Protective Shield Procedure
Act early before insolvency occurs. The protective shield gives you up to three months to develop a restructuring solution – protected from enforcement measures.
The protective shield procedure is a special form of preliminary self-administration. It was introduced in 2012 with the ESUG (Law to further facilitate the restructuring of companies) and anchored in § 270d InsO.
The core: The court grants the company a period of up to three months to prepare an insolvency plan or another restructuring solution (or to present it already prepared before insolvency, the so-called prepack plan). During this time, business operations continue under the conditions of self-administration.
The protective shield procedure thus combines two advantages: the legal protection of a court proceeding without the designation as insolvency proceedings with the entrepreneurial freedom of self-administration.
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Frequently Asked Questions about Protective Shield Procedure
Who issues the certificate according to § 270d InsO?
The certificate must be issued by a tax advisor, auditor, or lawyer experienced in insolvency matters. Important: The issuer must not subsequently act as the administrator in the proceedings. The certificate confirms that there is no insolvency and that the restructuring is not obviously hopeless.
What happens if insolvency occurs during the protective shield proceedings?
If insolvency occurs during the protective shield phase, the court may lift the protective shield proceedings. Usually, the proceedings will then continue as regular preliminary self-administration, provided the conditions are met. Careful liquidity planning is therefore essential.
Can I propose the administrator myself?
Yes – this is one of the main advantages of the protective shield proceedings. The court may only deviate from a proposal if the proposed person is obviously unsuitable. This right to have a say allows for the appointment of an administrator who understands the company and the industry.
How does the protective shield differ from the StaRUG?
Both instruments require that insolvency has not yet occurred. However, the protective shield is an insolvency procedure – an insolvency application is filed. In contrast, the StaRUG enables restructuring outside of insolvency and is limited to financial restructuring. There is no insolvency allowance under StaRUG, and it does not offer the possibility to terminate burdensome contracts or take labor law measures.