StaRUG
Restructuring without insolvency. The Corporate Stabilization and Restructuring Act enables targeted financial restructuring outside of insolvency proceedings – non-public and limited to selected creditors.
The Act on the Stabilization and Restructuring Framework for Companies – abbreviated StaRUG – implements the EU Restructuring Directive (2019/1023) into German law. It provides companies with a modular toolkit of instruments to avert impending insolvency.
The central tool is the restructuring plan. Similar to an insolvency plan, it regulates how claims of certain creditors are restructured – for example, through partial waivers, extensions of terms, or debt rescheduling.
The crucial difference: This is not an insolvency proceeding. The company does not have to file for insolvency, and the process is generally conducted non-publicly. Unlike in insolvency, not all creditors need to be involved. The company can selectively choose which creditor groups are affected by the restructuring plan – for example, only financial creditors, while supplier relationships remain untouched.
Frequently Asked Questions About StaRUG
Is StaRUG only suitable for large companies?
No. Although prominent cases like the Leoni restructuring have made headlines, StaRUG is also suitable for medium-sized companies and, under certain conditions, even for sole proprietors. The decisive factor is not the company size but the nature of the crisis: StaRUG is the right instrument when financial burden is the core problem.
What does a StaRUG procedure cost?
The costs depend on the complexity of the case – especially the number of affected creditor groups and whether a court confirmation of the plan becomes necessary. Generally, the procedural costs are lower than in insolvency proceedings, as no insolvency administrator is appointed.
Can employee claims also be restructured?
No. Claims from employees and entitlements from company pension schemes are explicitly excluded from the StaRUG. Other instruments must be used for labor law restructuring measures.
What happens if the StaRUG procedure fails?
If the restructuring fails or insolvency occurs, the company can still apply for insolvency proceedings – possibly in self-administration. The preliminary work from the StaRUG procedure is not lost but can be incorporated into the insolvency planning.
How long does a StaRUG procedure take?
The duration depends on the individual case. Stabilization orders can be issued for up to three months, and with ongoing plan confirmation for up to eight months. In practice, many procedures last between three and six months – provided the preparation was thorough.