Course of proceedings under the StaRUG

The core of restructuring proceedings under the StaRUG (the German Act on the Stabilisation and Restructuring Framework for Businesses) is the preparation of a restructuring plan, through which a company in economic difficulty seeks to arrange its legal relationships in such a way that it does not become illiquid. At the time the plan is drawn up, illiquidity may only be imminent, it must not yet have occurred. The main content of the plan will usually be a debt haircut or a postponement of due dates.

The plan must be presented to the affected creditors, who have to vote on it. This can take place in court proceedings or out of court. In addition, once the restructuring proceedings have been notified to the restructuring court, stabilisation measures can be applied for even beforehand (for example suspension of enforcement and realisation measures against the company).

Likewise, at the company’s request, the court may appoint a restructuring facilitator (who mediates between the parties) or, particularly in more advanced or more difficult cases (in which case also of its own motion), a restructuring officer. The restructuring officer examines and monitors the legal requirements of the restructuring and, depending on the case, may also be given more far-reaching functions (supervision of management and administration of incoming funds, supervision of plan implementation).

If the plan is accepted by the creditors with the required majorities, it must be submitted to the restructuring court for confirmation. If the court confirms the plan, it shapes the company’s affected legal relationships as intended.

If the proceedings fail because the plan is not accepted or not confirmed, this will often result in insolvency proceedings.