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The German Act on the Further Development of the Restructuring and Insolvency Law (Sanierungs- und Insolvenzrechtsfortentwicklungsgesetz – SanInsFoG) took effect on January 1, 2021, transforming the European Restructuring Directive of June 20, 2019 ((EU) 2019/1023) and introducing a self-administrated restructuring option outside the standard insolvency proceeding.
THE PRE-INSOLVENCY RESTRUCTURING PLAN
The core element of the SanInsFoG is the option of a self-administrated pre-insolvency restructuring by way of a restructuring plan with the support of its creditors. In principle, the restructuring procedure allows the restructuring of a person’s (in most cases a company’s) debt. It includes not only financial debt but all kinds of debt except liabilities towards employees, claims based on deliberately committed unlawful acts as well as administrative fines or monetary penalties. Through the restructuring procedure
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Through implementing the EU Restructuring Directive, German restructuring and insolvency law will be modernized, more effective, and enriched by new instruments.
On 17 December 2020, the German Bundestag passed the Act on the Further Development of the Restructuring and Insolvency Law (SanInsFoG). The SanInsFoG specifically provides for the 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 Act 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 (ESU