StaRUG

StaRUG gives a German company a court supported restructuring before the statutory duty to file for insolvency arises. Entry requires imminent inability to pay debts, judged on a forecast rather than on a missed payment, and the timing is the point: it opens a door before the filing deadline closes it.

It is modular. The company uses only the parts of the court process it needs, from a stabilisation order that holds enforcement off while a deal is negotiated, up to full confirmation of a plan binding dissenting creditors. The board stays in control throughout.

Classes approve at 75% by value. Cross class cram down requires three things rather than the two an English plan needs: the dissenting class must be no worse off than without the plan, it must receive an appropriate share of the value the plan creates, and a majority of the voting classes must be in favour.

Two limits define its use. Germany implemented the absolute priority rule, subject to narrow exceptions, so a plan leaving value with a class junior to a dissenting one is very difficult to confirm, which rules out outcomes an English court can sanction. And employee claims and pension entitlements cannot be compromised at all, which is why a group whose central problem is its pension liability still ends up in a formal insolvency procedure.