Die Patronatserklärung

The comfort letter [Patronatserklärung] is a legal instrument created in the practice of commercial transactions and banking, and has undergone a remarkable development. It may appear in different forms (using softer or harder wording), expressing various degrees of commitment regarding the person issuing the comfort letter [Patron]. Originally, the comfort letter was developed as an atypical collateral, e.g. in order to avoid the disadvantages associated with instruments such as guarantees. Meanwhile, its field of application has expanded to the use as an instrument of restructuring, for example to avert a company’s insolvency. In this respect, its focus within academic debate has expanded. Taking recent case law developments as a starting point – for instance the insolvency of Air Berlin – this study analyses doctrinal and practical issues of the use of comfort letters.