StaRUG procedure

• No, employee claims and personnel measures cannot be adjusted under the StaRUG. These are only possible in insolvency proceedings. Labor law simplifications that apply in insolvency proceedings are also not applicable here.

No, adjustments or terminations of current contracts are only possible in insolvency proceedings. Any necessary changes must be negotiated by mutual agreement with the contracting parties.

For the plan to be confirmed by the court, at least 75% of the creditors of each group must agree. In the event of non-approval, the plan can still be confirmed if the majority of the creditor groups support the restructuring and promise the best possible satisfaction of creditors (so-called cross-class cram-down).

The debtor implements the restructuring process on its own initiative, draws up the restructuring plan and selects the creditors to be involved. The plan is submitted to the creditors for a vote and, if approved by at least 75% of the creditors of each group, is confirmed by the restructuring court.

As a rule, restructuring should not last longer than six months, but can be extended by a further six months if necessary. A well-prepared restructuring can also be completed within a few weeks.

• The management must protect the interests of the creditors and is liable for damages caused by late filing for insolvency. When the restructuring is reported to the court, certain liability risks are exposed and the court decides whether to continue the restructuring or initiate insolvency proceedings.
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The StaRUG, the law on the stabilization and restructuring framework for companies, came into force on 1 January 2021. Its purpose is to support companies in financial difficulties through various instruments in order to avoid insolvency. The core of the StaRUG is the restructuring plan, which defines measures to stabilize and restructure the company.

The restructuring plan makes it possible to shape various legal relationships, in particular interventions in the company’s debts and securities. Receivables can be reduced, deferred or converted into equity. In addition, new financing and its collateral can be included in the plan, whereby shareholders can also be involved.

A restructuring officer is appointed by the court to ensure compliance with the requirements of the StaRUG and to protect the interests of creditors. He supports the court and monitors the process, but remains neutral and independent.

All companies, except banks and insurance companies, can make use of the StaRUG, provided they are not yet insolvent or over-indebted, but an imminent insolvency is likely within the next 24 months.