Skip to content
PKF News

You are here:

Out-of-court restructuring facilitated by the Business Stabilisation and Restructuring Act

The Act on the Stabilisation and Restructuring Framework for Enterprises (Gesetz über den Stabilisierungs- und Restrukturierungsrahmen für Unternehmen, StaRUG) created a framework that business owners have been able to use, since 1.1.2021, in order to restructure their enterprises without having to go through the conventional insolvency proceedings.

Implementation of the ‘Preventive Restructuring Framework’

In March 2019, the EU Parliament adopted the Directive on “Preventative Restructuring Frameworks’, which required Member States to create pre-insolvency restructuring proceedings. The aim of this is to give companies the option of reaching an agreement about restructuring measures with the parties involved under protected conditions and in a uniform way and then to implement these measures. The Act for the Development of Restructuring and Insolvency Law (Gesetz zur Fortentwicklung des Sanierungs- und Insolvenzrechts, SanInsFoG) was published in the Federal Law Gazette on 29.12.2020. An important part of this Act was the StaRUG, which mainly came into force on 1.1.2021.

Please note: The newly created Stabilisation and Restructuring Framework can also have implications for the mandatory filing for insolvency. In this respect, it should be noted that, in the context of the coronavirus pandemic, the legislator has amended the provisions on mandatory filing for insolvency several times. The Institute of Public Auditors in Germany (Institut der Wirtschaftsprüfer, IDW) makes reference to the StaRUG in the current revised draft version of its standard 11 (IDW S 11) on ‘Assessing the existence of reasons for opening insolvency proceedings’ (Beurteilung des Vorliegens von Insolvenzeröffnungsgründen); moreover, the StaRUG was also the subject of a separate report in this article.


With effect from 1.1.2021, the StaRUG should provide help to business owners so that they are able to restructure their enterprises without having to undergo judicial insolvency proceedings. Any enterprise that is facing the threat of insolvency is able to invoke such restructuring proceedings if there is a chance that the restructuring could be successful. A situation of imminent illiquidity would be assumed if an enterprise was still solvent but was projected to become insolvent within 24 months. There may be many reasons for a situation of imminent illiquidity however, in times of the coronavirus pandemic, it is particularly worth mentioning a lack of orders and revenue slumps. Up to now, in such cases it was common to restructure the enterprise through insolvency proceedings after having filed for insolvency. Instead of this, in the future, it will be possible to file a separate application for restructuring proceedings with the competent Restructuring Court (generally the local court [Amtsgericht]). However, if the illiquidity situation is already too far advanced then insolvency proceedings could, at least, still provide a solution via an insolvency plan but, in that case, the StaRUG would generally not be available as an option. 

Please note: When compared with insolvency plan proceedings, the advantage of the StaRUG is that the restructuring proceedings are not conducted in public and, thus, the enterprise does not have to fear any potential collateral damage from the resulting extensive reporting. Therefore, this means that adequate liquidity management will become an even stronger foundation for diligent business management practices because the choice of applicable restructuring instruments will be made on the basis of proper liquidity planning. Once illiquidity has occurred this normally results in the termination of the restructuring proceedings and the filing of an application for the opening of insolvency proceedings.

Content of the new proceedings

The StaRUG can be basically divided up into different chapters such as, e.g., the early detection of crises, the restructuring plan or restructuring moderation. However, the structure of the legislation is not prescribed analogously to conventional patterns of civil procedure rules but, instead, reflects the chronological sequence in practice - starting with the general obligations in the run up to restructuring, subsequently, the Act first of all regulates the contents of the restructuring plan. In the sections below we discuss, besides this restructuring plan, the judicial stabilisation and restructuring framework, the ‘restructuring officer’ and restructuring moderation.

Please note: The extended obligations that arise for executives from the SanInsFoG with regard to detecting crises at an early stage and initiating countermeasures were the subject of a report by Andy Weichler, a German lawyer.

Restructuring plan

The restructuring plan is the starting point for the restructuring proceedings and, therefore, of paramount significance. The overarching objective of the restructuring plan is to avert insolvency or (imminent) illiquidity in order to ensure the continued existence of the business. However, it is the debtor company that has to propose as well as draw up the restructuring plan. Similarly, as in insolvency plan proceedings, here too, the parties that will be affected by the restructuring plan have to be divided into groups for the purpose of voting on it. The groups are set up in due consideration of the legal status of the different parties and on the basis of their economic interests (e.g., secured creditors, unsubordinated unsecured creditors, subordinated creditors). Moreover, holders of share and membership rights will make up a separate group. For the adoption of the plan, it is necessary to have a qualified majority of 75% of the voting rights in each group. 

Please note: This majority rule means that it is possible to reach agreement faster and it is less likely that individual creditors will engage in obstructive behaviour. Moreover, upon notification of StaRUG proceedings the obligations to file for insolvency will be suspended. 

Restructuring moderation and the judicial stabilisation and restructuring framework

Instead of a restructuring plan it is also possible to conclude a mutual settlement agreement  (restructuring settlement agreement) mediated by a court-appointed, independent and experienced restructuring moderator. If this restructuring settlement agreement is confirmed by the court, then the benefit to the company would be, in particular, that the right to contest the respective agreements would be limited in any subsequent insolvency proceedings. The term ‘restructuring moderation’ is understood to mean a ‘formalised mediation process’ that stands fully alongside StaRUG proceedings. In the context of restructuring by means of a restructuring plan, it will however frequently be necessary to obtain support for the negotiations through judicial measures. The instruments available here under the judicial stabilisation and restructuring framework include: 

  • confirmation of the plan by the court,
  • preliminary review of issues,
  • injunction against enforcement and asset recovery as well as
  • confirmation of the restructuring plan.

In order to make use of one of these instruments the competent restructuring court needs to be notified of the restructuring proposal. The company has to add documentation that includes, in particular, a draft of a restructuring plan or at least a restructuring concept.

‘Restructuring officer’

Companies are able to autonomously make use of the StaRUG instruments. However, if it is foreseeable that the requisite majority approval for the plan will not be achieved in all the groups then it would be mandatory for a so-called restructuring officer to be appointed by the court in order to supervise the proceedings. In doing so, the restructuring officer will act impartially by monitoring and supervising the negotiations in order to protect the interests of the creditors in the process. The restructuring officer will thus also provide support, above all, for small and medium-sized enterprises as well as owners of micro-enterprises or consumers when determining their claims in the restructuring plan.


With the StaRUG the legislator has created a good possibility for companies to restructure without having to resort to a court. A restructuring plan makes it possible to reach agreement more swiftly and less likely that individual creditors will engage in obstructive behaviour. Moreover, the obligations to file for insolvency will be suspended via the notification of StaRUG proceedings. For executives there is now no conflict between the obligation to preserve assets and the obligation to pay tax, both of which come with the risk of personal liability. In the legislative procedure, priority has now been given to the obligation to preserve assets and personal liability for the payment of tax has been suspended.

Back to top of page