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Creditor information system

New reorganization law - FAQ on StaRUG

What is a restructuring procedure according to the StaRUG?

The StaRUG procedure (= restructuring procedure) is a (not necessarily judicial) procedure for the preservation of companies that are in economic difficulties but still solvent. On the basis of a restructuring plan and with the support of a restructuring officer, such companies can reorganize their liabilities (debt restructuring), if a qualified majority of creditors agrees, if the creditors are treated equally according to their rank and if the measures are appropriate. In addition, with court approval, enforcement measures against the company can be stopped. The proceedings can be conducted without publication. 

The procedure is intended to motivate companies to take the necessary measures to maintain their business without having to go through a judicial insolvency procedure, even if they are threatened with insolvency.

How does the restructuring procedure differ from insolvency proceedings?

Restructuring proceedings are intended to enable a company to be reorganized without compulsory court involvement and publication before insolvency proceedings are necessary. It assumes that insolvency is only imminent but has not yet occurred and that the company is capable of being restructured. The company must present its creditors with a proper restructuring plan, which must be accepted by a qualified majority of creditors. At the request of the company, supportive legal measures can be taken (suspension of enforcement, court voting procedure). The management of the company stays it in its own hands during the restructuring.

Insolvency proceedings, which are not only applied in the event of imminent insolvency, but above all if insolvency or over-indebtedness has already occurred, and which can also be carried out at the request of a creditor, are, on the other hand, mandatory court proceedings in which the management of the company is either (in the case of self-administration) supervised by a trustee or is placed entirely in the hands of a court insolvency administrator. In insolvency proceedings, too, it is ideal to reorganize the company (e.g. by means of an insolvency plan or asset deal), but it is also possible to discontinue and liquidate the business. In contrast to restructuring proceedings, insolvency proceedings offer the option of not continuing contracts in accordance with §§ 103 ff. InsO at the expense of the insolvency estate.

If the restructuring procedure fails (e.g. because the required majority of creditors do not agree), the company will usually be subject to subsequent insolvency proceedings.

How does the restructuring procedure according to the StaRUG work?

The core of the restructuring procedure is the preparation of a restructuring plan, by which a company in economic difficulties tries to arrange its legal relationships in such a way that it does not become insolvent. At the time the plan is drawn up, the insolvency may only be threatening, it may not yet have occurred. The main content of the plan will usually be a debt cut or a postponement of the due dates.

The plan must be presented to the affected creditors, who must vote on it. This can be done in a court proceeding or out of court. In addition, after notification of the restructuring process, stabilization measures can be applied for in advance at the restructuring court (e.g. suspension of enforcement).

Similarly, at the request of the company, the court may appoint a restructuring moderator (mediates between the parties) or, especially in more advanced or problematic cases (then also ex officio), a restructuring officer who will examine and monitor the legal requirements of the restructuring and, depending on the situation of the case, may also be equipped with more extensive functions (monitoring of the management and administration of incoming funds, monitoring of plan fulfilment).

If the plan is accepted by the creditors with the required majorities, it must be submitted to the restructuring court for judicial confirmation. If the plan is confirmed by the court, it will shape the affected legal relationships of the company as intended.

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

Who can report/initiate proceedings under the StaRUG?

Any person who is capable of insolvency with the exception of natural persons who are not entrepreneurs. The initiation is only possible for one's own company, so unlike in insolvency proceedings, it is not possible as a creditor to file a corresponding application against another company.


When can a procedure according to StaRUG be indicated/initiated?

Proceedings under the StaRUG can be initiated as soon as imminent insolvency arises. Companies, which already are insolvent or overindebted cannot make use of the instruments of the StaRUG. These companies will have to apply for insolvency proceedings according tot he InsO.

The actual procedure begins with the preparation of a restructuring plan which the affected creditors have to accept with a qualified majority. This can be done in a court proceeding or out of court. If the company wants to make use of the judicial procedure, it must notify the restructuring plan to the responsible restructuring court (§ 31 (1) StaRUG). The notification must be accompanied by a draft restructuring plan or a concept for the restructuring, a description of the status of negotiations with the creditors and a description of the measures taken to ensure implementation (§ 31 (2) StaRUG). The consequence of the notification is that the restructuring case becomes pending and the instruments of the StaRUG can be used for its implementation (§ 31 (3) StaRUG).

What does "imminent insolvency" mean?

Imminent insolvency means that a company is unlikely to be able to meet all existing payment obligations at the time they fall due (§ 18 (2) InsO) according to a forecast period of 24 months.

When do the regulations of the StaRUG come into force/ When can a procedure be notified?

The StaRUG came into force on January 1st, 2021, so that restructuring projects can be notified to the competent courts since then.

The public restructing matters in §§ 84 - 88 StaRUG will only come into force on July 17th, 2022. These provisions, as well as the amendments to the code of insolvency announcements, are to be given sufficient lead time for the technical implementation, making use of the maximum implementation period unter Article 34 (2) of the directive.

Where are proceedings under the StaRUG notified?

Proceedings under the StaRUG must be displayed to the competent restructuring court. The competent restructuring court is the district court in whose district the competent higher regional court is located (§ 34 (1) StaRUG). A different jurisdiction is given if this local court is not responsible for the execution of corporate insolvencies. In this case the local court which is competent for corporate insolvencies at the seat of the Higher Regional Court is competent. In addition, the federal state is permitted to assign jurisdiction by statutory order to another local court in the district of the Higher Regional Court (§ 34 (2) StaRUG). It is not yet known whether the federal states will make use of this.

Will the procedure be made public?

In proceedings concerning restructuring cases, public announcements are only made if the debtor requests this. The request must be made before the first decision in the restructuring case and can only be withdrawn until the first decision has been made (§ 84 (1) StaRUG). Pursuant to § 84 (2) StaRUG the information to be published are the details mentioned in Article 24 (2) of Regulation (EU) 2015/848, i.e. mainly general information on the proceedings and current deadlines and all court decisions. The public announcement is made by means of a central publication on the Internet, § 86 (1) StaRUG. IMPORTANT: The public announcement is sufficient as proof of service to all parties involved, even if the law requires a special service in addition to it (§ 86 (3) StaRUG).

What is a restructuring plan according to the StaRUG?

Similar to an insolvency plan (§§ 217 ff InsO), the restructuring plan according to the StaRUG (§§ 2-28, 45, 46, 60-72 StaRUG) is a comprehensive reorganization of the legal relationships of the company, which is intended to enable a restructuring of the company. Usually such a plan is drafted by specialized consultants of the company. Of key importance is the handling of claims against the company ("debt cut"), and of rights to assets (e.g. real estate) which are necessary for the company even after reorganisation. The plan can also intervene in shareholder rights (e.g. dept equity swap). Employee claims cannot be shaped by a plan. The plan divides the affected creditors into groups as they would be in in insolvency proceedings. Within these groups the creditors are to be treated equally (however, certain groups can be excluded from the outset, e.g. small creditors or consumers and appropriate unequal treatment is also possible under certain conditions). The plan is sent to the creditors concerned in writing. If it is not accepted by all creditors, a vote can be taken on it, at the debtor's request also in court proceedings - so an appropriate plan can outvote unwilling creditors.

Which groups of creditors can be included in the proceedings and which not?

According to § 9 StaRUG a distinction must be made between

  1. the holders of special entitlements (secured creditors),
  2. the holders of claims which, in the event of the opening of insolvency proceedings, would have to be asserted as normal insolvency claims, together with interest and default surcharges thereon (simple restructuring creditors),
  3. the holders of claims which, in the event of the opening of insolvency proceedings would have to be registered as subordinate or lower ranking insolvency claims (subordinate restructuring creditors), whereby a group shall be formed for each ranking class pursuit § 39 InsO and
  4. the holders of share or membership rights (e.g. partners);

The time of the submission of the plan offer or the first court order in the proceedings shall be taken into account for these distinctions. Employee claims are excluded. In addition, the author of the plan may, for factual reasons, exclude certain other claims, e.g. those of small creditors or consumers.

What judicial assistance is available under the StaRUG?

The following judicial instruments are available according to § 29 StaRUG

  1. conducting a judicial plan approval procedure (judicial plan approval - suitable for large proceedings and those with difficult or unreasonable creditors)
  2. preliminary judicial review of issues relevant for the confirmation of the restructuring plan (preliminary review - suitable for proceedings with difficult legal issues where judicial changes are expected),
  3. the court order of regulations to limit measures of individual enforcement (stabilization - e.g. stop of enforcement according to § 49 StaRUG) and
  4. the judicial confirmation of a restructuring plan (plan confirmation)
Can creditors be outvoted?

Yes, when voting on the restructuring plan, creditors can be outvoted with a ¾ majority within their group, § 25 (1) StaRUG, whereby the voting right is based on the amount of the claims or the expected value of separation (§ 24 StaRUG). If this majority is not achieved within a group, it is sufficient that the majority of the other voting groups have approved the plan with the required majority, if the members of the group without a majority are not expected to be worse off by the residual restructuring plan than they would be without a plan and recieve an appropriate share. If only two groups have been formed, the consent of the other group is sufficient; the consenting groups must not be formed exclusively by shareholders or subordinate restructuring creditors. The appropriateness of a participation is generally based on the equal treatment of creditors of the same group "absolute priority, § 27 StaRUG", whereby exceptions are permitted (§ 28 StaRUG), e.g. improvement of the position of necessary company owners.

Can contracts be adjusted?

The StaRUG does not provide for the adjustement of contracts.

Is there a protection against enforcement measures?

Yes, the restructuring court can, upon application, prohibit or temporarily suspend enforcement measures (§ 49 (1) StaRUG). However, this is only possible if this is necessary to achieve the restructuring goal. The company must prove this by submitting to the court an up-to-date restructuring concept and a plausible liquidity plan.

Who manages the business and the restructuring measures in a StaRUG procedure?

The preparation and implementation of a StaRUG procedure will be carried out by the previous management. The latter retains control of the business processes and conducts the reorganization negotiations with the parties involved. Due to the complexity of the procedure and the risks of personal liability from procedural errors, the managing director will call in consultants to support him, comparable to self-administration in insolvency proceedings.

In addition, the restructuring court may appoint a restructuring officer to accompany the course of the proceedings and in particular to monitor that the interests of all creditors are safeguarded. The debtor can apply for the appointment of the restructuring officer or, in cases regulated by law, the court can issue a binding order to this effect. The law also allows for the appointment of a restructuring moderator who mediates in the negotiations between the debtor and the creditors. This moderator is appointed by the restructuring court at the debtor's request.

Which liability risks exist for the managers, shareholders and consultants in a StaRUG procedure?

One of the core questions of the procedure is the possible personal liability of the parties involved. The StaRUG procedure closes a gap between the amicable out-of-court reorganization on the one hand and the judicial insolvency proceedings on the other hand. This places high demands on all parties involved in the StaRUG procedure, not least on the consultants of the management. Future court rulings on liability issues will concretely shape the scope of action of the management and regulate how the proceedings are to be prepared and carried out. However, the parties involved will not want to let it come to that, especially since liability claims can quickly have an existentially destructive effect even in small and medium-sized companies. This is all the more true in large companies, for which the regulations of the StaRUG will initially primarily be applied. It is therefore essential to recognize and minimize liability risks. Against this background, the StaRUG provides for  organ liability.

In the end, a comprehensive liability in the occurrence of imminent insolveny of the manager already in the imminent insolvency as originally provided in the government draft was refrained. Nevertheless, liability risks still exist for the managers. The central liability norms are § 43 (1) and § 57 StaRUG. The regulations are similar to the liability of organs, which is linked to the diligence of a prudent manager (e.g. § 43 (1) GmbHG, § 93 (1) AktG). In contrast to the known liability of organs, § 43 (1) StaRUG extends the liability of the organs to external liability towards the creditors if the management culpably violates its obligations to safeguard the interests of the entire group of creditors.

§ 57 StaRUG also standardizes the managers liability for damages to the creditors for obtaining a stabilization order, stating intentionally or negligently incoreect information. The same applies to an improper distribution or safekeeping of proceeds after the sale has been blocked. The general principles of liability are based on the interests of the parties involved and their protection against impairment in the proceedings. For the managers, the StaRUG procedure is associated with a paradigm shift ("shift of duties").