Hanover, Germany

New Restructuring Procedure for Companies in Germany Opens Up New Opportunities

By Thorsten Hunsalzer, Gehrke Econ Group

EU Directives 2017/1132 and 2019/1023 require all EU members to create a pre-insolvency procedure by July 2021. German lawmakers have recognised this procedure as a restructuring tool for dealing with the COVID-19 crisis and implemented it within a few weeks with the StaRUG act, which came into force on 01 January 2021.

The aim is to identify corporate crises at an early stage and avoid insolvency proceedings. Companies are obligated to install an early crisis-detection system, regardless of their legal form.

The stabilisation and restructuring framework provides a legal framework for the reorganisation of threatening insolvent companies outside of insolvency proceedings. Various instruments are made available for implementation, such as enforcement protection. The core element is the restructuring plan. This is based on the insolvency plan and allows the company to restructure its legal relationships with its creditors and shareholders. Creditors affected by the plan are divided into groups for the voting. In principle, a majority of 75% of the voting rights is needed in each group. The debtor may itself determine which creditor groups are included. Employee rights, on the other hand, may not be interfered with.

Another special important feature, and a real innovation, is that the procedure can be done without publication or court involvement. Court confirmation of the restructuring plan can nevertheless be requested.

The first drafts of the law were bold and provided for the possibility of getting rid of unpleasant contracts, such as commercial leases. Only equal protection and minority protection rights were to be available to landlords. On the finish line, such a provision was deleted.

Nevertheless, restructuring proceedings remain an advantageous procedure; the first are already pending. Practice will show how the procedure is accepted and whether it can prevail over other European procedures.


Thorsten Hunsalzer

Thorsten Hunsalzer

GGI member firm
Gehrke Econ Group
Auditing and Accounting, Tax, Law Firm Services, Advisory, Corporate Finance
Hanover, Germany
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Gehrke Econ Group offers tax consulting, auditing, legal advice, and business consulting from a single source. It is owner-managed and advises medium-size companies at eye level. Over 200 employees carry out interdisciplinary consulting projects.

Thorsten Hunsalzer is an attorney at Gehrke Econ and former insolvency administrator. He has more than 15 years’ experience in corporate restructuring, turnaround, M&A, and due diligence. His focus is on avoiding insolvency proceedings.


Published: Debt Collection, Restructuring & Insolvency Newsletter, No. 13, Spring 2021 l Photo: panoramarx - stock.adobe.com

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