Agriculture Old Debt Act

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Basic data
Title: Law amending the regulations on old debts of agricultural companies
Short title: Agriculture Old Debt Act
Abbreviation: LwAltschG (not official)
Type: Federal law
Scope: Federal Republic of Germany
Legal matter: Private law
Issued on: June 25, 2004
( BGBl. I p. 1383 )
Entry into force on: July 1, 2004
Last change by: Art. 6 Regulation of August 31, 2015
( Federal Law Gazette I p. 1474, 1475 )
Effective date of the
last change: 		September 8, 2015
(Art. 627 of August 31, 2015)
Please note the note on the applicable legal version.
Basic data
Title: Ordinance for the implementation of the old agricultural debt law
Short title: Old Agriculture Debt Ordinance
Abbreviation: LwAltschV (not official)
Type: regulation
Scope: Federal Republic of Germany
Legal matter: Private law
Issued on: November 19, 2004
( BGBl. I p. 2861 )
Entry into force on: December 1, 2004
Please note the note on the applicable legal version.

The agricultural debts law regulated sixteen years after reunification in connection with the agricultural debts Regulation repayment of old debts from the time of the GDR for LPG -Nachfolgebetriebe. As a result, due to the law in summer 2008, the debts of 1210 companies were mostly completely redeemed by paying a total of 267 million euros. This corresponded to a repayment rate of only about 11 percent of the forgotten old debts, whereby old debts were also redeemed, which were only taken up after the reunification .

prehistory

On the key date of monetary union , the agricultural production cooperatives of the GDR had debts of an estimated 7.6 billion D-Marks. During the SED dictatorship, these did not arise solely from economic aspects of the companies. Due to political requirements, the companies also had to invest in social or cultural projects and pay for public services . Road construction, kindergartens and cultural centers etc. were outsourced in this way with loans from the state budget at the expense of the companies. Within the GDR, these debts were meaningless for companies. In the monetary union, all loans were included in the DM balance sheet at a ratio of 2: 1.

Agricultural engineering in the GDR in 1989

In order to relieve the companies, the first debt relief had already taken place in 1991, during which around 1.762 billion D-Marks were spent on partial redemption for 1,382 companies that were previously considered capable and willing to reorganize and had a total of around 4.5 billion old debts . This was also done against the background that in the D-Mark opening balance sheets these debts on the liabilities side due to the accounting of the machine and fixed assets according to estimated real values, which were considerably below the production and balance sheet values ​​from the GDR period, no values on the assets side of the balance sheet. It should also be ensured that the former cooperative farmers would not have to be liable for these debts and that cooperative members willing to leave would receive remuneration for the inventory they brought in. Prior to this settlement, bank debts took precedence (see also Agriculture Adjustment Act ).

Between 1992 and 1994 there was further relief for the LPG successor companies. In detail, around 1,500 companies were relieved of the balance sheet by 3.5 billion D-Marks because the old debts had to be removed from the balance sheet and only had to be subordinated. This affected all businesses that had not already been liquidated and that were seen as capable and willing to renovate. Funds released as a result were not allowed to be used to pay out withdrawing members and to cover ongoing losses. In years with positive results, only 20 percent of the profit had to be used to repay these debts, whereby the repayment was also tax deductible. Usually this is only possible for interest . Despite the measures already described, the debts in many companies were still higher than the fixed assets on the assets side.

The Federal Constitutional Court confirmed in a judgment of April 8, 1997 BVerfGE 95, 267 the legality of the old debt regulation, but at the same time commissioned the federal government to check whether the measures taken since were sufficient to avoid the existence of the old debt for companies. In a report that was then commissioned and published in 2001, it was found that at that time hardly any old debts had been reduced and, on the contrary, they had increased again to 4.7 billion D-Marks through interest. If debts were repaid, 80 percent of this was done by selling assets that were no longer needed. The old debts, however, often had the positive effect of preventing comrades from leaving because it was more financially worthwhile to stay in the cooperative. Taking this into account, the experts came to the conclusion that the subsidies at the time had already overcompensated for the old debts. The still high level of old debts was caused by skillfully delaying the repayments, and this in the hope of further subsidies, but not due to a lack of solvency. The study was subsequently ironically commented and controversially discussed and other model calculations were presented, according to which only 5 percent of the companies would be able to repay the debts in full in the period up to 2010 specified by the Federal Constitutional Court. The Parliamentary State Secretary Gerald Thalheim ( Federal Ministry of Food and Agriculture ) and other politicians from the new federal states as well as cooperative associations or East German media such as the magazine “Neue Landwirtschaft” pushed for further debt relief.

The law and its implementation

After a long and controversial discussion, the old agricultural debt law was passed in the summer of 2004 and the associated implementing regulation came into force on December 1, 2004. The new regulation stipulated that companies wishing to replace their old debts with a one-off payment would waive their old debts by August 31, 2008 at the latest. In the Federal Ministry of Finance , debts of 2.1 billion euros to be redeemed were expected , with income of 600,000 euros planned for the one-off payment. In addition to some changes to the previous accounting classification of the old debts, a minimum redemption amount was also provided, which resulted from the discounted bank and auditing costs saved.

1,350 companies were eligible to apply, of which 1,222 had submitted an application within the short deadline. The first approvals were issued in July 2005. The last ones were delayed until 2008. The reasons were a long and complicated procedure with individual examination and a lack of communication between the BAG Bankaktiengesellschaft Hamm and the BVVG . In some cases, the companies did not hear about the application for two years. There was also criticism of the BAG's offers and calculations. The counter-offers of the companies, which offered an average of 7.4 percent of the remaining old debts, were negotiated hard.

Ultimately, 500 companies only paid the minimum amount. A total of 267 million euros were collected, which corresponds to a rate of 11 percent of the old debts.

See also

Web links

Individual evidence

  1. ↑ a b c d e f g h Halvor Jochimsen: 20 Years of Green Construction East in the Federal Ministry of Food and Agriculture : Reports on Agriculture , Issue 2, 2010, pp. 226–231 pdf available here