Last month, the German Federal Ministry of Justice published draft legislation that could fundamentally change the restructuring landscape in Germany.
An essential part of the law is the introduction of a corporate stabilisation and restructuring regime, which establishes a comprehensive legal framework for non-consensual out-of-court restructurings in Germany on the basis of the EU's 2019 restructuring directive.
Once enacted, the framework will fill a gap in Germany's restructuring landscape, which currently lacks pre-insolvency proceedings akin to the UK scheme of arrangement and other preventive frameworks, such as in the Netherlands.
In addition to several other legislative changes, the law also makes amendments to Germany's:
- Insolvency Code, which stem from the results of an October 2018 evaluation of Germany's law on the restructurings of corporate enterprises;
- COVID-19 legislation to further mitigate the effects of the pandemic.
Although a very ambitious legislative timeline, we anticipate that the law will come into force on 1 January 2021.
Once enacted, the framework will fill a gap in Germany's restructuring landscape, which currently lacks pre-insolvency proceedings