Preventive restructuring

Reorganisation at an early stage of a crisis
Preventive restructuring

Preventive reorganisation - before insolvency

Preventive reorganisation, also referred to as pre-insolvency restructuring or a preventive restructuring framework, starts before a company becomes insolvent. This particularly benefits companies that have a properly functioning business model, but are threatened with insolvency due to the current economic situation. Under the new procedure, which entered into force on 1 January 2021, the company itself decides whether to seek the support of the court. Reorganisation efforts are merely to be reported to the court. Facilitation of the reorganisation is also conceivable, the aim of which is to enable the company to reach a settlement with its creditors regarding its liabilities.

This is what you can expect from us

Why dhpg?

In good hands throughout the process

Our aim and objective is to guide companies effectively through a crisis. With dhpg at your side, you have a partner who thinks and drives restructuring holistically. From analysis to implementation. From advice on legal and tax issues to business management support.


80 experts working in a network

No matter what the challenge, we have management consultants, auditors, tax advisors and lawyers on board to take care of your needs. And in our work, we always think outside the box.


Experienced in crises

We have been assisting companies in various stages of crises for decades. As experienced advisors, we are able to make a rapid yet well-founded assessment while making use of the entire range of crisis management tools.


Strong in implementation

Our priorities are to preserve companies and secure jobs in harmony with the interests of creditors. We build on sustainable strategies and implement them together with you.

Your contact persons for questions regarding preventive restructuring

Would you like to get together for a personal meeting? We would be happy to schedule a non-binding appointment with you so that we can get to know each other. We look forward to your call or e-mail and to meeting you.

To the contact persons

FAQ - Questions on preventive restructuring

What is meant by preventive reorganisation/pre-insolvency reorganisation?

The German Act on the Stabilisation and Restructuring Framework for Companies (Unternehmensstabilisierungs- und -restrukturierungsgesetz - StaRuG) transposes the 2019 EU Restructuring Directive into German law. In contrast to traditional insolvency proceedings (regular insolvency proceedings, insolvency proceedings in self-administration, protective shield proceedings), preventive restructuring starts earlier - i.e. before a company is insolvent. This is intended in particular to help companies whose business model is fundamentally sound but which have temporarily run into difficulties. The German Act on the Stabilisation and Restructuring Framework for Companies entered into force on 1 January 2021.

What is special about the German Company Stabilisation and Restructuring Act (StaRUG)?

Since 1 January 2021, a new restructuring law based on the Company Stabilisation and Restructuring Act (StaRUG) has been in force. Under the StaRUG, companies can for the first time reorganise themselves on the basis of a restructuring plan without insolvency proceedings if at least 75% of their creditors agree to such. An insolvency court does not necessarily have to be called upon, but the proceedings must be notified and a restructuring commissioner can be appointed by the court if the company concerned wishes to do so or if creditor rights are interfered with. The restructuring procedure is open to companies that are only threatened with insolvency. Threatened insolvency is deemed to be the case if insolvency is looming within a forecasted period of generally two years. If there is not merely a threat of insolvency, but (actual) insolvency or overindebtedness, an insolvency application must be filed. A company is then required to continuously monitor the continued viability of the company and to carry out 24-month liquidity planning in order to recognise a (threatened) insolvency or over-indebtedness in time. The German Act on the Further Development of Reorganisation and Insolvency Law (SanInsFoG) has also revised the provisions laid down in the Insolvency Code. Furthermore, an insolvent company must file for insolvency immediately, within three weeks at the latest. If this is not done, the managing director is liable to prosecution. The same applies in the case of over-indebtedness, whereby the managing director then has a period of up to six weeks to file for insolvency. There is no obligation to file for insolvency despite computational over-indebtedness of the company if it is for the most part likely that the company can be continued in the next 12 months (positive forecast of continued liability). 

Who can benefit from preventive rehabilitation?

The restructuring procedure under the StaRuG is open to companies that are expected to become insolvent within a forecasted period of two years. Companies that are already insolvent or over-indebted are excluded. Especially companies whose forecast at present does not look good due to the Corona crisis, but which operate profitably under normal circumstances, can benefit from this procedure. These companies can achieve a debt cut with a restructuring plan and then continue to operate. Because the restructuring procedure takes effect before actual insolvency, certain relief, such as insolvency benefits paid by the employment agency, cannot be claimed.

What is the role of the restructuring plan?

At the core of preventive restructuring or the preventive restructuring framework is the so-called restructuring plan. This is an agreement between the company and its creditors and is similar to the insolvency plan already familiar from the Insolvency Code. Not all creditors must necessarily be included in the restructuring plan. The creditors involved are divided into different groups and treated equally therein. The restructuring plan is accompanied by a statement of assets and liabilities and an explanatory statement that the company is to be reorganised upon completion of the proceedings. The restructuring plan is deemed to be accepted if three-quarters of the voting rights in each group are cast to accept the plan. The voting rights are based on the amount of the claim. The approval of a group can be waived under certain conditions. This is particularly the case if the group is not placed in a worse position by the restructuring plan. In order to protect creditors and the management, payments made under the restructuring plan are generally not subject to contestation, nor do they give rise to any liability.

What is the role that courts play in restructuring proceedings?

The company concerned decides for itself to what extent it intends to make use of the courts. First of all, the project merely has to be notified to the court. The notification is not made public (in contrast to insolvency proceedings). Then, at the request of the company, the competent court may

  • Carry out the vote on the insolvency plan 
  • Have the restructuring plan confirmed by the court
  • Review key questions in advance
  • Restrict enforcement, foreclosure and realisation actions by creditors

The originally envisaged possibility for the company to terminate unprofitable contractual relationships with approval of the court was ultimately not implemented due to constitutional concerns.
As a rule of thumb, court action is only taken if and to the extent necessary to make the restructuring successful, even against the will of one or more creditors. If the company petitions for the support of the court, the court may appoint a restructuring officer. The restructuring officer supervises the restructuring. If insolvency or over-indebtedness occurs during the proceedings, the court must be informed of such. The proceedings may then be continued in individual cases if this would be advantageous for the creditors. A restructuring settlement reached through restructuring facilitation can also be confirmed by the court.

Are there critical issues in the process?

A restructuring procedure must be well prepared. For example, a restructuring plan or at least the restructuring concept must accompany notification of the restructuring project. As soon as the court has to be involved because of individual issues, even more detailed and extensive documents have to be submitted, for example liquidity plans. Another challenge for the company is to secure liquidity during the proceedings. In such an uncertain situation, bank loans will no longer be available, and there are no benefits with which to prop up liquidity as is the case in an insolvency application procedure (for example, through insolvency benefits). Here it is important for an advisor experienced in corporate restructuring to work out viable solutions for the company with its customers and suppliers in the short term in order to enable the restructuring, which is in the interest of all parties involved. Furthermore, the restructuring process cannot interfere with employee claims. An accompanying reorganisation of the workforce under labour law provisions outside the actual restructuring process is often necessary as well in order to restructure the company for the long term.

Preventive restructuring

Preventive reorganisation or pre-insolvency reorganisation or a preventive restructuring framework is a procedure prescribed by the EU that has been transposed into German law with effect from 1 January 2021. It is open to companies on the brink of insolvency, but not in the case of actual insolvency or overindebtedness. Companies are put in a position to restructure. To this end, a restructuring plan is drawn up, serving as something akin to a settlement between the company and its creditors. The initiation of proceedings is not made public, thus removing the stigma of insolvency. Nor does a court have to necessarily be involved. Alternatively, a restructuring facilitator can be appointed to mediate between the company and its creditors.


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