Contrary to the widespread stigma surrounding insolvency in Germany, self-administration proceedings offer various advantages for entrepreneurs, employees, and creditors. In particular, the creditor protective shield procedure under Section 270b of the German Insolvency Code (InsO) can increase the chances of a successful and early restructuring under self-administration. The management remains in control of the company during the proceedings under the supervision of a trustee proposed by the company. The necessary preconditions for initiating the protective shield procedure are the existence of over-indebtedness or imminent insolvency and little prospect for a successful restructuring. Both must be certified for the insolvency court by a third party with expertise in restructuring and bankruptcy issues.

• A German subsidiary undergoing restructuring is acquired by a Dutch software company for strategic positioning in the German market
• The turnaround fails due to market disruption and expiring product life cycles in the majority of segments, resulting in a period of loss-making lasting several years
• Smaller sub-segments are profitable and so able to continue as a going concern but the main business units are not
• Continuation only possible through financing provided by the parent company which is to be discontinued in the near future

During insolvency proceedings, the (provisional) insolvency administrator faces not only legal challenges but also business issues that require considerable commercial and insolvency law expertise. For example, a sound liquidity and income plan must be developed as quickly as possible, taking account of the special features involved in insolvency proceedings. At the same time, measures to secure or increase the assets must be evaluated and operationally implemented. Clarification is needed on the extent to which the whole or individual parts of the affected company can continue to operate and so develop a strategy for further action. While a distressed M&A process often has to be set up in the event of a (partial) ability to continue as a going concern, it is also important to ensure an orderly process in a liquidation scenario. Finally, from the perspective of the insolvency administrator, there is often a requirement for a retrospective determination of the frequency of insolvency cases.

• A traditional company group in the textile sector with a long history of losses due to an inadequate cost structure files for insolvency as shareholders refuse to finance further losses

When companies find themselves in a crisis, financiers and other stakeholders usually demand the preparation of a restructuring report (opinion) by a neutral external expert, among other things as a basis for board decisions and in complying with regulatory obligations. The report provides an independent and objective assessment of the company’s ability to be reorganized by analyzing its capability to continue as a growing concern, to compete and generate profit. The focus is on examining the root causes of the crisis and developing a positive and integrated restructuring solution. A restructuring report therefore not only serves as a basis for decision-making by stakeholders but also offers the company’s governing body protection against rescission and liability risks. Consequently, a restructuring appraisal at best provides new room for maneuver and paves the way for a successful reorganization by implementing agreed measures.

• The client is a German textile retail chain that generates operational losses and runs a loss-making network of stores in southern Germany;
• As well as the planning, the expert report also includes the formulation and analysis of already planned optimization and further business model measures.