On 16 March 2021, the German Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht, or BaFin) declared Greensill Bank AG (Greensill) to be an indemnification case, meaning that German deposit insurance institutions can compensate the bank’s creditors.

BaFin had previously filed an insolvency petition against Greensill, and the insolvency court in Bremen opened insolvency proceedings on 16 March 2021. It appointed an insolvency administrator who is now responsible for managing Greensill’s affairs.

The COVID-19 pandemic in Germany is significantly affecting commercial landlords and tenants. The German legislator has taken various measures to mitigate the consequences of officially ordered business closures during lockdown and other pandemic-related adverse effects. 

With each extension, the scope of the suspension of the obligation to file for insolvency which was first introduced in March 2020 became more and more limited.

On 1 January 2021, the German Law for the Further Development of the Restructuring and Insolvency Laws (SanInsFoG) came into force.

Crucially, this contains a stabilisation and restructuring framework for businesses (StaRUG). Set out within this are new procedures for out-of-court pre-insolvency restructurings in Germany (the German Scheme), introduced in connection with the Directive on restructuring and insolvency of 20 June 2019 ((EU) 2019/1023) (Restructuring Directive). Also worthy of mention is the fact that the German Insolvency Code has undergone significant changes.

The Further Development Act on Restructuring and Insolvency Law (Sanierungsrechtsfortentwicklungsgesetz, or SanInsFoG2) came into force at the beginning of 2021, marking the final implementation of Germany's latest insolvency law innovations.

Here, we outline how the original, more extensive plans and draft laws from autumn 2020 compare with what was ultimately implemented.

Which provisions weren't implemented?

The SanInsFoG introduces the possibility of early risk identification and preventive restructuring before the stage of insolvency maturity.

German Act on the Stabilization and Restructuring Framework for Companies (Gesetz über den Stabilisierungs- und Restrukturierungsrahmen, StaRUG) facilitates restructuring.

A business concept that business partners are also convinced of, despite the threat of insolvency? The German Act on the Stabilization and Restructuring Framework for Enterprises (StaRUG) helps companies to get through the crisis without bankruptcy.

Restructuring Without Insolvency: What is it about?

By judgment of 26 January 2021 (docket number: 3 AZR 878/16, 3 AZR 878/17) the Federal Labour Court (Bundesarbeitsgericht – BAG) has ruled that the acquirer of an insolvent company is only liable for vested entitlements and claims to occupational pension that had been earned after the opening of insolvency proceedings. He is not liable for the pension based on periods before, even if the German Insolvency Protection Fund (PSV) does not fully cover this part of the pension.

Facts / Background:

Over the last 12 months, global markets have been amazingly resilient, indeed even buoyant, aided in large part by governments around Europe and the world providing seemingly unlimited funding and extensive financial stabilisation measures, such as quantitative easing.

This, coupled with protective legislation for companies to prevent insolvency filings and to ensure continued trading – for example, moratoriums, relaxations on insolvency filing obligations and restrictions on creditor actions – has given businesses significant breathing space and prevented widespread failures.

I. Overview and Background

A report about the administrative practice of the German Takeover Panel in the last decade

The exemption from the requirement to launch a mandatory offer based on the restructuring of a target company is the most frequently applied exemption from the mandatory offer procedure in German takeover law. In view of the expected increase of restructuring cases due to the COVID-19 pandemic, it is likely to become even more important.