A Court-approved reduction of capital is one of the corporate reorganisation tools that has been successfully deployed by listed companies domiciled in the Cayman Islands in order to manage debt and liquidity.
Cancellation of debt a key element of most restructurings generally triggers taxable income. The German tax authorities had issued an administrative decree (the "Tax Restructuring Decree" - Sanierungserlass), however, declaring that, upon the satisfaction of certain requirements and conditioned on forfeiture of any loss carry forwards, the cancellation of debt income ("CODI") would not be taxed.