Insolvency law and restructuring

Restructuring must always be based on a coherent concept that is based on complete information. Otherwise, the chances of success decrease considerably and there are liability risks for all parties involved.
As soon as the solvency is no longer sufficient in the long term, the company must fulfill increased due diligence obligations, which also affect the personal liability claims of the management bodies.

The choice of the appropriate form of insolvency proceedings always depends on the circumstances of the individual case. Third-party administration makes sense if the company’s value creation is permanently disrupted. Otherwise, it should be examined whether conducting the proceedings under debtor-in-possession management might be expedient. Our experts will examine all options together with you.

In restructuring processes, it is regularly the case that contractual partners also have to participate in the restructuring. Restructuring will be successful if consensus can be reached with all parties involved on the path to a restructured company.

If a consensual concept is not possible, but operational value creation is essentially intact, judicial StaRUG measures may be considered. Individual creditors can be forced to participate in the restructuring process even against their will or enforcement measures can be temporarily prevented.

In the event of an advanced liquidity crisis or operational problems – for example, if the workforce is too large for the company – restructuring under debtor-in-possession management is an option. Unfavorable contracts can be terminated as part of debtor-in-possession management and personnel measures are specially regulated for insolvency proceedings/debtor-in-possession management.

StaRUG and debtor-in-possession management are only possible in the event of imminent insolvency. If insolvency has already occurred, such proceedings are generally no longer possible.
 

With timely preparation and honesty on the part of the persons involved, protective shield proceedings are certainly possible, but often not necessary or helpful. Our experts will examine all options together with you. 

There is a wide range of options, from out-of-court negotiations to preventive restructuring or refinancing, StaRUG measures or debtor-in-possession management through to general insolvency (if you wait too long). Our experts will examine all options together with you. 

The sale of a company or part of a company should definitely be an option in restructuring planning. A corporate transaction is particularly sensible if fresh capital is required or if the entrepreneurial value creation can be strengthened with a strategic partner. Our experts will examine all options together with you.

Since January 1, 2021, companies have also been able to deleverage outside of insolvency via the so-called restructuring plan in accordance with the German Corporate Stabilization and Restructuring Act (StaRUG). In order to do so, they submit a restructuring plan to their creditors that shows how the company can repay all liabilities and avoid insolvency.

The creditors usually agree to such plan, as they would receive less or nothing in the event of insolvency. Potential “notorious troublemakers” among the creditors can be outvoted by the majority of creditors. The company deleverages outside of insolvency and the future of the business is secured.
 

Restructuring measures initiated in good time serve to prevent the insolvency of a company. Strategies are generally developed not only to ensure the company’s short-term survival, but also to set the course for a successful competitive position in the medium to long term. 

In operational terms, a variety of measures can help to enhance a company’s effectiveness and productivity. From a legal perspective, the areas of administration trusts, revocatory action, labor law, restructuring tax advice, liquidation and the examination of grounds for filing for insolvency play a central role. For managing directors, this also includes the development of strategies in order to avoid personal liability.