Creditor Protection in the Law of Corporate Groups

The development of corporate groups is a feature of most western economies. The British as well as the German economy are influenced by this development. One central issue which arises out of corporate groups is that with the formation of any limited liability entity, a primary purpose for this parent-subsidiary structure is often to minimize the liability of the parent company. For this reason corporate groups pose particular problems especially for creditors. In this context, issues of fairness arise if it is asked whether the law imposes risks on creditors that are inequitable. Parent-subsidiary relations are for this reason some of the most controversial areas in modern company law. As a consequence, creditors face legal uncertainties. However, the legal treatment of corporate groups differs heavily among the several European nations. The lack of European harmonization and the different corporate cultures in this area show the need for a comparison.