Esug an important amendment of the german insolvency ordinance
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ESUG – an important amendment of the German Insolvency Ordinance. A brief overview over the main changes. B ackground. Insolvency Ordinance from 1999 EIR from May 2002 Forum shopping Need for improvements. Purpose of the ESUG.

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Esug an important amendment of the german insolvency ordinance

ESUG – an importantamendment of theGerman Insolvency Ordinance

A briefoverviewoverthe

mainchanges


B ackground
Background

  • Insolvency Ordinancefrom 1999

  • EIR from May 2002

  • Forum shopping

  • Needforimprovements


Purpose of the esug
Purpose of the ESUG

  • Primarygoal: insolvencyproceedingshallbecomemoreprojectable

  • Establishing a rescueculture

  • Disempowerment of theinsolvencystigma


The respective amendments i
The respectiveamendments I

  • Increasingthecreditors‘ influence on theadministrator‘sselection:

    byinstituting a preliminarycreditors‘scommittee, s. 21, 22a

    byselection of theadministrator, s. 56a (56 par. 1 3rd sent.)

    Note: twoprofessions! Restructuringexperts vs. Insolvency administrators


The respective amendments ii
The respectiveamendments II

  • Betterinformation of thecourt, s. 13 (forimprovingthequality of thedecisions)

  • See also s. 22 par. 6, 2dn s. GVG and s. 18 par. 4, 2nd s. RPflGfortheeducation of thejudges and judicialofficers

  • Non-reform: concentration of courts


The respective amendments iii
The respectiveamendments III

  • Improvements of the plan proceeding

    • Lessremediesforobstructingcreditors

    • Inclusion of the insolvent company‘sshareholders

    • Debt-equityswap

    • Permissibility of a plan containingsolelydirectionsforhow to proceeduntiltheneststep („verfahrensleitender Plan“)


The respective amendments iv
The respectiveamendments IV

  • Strengthening of the „debtor-in-possession“ (Eigenverwaltung)

    • General admissibility, s. 270

    • Preliminarydip, s. 270a

    • Relationship with company‘sofficialsweakend, s. 276a


The respective amendments v
The respectiveamendments V

  • Incentiveforearlyopening

    • S. 270b: protectiveumbrellaproceeding (Schutzschirmverfahren)

    • Germany‘sreaction to the English Scheme of Arrangement

    • A threemonthsperiodfordrafting a plan

    • Successdependent on communication with stakeholders


Outlook
Outlook

  • The legislatorisexpected to changethementality!

  • Successdepends on theprofessionals

  • Whatisneededaresuccessstories

  • The European competition will notstophere