Game Change for German Restructurings
By DR. CHRISTOPHER WOLFF & DR. CHRISTIAN MOCK
On March 1, 2012, the "Act Concerning the Improvement of Restructurings under German Insolvency Law" (ESUG) will come into force and effect. The new act will substantially change the landscape for restructurings in Germany: (i) it will materially increase the creditors' influence, (ii) insolvency plan proceedings will be strengthened and shortened, (iii) the frequency of debtor-in-possession proceedings will dramatically rise, and (iv) debtors may want to use the new protective shield mechanism to prepare an insolvency plan. The new rules provided for and will result in new opportunities and risks for market participants. As a result, shareholders, managing directors, senior and junior lenders, agents, as well as servicers, should be well aware of the impact of the changes in order to be well positioned.