Restructuring & Corporate Turnaround for SMEs
Economic crises hit medium-sized companies and entrepreneurs often without warning. Rising energy costs, collapsing orders, supply chain problems or a rise in interest rates can push a previously healthy company into difficulty within a very short time. In this situation, one thing above all counts: time and the right legal adviser by your side.
Reef Rechtsanwälte advises medium-sized companies, GmbH managing directors and entrepreneurs at an early stage, confidentially and in a solution-oriented manner. We are familiar with all the instruments of modern corporate restructuring – from out-of-court settlement through StaRUG proceedings to insolvency plan proceedings – and work with you to develop the strategy that puts your company on a sustainable footing.
Out-of-Court Restructuring: Resolving the Crisis Without Court Proceedings
Out-of-court restructuring is the fastest and most discreet way out of a corporate crisis. It is particularly suitable where the company still has sufficient operational substance and there is a manageable number of principal creditors.
The focus is on direct negotiations with banks, suppliers and other creditors regarding payment deferrals, debt write-downs (haircut), subordination agreements or debt rescheduling. A central instrument in this context is the moratorium – also known as a standstill agreement.
Advantages of out-of-court restructuring:
- Complete confidentiality – no public proceedings, no reputational damage
- The entrepreneur retains full control over the company
- No insolvency entry in the commercial register
- Swift implementation without procedural deadlines
- Flexible, individually tailored solutions with creditors
Important: Out-of-court restructuring requires the willingness of all material creditors to cooperate. If even one material creditor blocks an agreement, the entire plan can fail. In such cases, the StaRUG proceedings offer a decisive way out.
StaRUG – Restructuring Before Insolvency with Statutory Protection
When does StaRUG apply?
StaRUG applies in cases of imminent insolvency – i.e. where the company will likely be unable to meet its payment obligations within the next 24 months. The key point: the company need not yet be insolvent or over-indebted.
The Core Element: The Restructuring Plan
The centrepiece of StaRUG is the restructuring plan, which allows liabilities to creditors to be restructured, deferred, reduced or converted into equity. A decisive advantage: dissenting minority creditors can be outvoted (the so-called cross-class cram-down).
The Moratorium under StaRUG
In parallel to the restructuring plan, the restructuring court may, upon application, issue a stabilisation order (moratorium). This protects the company initially for three months – extendable to up to eight months – against enforcement measures.
Advantages of StaRUG proceedings at a glance:
- No insolvency proceedings – the company remains outside insolvency
- Management retains control – no insolvency administrator
- Confidentiality – the proceedings are not public
- Majority vote suffices – blockade by individual creditors is overcome
- Moratorium protects against enforcement during plan development
- Insolvency filing obligation suspended during ongoing proceedings
Insolvency Plan Proceedings – Orderly Restart with a Perspective
What does the insolvency plan regulate?
- Debt reduction (haircut): Liabilities are reduced to a sustainable level
- Payment deferrals and instalments: Liquidity relief through staggered payments
- Debt-to-equity swap: Claims are converted into equity
- Business continuation: The company, its brand and jobs are preserved
- Structural renewal: Adaptation of the business model under insolvency law protection
Insolvency in Self-Administration and Protective Shield Proceedings
Within the framework of insolvency plan proceedings, the company may also apply for self-administration or protective shield proceedings. In both cases, management remains capable of acting and continues to run the company – accompanied by a court-appointed supervisor (Sachwalter).
Restructuring Strategy: Which Instrument Suits Your Company?
| Criterion | Out-of-Court Restructuring | StaRUG Proceedings | Insolvency Plan Proceedings |
|---|---|---|---|
| Timing | Before imminent insolvency | Imminent insolvency (24 months) | Insolvency / over-indebtedness |
| Public visibility | None | Limited (restructuring court) | Yes (insolvency notice) |
| Creditor consent | 100% required | Majority vote sufficient | Majority vote sufficient |
| Management control | Full | Full | Yes, in self-administration |
| Moratorium / enforcement protection | Contractual only (standstill agreement) | Court moratorium possible | Automatic upon opening of proceedings |
Acting Early – Avoiding Personal Liability of the Managing Director
Acting Early – Avoiding Personal Liability of the Managing Director
Managing directors of a GmbH or GmbH & Co. KG are obliged to file for insolvency without delay upon the occurrence of insolvency or over-indebtedness (§ 15a InsO). Anyone who acts too late is personally liable for payments made after the onset of insolvency.
The good news: those who act early – i.e. already at the stage of imminent insolvency – have legally secured options available through StaRUG and out-of-court restructuring that minimise personal liability risks.
Reef Rechtsanwälte recommends: Contact us as soon as you notice the first warning signs – not only once the crisis has become acute. The earlier we are brought in, the more instruments are available and the greater the chances of success.
Our Advisory Services in the Area of Restructuring & Corporate Turnaround
- Crisis analysis and initial consultation: Assessment of the financial situation and identification of all legal options
- Restructuring concept: Development of a tailor-made restructuring plan
- Creditor negotiations: Conducting negotiations with banks, suppliers, the tax office and other creditors
- Moratorium / standstill agreement: Negotiation and conclusion of standstill agreements
- StaRUG proceedings: Preparation and implementation of the restructuring plan
- Insolvency plan proceedings: Support in self-administration, protective shield proceedings and insolvency plan
- Liability advice for managing directors: Assessment and minimisation of personal liability risks
