By judgement of 20 September 2010 the Federal Court of Justice held that in a letter of comfort (Patronatserklärung) it would be possible to validly agree a termination right for the parent company which could be exercised even in a financial crisis of the beneficiary of such letter of comfort (BGH, 20 September 2010, II ZR 296/08).
The court stressed that the principle of private autonomy would enable the parties to a letter of comfort to freely agree the possibilities to terminate such comfort letter. The court thereby rejected the view that a letter of comfort could not be terminated anymore once the beneficiary of the comfort letter was in a financial crisis.
Posted by Mario Lindner on Wednesday 22 Sep 2010