New German Insolvency Law Rules to Facilitate Restructurings, Debt-Equity Swaps and Debtor in Possession



On 1 March 2012 new German insolvency law rules will come into effect which are intended to facilitate and promote debtor-in-possession proceedings and the use of restructuring plans and debt-equity swaps. In addition, the new insolvency law will introduce new rules to enhance creditor autonomy and control, in particular over the appointment of the insolvency administrator. When it comes into effect the new insolvency law is likely to drastically change the rule set for insolvency proceedings in Germany, increasing the number of plan proceedings versus liquidations and making distressed investment targets more attractive to financial investors. It will also further align German insolvency rules to international standards, in particular to US Chapter 11 proceedings.

With its new rules the German legislator has reacted to increasing criticism among German insolvency law experts about the unwieldy German legal environment for company restructurings. Over the past years there have been several cases of German distressed companies that have relocated their centre of main interest (COMI) to the United Kingdom to make use of a legal environment which was perceived to be more restructuring friendly to debtors and major creditors...

Please see full alert below for more information.

LOADING PDF: If there are any problems, click here to download the file.

Published In: Bankruptcy Updates, Business Organization Updates, General Business Updates, Finance & Banking Updates, International Trade Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© K&L Gates LLP | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »