As described in our Client Alert “The new German business stabilization and restructuring regime ("German Scheme")" dated 12 October 2020, the German Federal Ministry of Justice and Consumer Protection had presented a draft bill (the "Original Bill") to introduce a new business stabilization and restructuring framework - the new "German Scheme" - into German law.
The German Federal Government has now presented a revised draft bill for the German Scheme (the "Revised Bill"). The Revised Bill retains the general concept of the German Scheme proposed in the Original Bill and the majority of amendments constitute technical adjustments, clarifications and clean-ups. The substantive changes made in the Revised Bill can be summarized as follows:
- Business judgment rule for the duty to protect creditors’ interests
- Discretion of the court to terminate the restructuring proceedings upon the occurrence of insolvency
- Modifications to the absolute priority rule
- Privilege on claw-back only for new money financings
- Fewer instances in which the appointment of a restructuring officer is mandatory