1 January 2021.
StaRUG – The New German Restructuring Tool
The StaRUG is a pre-insolvency rescue procedure which allows a debtor to implement a restructuring plan outside formal insolvency proceedings.
General Features of StaRUG
- Rescue procedure in which a restructuring plan is put to a vote across separate classes of creditors.
- Available at an early stage outside of formal insolvency proceedings.
- Initiation requires the debtor’s notice to the court, combined with a restructuring concept and confirmation that the company is facing impending insolvency.
- Moratorium of maximum eight months possible.
- Dept-equity-swaps and other measures are possible in the plan.
- Debtor may choose from a broad toolkit of individual instruments.
- Not all instruments require the court’s involvement.
- Debtor is free to choose who is included in the plan.
Changes to the Insolvency Law
- Liability regimes for wrongful trading, which were scattered throughout corporate law, are harmonised in one central insolvency law provision (Par. 15b InsO).
- Debtors who wish to use insolvency in self-administration (“Insolvenz in Eigenverwaltung”) need to show to the satisfaction of the court that they have provided detailed debtor in possession planning with a six-month planning horizon.
- The mandatory insolvency case of over-indebtedness was reduced to a twelve-month (instead of 24 month) forward-looking going-concern prognosis.
For further information please contact:
Michael Busching, Partner, Lawyer, ECOVIS Insolvenz und Sanierungs AG, Hamburg, Germany
Email: michael.busching@ecovis.com
Nils Krause, Partner, Lawyer, ECOVIS Insolvenz und Sanierungs AG, Hamburg, Germany
Email: nils.krause@ecovis.com