Subordination of Shareholder Loans between Creditor Protection and Rescue Culture. An Escapable Tension?

This paper provides a critical overview of the different legislative frameworks which have been traditionally regarded as the most comprehensive models addressing the widespread practice of loans granted by shareholders to their company in the vicinity of insolvency. Having analyzed the rationale underlying the subordination rule, the paper ultimately argues that an unselective subordination of shareholder loans should not be considered as the “panacea”. On the contrary, more room should be left in the legal analysis to the arguments which focus on the valuable part shareholder loans could perform in rescuing the company.