Influence of a formal crisis on financing
It is common practice to reduce the credit risk of credit financing by taking collateral from the owners. Since the entry into force of the Capital Expenditure Act (EKEG) in 2004, however, the rules for financing have also been tightened.
If collateral is provided by the owner (pawn or pawn-like rights) as long as the company is still outside the legal crisis definition according to EKEG, a credit repayment is allowed as long as the company is not insolvent and the bank had to know about it (contestation for knowledge of insolvency ).
If the company is already legally in crisis and the owner makes loan provisions, it is known as "equity substitute collateral". If the lender had to know that the company is in crisis in accordance with EKEG, he has to, regardless of his repayment agreement, pay securities to the company as long as it is still in crisis. In the crisis, a bank would only be able to directly demand the financing portion of the company which is not covered by the realization of the collateral.
In the case of changes in the guarantees and / or expansion of credit exposures during the crisis, which had already existed before the formal crisis, it is advisable to consider a possible complete or partial new qualification in the individual case.