BMJ: Draft for a restructuring regulation presented

Mar 17, 2021 Benn-Ibler Rechtsanwälte

As part of the reform of insolvency law, the Federal Ministry of Justice (Bundesministerium für Justiz, BMJ) has sent a draft law on the restructuring of companies (Restructuring Regulation – Restrukturierungsordnung, ReO) for review.

The aim of the ReO is to create a preventive restructuring framework that enables debtors to restructure themselves in order to limit the unnecessary liquidation of viable companies. If such companies are in financial difficulties, a judicial pre-insolvency restructuring procedure is to be available to them.

The prerequisite for initiating restructuring proceedings is to be the otherwise "probable" insolvency of the debtor. The core of such proceedings is the restructuring plan. This must be submitted by the debtor and must contain, among other things, the following information:

• Presentation of the economic situation
• Affected creditors and their claims
• Proposed restructuring measures and their duration, in particular a reduction in creditors' claims
• Classes of creditors whose claims will be reduced or deferred
• Impact on jobs
• Reasons why the restructuring process might be successful.

The restructuring plan must be accepted by the creditors concerned. This is the case if the majority of the creditors present in each creditor class agree and if the sum of the claims of the creditors agreeing amounts to at least 75% of the total sum of the claims of the creditors in each class. The plan must then be confirmed by the court.

At the debtor's request, the court may also order a stay of execution to support negotiations on a restructuring plan. This is usually only possible for a period of three months, but can be extended by a further three months in exceptional cases.

In addition, the mandatory appointment of a restructuring agent to assist the debtor and the creditors in the negotiation and preparation of the plan is provided for. The debtor must pay an advance on costs for the remuneration of the restructuring agent.

Draft, BMJ (22.02.2021)