Germany: Insolvency/Bankruptcy

German insolvency law's principle of equal creditor treatment faces a critical challenge through Section 131 of the Insolvency Code, which addresses "incongruent coverage" - situations where creditors receive security or satisfaction they weren't entitled to receive, or not in that form or timing. The practical stakes are substantial: within the last month before insolvency filing, objective incongruence alone suffices for avoidance actions, with no requirement to prove the creditor's knowledge of the debto

Companies facing financial distress must carefully evaluate their restructuring options, with protective shield proceedings offering a unique opportunity to prepare an insolvency plan while maintaining existing management. This specialized form of preliminary self-administration requires precise timing and thorough preparation, as it is only available when a company faces imminent illiquidity or over-indebtedness but has not yet become actually illiquid.

The European Union has formally adopted a directive establishing minimum standards for insolvency law harmonization across Member States, covering avoidance actions, asset tracing, pre-pack proceedings, director filing duties, creditors' committees, and transparency measures. While the directive sets baseline requirements in these critical areas, its practical impact on German insolvency law is expected to be limited, as Germany's existing framework already meets or exceeds most of the directive's standards

The principal body representing insolvency creditors is the creditors' assembly, through which creditors jointly exercise their rights vis-a-vis the insolvency debtor, the insolvency court and the insolvency administrator.

Restructuring & Insolvency Comparative Guide for the jurisdiction of Germany, check out our comparative guides section to compare across multiple countries

Frankfurt Regional Court declines to recognize the effect of Projekt Fürst's restructuring plan, but this should not impact the recognition of English Schemes of Arrangement.

For many years, the German fiber market has experienced dynamic growth, driven by high expectations, political agenda, billions in financing at low interest rates...

The Securitisation 2024 guide features over 20 jurisdictions. The guide covers the latest developments in insolvency laws, special-purpose entities, the construction of bankruptcy-remote transactions...

After many had proclaimed the German StaRUG to have failed as an effective preventive restructuring regime, there appears to have been a recent increase in cases.