RESTRUcturing

Act on time and avoid insolvency.

The law on the stabilization and restructuring of enterprises (StaRUG) has only been available as a draft law so far; here you can find a brief summary of the essential elements of the law (in German language only). The goal of the law, with which the EU restructuring directive is to be implemented, is to create a preventive stabilization and restructuring framework in order to enable companies to cope with the crisis in good time before insolvency and thus to avoid insolvency proceedings at an early stage.

The main instrument of the preventive stabilization and restructuring framework is the restructuring plan, which, among other possibilities, enables considerable cuts in the rights of creditors, but also in the rights of shareholders, and thus enables the long-term adjustment of over-indebtedness in the balance sheet. The restructuring plan is supplemented or in some cases even made possible by court orders, e.g. a so-called stabilization order, which prevent threatened foreclosures and even proactively avoid the collection and utilization of security rights of individual creditors in order to keep the company’s substance together.

Our lawyers and consultants have been dealing with the restructuring of companies in crisis for years. We use a wide range of experience with insolvency plans and in dealing with the various groups of creditors in the restructuring process in order to develop the best possible solutions in the interests of all parties and to achieve success in negotiations.

Self Administration and Protective Shield Proceedings

Overcoming the crisis together.

If a restructuring according to the new restructuring laws (StaRUG) – for whatever reasons – does not promise success, the German restructuring and insolvency law offers extremely attractive options for dealing with corporate crises: self-administration and protective shield proceedings. Contrary to popular belief that insolvency proceedings are the end of a company, insolvency in self-administration or protective shield proceedings as a special form of self-administration offers entrepreneurs many opportunities to remain operationally in the “driver’s seat” and to leave insolvency behind them with the support of competent advisors. The implementation follows either the way of the so-called asset deal or the way of an insolvency plan.

We have the necessary expertise and experience to support self-administration proceedings of any size. In the past 10 years we have not only been able to support hundreds of companies as insolvency administrators, but in a large number of cases we have also successfully supported self-administration in the interests of companies and creditors. Our partner Dr. Matthias Hofmann with his numerous publications – including the practical book “Eigenverwaltung” published by RWS-Verlag – is one of the most recognized experts in the field of self-administration and protective shield proceedings in Germany.

RESTRUCTURING PLAN AND INSOLVENCY PLAN

Shaping the future.

The legal tool to clean up financial burdens for a long time has been the insolvency plan in self-administration and insolvency proceedings. In the preventive restructuring framework the restructuring plan will be available from 2021. Both plans combine a variety of design options:

• redesigning the rights of creditors, e.g. (Partial) waivers of claims or suspensions of payment;
• redesigning the rights of shareholders, e.g. Redemption of previous shares and issue of new shares to dissolve shareholder structures that are no longer functioning;
• transfer of assets without the need for additional (notary) contracts uniformly in the restructuring or insolvency plan, e.g. implementation of real estate sale-and-lease-back solutions, saving high notary fees.

Restructuring and insolvency plans are extremely demanding from a legal point of view, especially in view of the many possibilities. Designing plans in such a way that they cannot be attacked by individual creditors or by complex inquiries from the restructuring or insolvency court requires a lot of experience, legal expertise and, last but not least, the necessary instinct for the parties affected by the plan in the context of the preparatory negotiations .