Comfort letters (Patronatserklärungen) are a tool to secure claims of a creditor against a subsidiary typically by way of a promise by a parent company to manage the subsidiary in such a fashion and to equip it with financial means that will allow the subsidiary to fulfil all of its present and future obligations (harte Patronatserklärung – binding comfort letter. This text does not deal with non-binding comfort letters). While comfort letters have grown popular in Germany since their beginning in the 1960s, they have not been subject to a distinct set of legislation, and they have rarely been the subject of jurisdiction either.

In the case at hand, the defendant had issued a comfort letter to a subsidiary that was in financial difficulty. In the comfort letter, the defendant promised, should the subsidiary become over-indebted or unable to pay its debts, to settle due claims against the subsidiary to such extent that the subsidiary would not have to file for insolvency. Several months later, the defendant terminated the comfort letter and the subsidiary filed for insolvency.

The insolvency administrator sued the defendant, claiming that termination of the comfort letter had been inadmissible and that the defendant therefore was liable to settle all claims against the subsidiary. The defendant argued that it had been agreed that the comfort letter would only be valid for as long as it would take the defendant to figure out if the subsidiary could be restructured, but that the letter had not been intended to guarantee the subsidiary's survival even if it proved inapt to restructuring.

Since there are no legal provisions and little jurisdiction on comfort letters under German law, the court discussed other structures for financing of distressed subsidiaries that might have denied a right to termination. However, it found that the principles of equitable subordination (Grundsätze des Eigenkapitalersatzes) which were still applicable at the time did not oppose a termination of the comfort letter because they prohibit to withdraw funds from a subsidiary, but do not oblige a parent company to invest new funds. Also, the model of regular credits to a subsidiary instead of providing additional equity (Finanzplankredit) that might have bound the defendant as parent company to stick to its promise did not apply because the defendant's promise could not be considered as equal to equity.

Therefore, the court found that the termination of the comfort letter was not forbidden. Since the lower courts had omitted to determine whether or not the defendant and its subsidiary actually had agreed that the comfort letter would be time limited or subject to termination, the BGH remitted the case to the appellate court.