New Restructuring Procedure for Companies in Germany Opens Up New Opportunities

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.

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