Share Facebook Twitter Linked In. Follow Please login to follow content. Register now for your free, tailored, daily legal newsfeed service. Germany May 5 Debtor-in-possession DIP proceedings: German insolvency law allows distressed companies to restructure themselves without losing control over their business and the restructuring process. It is no longer necessary that an insolvency administrator in the traditional German style takes over the operation of the business and exercises complete control at the expense of existing management and shareholders.
Instead, the distressed company can remain in charge and operate its business, in almost all practical cases with the support of an insolvency professional as chief restructuring officer, who is trusted by the existing management. The court only appoints an insolvency professional to supervise the company so-called Sachwalter , often translated as trustee.
If planned in advance and well prepared, debtor-in-possession proceedings can allow for a complete restructuring process in less than eight months. Insolvency plan: Another feature of German insolvency law is the so-called Insolvenzplan often translated as insolvency plan.
Such proposal may even involve a total squeeze-out of existing shareholders. Only the company or, seldomly, the trustee upon instruction of the creditors can present such a plan.
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If the plan is approved by the creditors, the legal steps proposed therein take immediate effect without further documents or additional process. Creditors must approve in groups, which are set out in the plan presented by the company. There may be any number of groups, as long as creditors with a comparable economic interest are put in the same group and treated equally.
The plan is approved if in each group the approving creditors have the majority in terms of headcount and volume of claims.
Insolvenzplan | German to Polish | Law (general)
The plan can be forced upon opposing groups, if a majority of the groups vote for the plan. The only test for a cram-down is that the opposing group must not be worse off with the plan than without, the latter normally being a liquidation scenario. A creditor cannot argue that it would be better off with a different plan. Financing of restructuring measures: Unlike in Chapter 11 proceedings, German insolvencies do not use DIP financing because German financial institutions do not accept a reduction in the value of their collateral.
The third area where the reform aims at facilitating the restructuring of insolvent companies is the law on debtor-in-possession proceedings Eigenverwaltung. While these proceedings already exist under the current law, they have in the past not been used regularly. This insecurity means that companies are reluctant to apply for the protection that insolvency proceedings can offer already at an early stage where the chances of a successful restructuring are still best.
Instead they delay the filing and attempt to achieve a turn-around by negotiated solutions outside of the insolvency proceedings. State agency asks people to report moose sightings. Edward L Rose Conservancy shared a link. German Edition. Edward L Rose Conservancy.
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Related Insolvenzplan (German Edition)
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