Below you find the newsletter of the International Department of Schultze & Braun with information on current issues in German insolvency law as well as an article about discussion in the US and Germany regarding illegal real estate foreclosure. Dr H. Philipp Esser, LL.M. (Chicago) Attorney at law (Germany) Attorney at Law (New York State) Comfort Letter In a company crisis shareholders frequently grant enforceable comfort letters (in German: „hard“ comfort letters) for the benefit of a subsidiary and its creditors.

European officials meeting Friday are meant to lay the groundwork for a comprehensive fix to Europe's debt crisis. Bond investors already are betting against success, The Wall Street Journal reported. Two months ago, a resolution seemed within reach. The region's paymaster, Germany, would agree to beef up a rescue fund, the European Financial Stability Facility, in size and in scope by permitting its use for government-bond purchases and credit lines. That would keep the debt crisis that engulfed Greece and Ireland last year from also forcing a bailout of Portugal and Spain.

German train drivers voted on Monday to go out on strike, a move which could bring the country's rail network to a standstill. Several other unions are likewise demanding higher wages this year -- a trend experts say is very worrisome given the delicate economic recovery, Spiegel Online reported. Economists in Germany are concerned that the rail strikes could merely be the tip of the labor conflict iceberg this year. After years of stagnating wages, the result of labor market reform followed by economic recession, workers in the country appear to be losing their patience.

German prosecutors expanded a probe of Porsche SE's former top managers to new allegations tied to the sports-car maker's failed attempt to take over Volkswagen AG, likely delaying the two companies' planned merger, The Wall Street Journal reported. Shares in Porsche closed down 11% on Thursday after the German car maker said there is now only a 50% chance that the merger agreement—struck after Porsche's effort to swallow VW nearly drove Porsche into bankruptcy—would be completed before 2012.

The woes of WestLB, which has received $11 billion in taxpayer support since 2009, are symptomatic of a larger problem in the German economy. Many of its biggest banks are still on government life support after making bad lending bets during the bubble years. And with their access to cheap capital long gone, their prospects of becoming profitable again are dubious, the International Herald Tribune reported.

European Union regulators will review competing restructuring plans for WestLB AG, the state- owned lender bailed out during the financial crisis, from the bank’s board and the German government, Bloomberg reported. German Finance Minister Wolfgang Schaeuble proposed the bank transfer its non-saleable assets to a so-called bad bank and sell the rest of its portfolio, EU Competition Commissioner Joaquin Almunia said in an e-mailed statement today. Savings banks would take over the rest of the bank, he said.

Owners of troubled state lender WestLB AG failed to agree on the terms of a European Commission-demanded restructuring plan over the weekend and could keep haggling right up to the plan's submission deadline at midnight Tuesday, several people close to the matter told Dow Jones Monday. WestLB owners have to present a restructuring plan to the commission that outlines how the bank will shrink its balance sheet, while detailing its search for new owners by the end of 2011 and outlining a long-term business model.

Ailing German lender WestLB has received several bids, its official sales agent said, as the bank enters the final stretch to present a restructuring plan to the European Commission, Reuters reported. But sources close to the bank said that although four non-binding bids from strategic players and private equity investors have been tendered, none of the bidders will end up buying the whole lender. Instead, they will only try to pick up parts of it at later stages of the process.

Ailing German lender Hypo Real Estate (HRE) should be wound down, a German expert commission has recommended, two sources familiar with the matter told Reuters on Wednesday. "The experts can see only slim chances that a privatisation of HRE would become a success," said one of the people with knowledge of a report drafted on behalf of the German government by the expert commission. Due to overcapacity in the markets where nationalised mortgage lender and state financier HRE is active, the experts concluded that a sale would not yield higher proceeds than a liquidation, the source added.

Splitting up state-backed German lender WestLB would be the most sensible scenario for the ailing bank, the head of Germany's biggest regional savings banks association said Tuesday, as pressure mounts on WestLB and its shareholders to drastically reduce the bank's size and find new owners by the end of 2011, Dow Jones Daily Bankruptcy Review reported.