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Act on the Stabilisation and Restructuring Framework for Businesses (StaRUG)

The European Directive passed by the European Parliament on 20 June 2019 governing preventive restructuring frameworks and the evaluation of the Act to Simplify the Restructuring of Businesses (ESUG) adopted by the German Bundestag in 2011 have triggered further development and amendment of restructuring and insolvency law in Germany. Following a ministerial bill prepared by the Federal Ministry for Justice and Consumer Protection, a draft bill for the further development of restructuring and insolvency law (SansInsFoG) was presented in September 2020. The directive requirements for preventive restructuring frameworks, which are provided for in SanInsFoG and include pre-insolvency restructuring support for businesses, have been implemented in the Act on the Stabilisation and Restructuring Framework for Businesses (StaRUG). This means that, starting in January 2021, German businesses will also be able to use this as a basis for successful restructuring using a cross-class cram-down mechanism, a moratorium and other restructuring tools. This act will place Germany in a competitive position in the future when it comes to the restructuring of businesses. This is essential, since other European member states are also modernising and expanding the possibilities for restructuring based on the EU directive.
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