30	1	Introduction
Silent Partnership (stille Gesellschaft)
The silent partnership (stille Gesellschaft) is a	partnership as	set forth in

Sec. 705 BGB but is designed as an internal legal relationship characterized by someone participating in the commercial trade of another person with a capital contribution which will then be transferred to the assets of the business partner. For this purpose a contract between the proprietor of the commercial trade and the so-called ‘silent’ participant is mandatory. Only the proprietor will enter into transactions and will be liable for and entitled from the business transactions. The silent partner is only liable for her/his capital contribution towards her/his partner. In practice, a silent partnership may be chosen for tax reasons or because of confidentiality interests of the investor (e.g. in a family business).

Registered Co-operative (eingetragene Genossenschaft)

The registered co-operative (eingetragene Genossenschaft, eG) is an association with an unlimited number of members whose purpose is to promote the goals of its members—this can be a commercial goal as well as for a social or cultural purpose. This type of business association originated in the nineteenth century and was a popular vehicle especially for craftsmen and farmers. But even today, the eG is quite common in some business sectors (e.g. retail and banking), and there are approximately 7,000 registered co-operatives with nearly 20 million members.37

The eG is defined as a separate legal entity and can acquire rights and assume liabilities; it may acquire ownership and other real property rights, and it can sue and can be sued.

1.4  A Brief Introduction into German Insolvency Law

The regulatory framework for insolvencies in Germany has been subject to various changes. In 1999, the German legislature passed a new Insolvency Code (Insol­ venzordnung, InsO) which replaced the rules of the former Bankruptcy Code (Konkursordnung) of 1877 and the SettlementAct (Vergleichsordnung).The former legal framework had been criticized for not achieving the main goal of insolvency law, namely, a fair and equal satisfaction of the creditors. In many insolvency cases, creditors received only very small distributions on their claims, or the courts did not even commence insolvency proceedings for lack of sufficient assets within the company.38 The reform of Germany’s Limited Liability Company Law in 2008 by the Act on the Modernization of the Limited Liability Company Law and the Prevention of Abusive Acts (Gesetz zur Modernisierung des GmbH-Rechts und zur Bekämpfung von Missbräuchen, MoMiG), which will be discussed in more detail later on39, also included amendments to insolvency rules, e.g., regarding the scope of duties of a managing director in case of insolvency of a GmbH.

37  See Klunzinger 2009, p. 310.

38  For more details on this reform see Braun 2005, pp. 59 et seq. 39  See infra, Sect. 3.1.