Government draft of law implements EU Restructuring Framework, and introduces new restructuring instruments.

On 14 October 2020, the German Federal Government published a government draft of the Act on the Further Development of the Restructuring and Insolvency Law (SanInsFoG). This government draft primarily provides for the highly anticipated implementation of Directive (EU) 2019/1023 on Preventive Restructuring Frameworks (Restructuring Directive) into German law. In addition to the adoption of a Law on the Stabilization and Restructuring Framework for Enterprises (StaRUG), which serves to implement the Restructuring Directive, the draft contains several other reforms of German insolvency and restructuring law. In particular, the Insolvency Code shall be adjusted in those areas where the Federal Government saw need for improvement following the evaluation of the Law to Further Facilitate the Restructuring of Enterprises (ESUG) passed in 2011. According to the Federal Government’s timetable, the law shall become effective in substantial parts as soon as 1 January 2021.