Schutzschirmverfahren

A Schutzschirmverfahren (protective shield proceedings) is an instrument of German insolvency law that enables companies in a difficult financial situation to find a solution for their debts before they become illiquid. It is part of the insolvency opening proceedings and is always conducted in Eigenverwaltung (debtor-in-possession management, Section 270d of the German Insolvency Code). On application, the court prohibits enforcement measures against the company, and the company is given up to three months to draw up an Insolvenzplan (the plan creditors vote on in German insolvency proceedings). This allows the company to use time and resources for a restructuring or reorganisation.

The requirement is that imminent illiquidity or over-indebtedness exists, but not illiquidity, and that the restructuring is not obviously futile. This is evidenced by a certificate from a tax adviser, auditor or lawyer experienced in insolvency matters. The application for Eigenverwaltung is a mandatory part of it, as there is no Schutzschirmverfahren in regular insolvency proceedings.