The main purpose of this thesis is to present the legal regulation of the conversion of debt into equity (debt to equity swap) in Slovenian and German insolvency legislation. In very general terms, debt to equity swap can be defined as a means of financial restructuring by which loans are transformed into an equity position in the company.
The first part of the thesis deals with the regulation of the debt to equity swap in Slovenian law, where this transaction is a part of the compulsory settlement procedure. Special emphasis is drawn to the characteristics of loans that can be transformed into an equity position and to the debt to equity swap procedure, which is a special form of a capital increase in kind, often accompanied by a simplified capital reduction due to uncovered loss. Additionally, the impact of the swap on debtor’s financial situation and his financial statements is discussed as well.
The second part of the thesis gives insight into the German regulation of the debt to equity swap, which is very similar to the Slovenian one. It is shown that German law does not provide for as many swap-specific rules as Slovenian law, which is to be welcomed in some cases, whereas in others, it can be considered as a weakness. The second fundamental difference is the much more thorough approach of German law towards the compensation for withdrawing company owners.
The final chapter compares some of the most important elements of the debt to equity swap regulation and attempts to find the reasons for the differences. Additionally, basing on the comparative analysis, it provides suggestions that could be used for further improvements of the legal regulation.
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