Find Lawyers in Bremen, Germany for Restructuring and Insolvency Law
Restructuring and Insolvency Law Definition
Insolvency proceedings are initiated on request when a debtor can no longer use his assets to satisfy creditors at all or at least not on a timely basis. Creditors can be private individuals as well as corporations. The purpose of insolvency proceedings is to come up with the best way to satisfy creditors. In the process, the insolvency code specifically preserves the value of a business by requiring the development of a restructuring plan known as an insolvency plan.
Germany’s new insolvency law (ESUG), established in 2012 reinforces the idea of insolvency proceedings as a lawful restructuring process. It aims at facilitating the restructuring process of a business by giving creditors more say in the choice of insolvency administrators, by clearing the path to self-administration as well as by expanding and streamlining insolvency plan procedures.
For example, if a business facing default or excessive debt files for insolvency prior to reaching the point of insolvency, then that business is entitled under the insolvency code to use the insolvency proceedings as part of its restructuring process. That means, once its motion for bankruptcy has been granted by a court, the debtor is given a self-administration period of up to three months without any enforcement measures under the supervision of a provisional trustee appointed as part of protective proceedings in which the debtor may produce a restructuring plan to be subsequently applied as an insolvency plan.
As a result of the renewed focus on preserving businesses, the new law has further led to increased qualifications and demands for insolvency administrators and for law firms specializing in insolvency administration. In this context, it doesn’t matter whether an administrator is hired as insolvency administrator as part of regular insolvency proceedings or as a trustee as part of a business’s self-administrative restructuring process.
When it comes to preserving and restructuring a business, it’s imperative to perform an analysis of its current assets, financial position and earnings performance. At the same time, the idea is to break down any complex business models into their individual core elements. This analysis provides the foundation for developing a tailor-made restructuring concept. Such a concept incorporates all restructuring options in line with existing insolvency laws, along with ways to eliminate the causes of insolvency as well as reasonable prospects of successfully maintaining a business, while always keeping in mind the best interests of creditors.
In addition to law and business expertise, administrators charged with the short-term implementation of restructuring measures need strong social skills and assertiveness. After all, it takes an administrator who is accepted and respected by all sides to gain both the trust of all parties involved and the support necessary for implementing an insolvency plan that works in putting a business back on its feet.
The ultimate backbone of any administrator is a law firm with its own highly scalable infrastructure of combined law and business expertise. That’s because transparent and efficient work processes and a thorough understanding of project management are all vital to the successful outcome of any proceedings.
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