Vol 17 (2020) - Issue 5

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Implementation of the EU Directive on Restructuring and Insolvency: A Quick and Effective, thereby Cost-Efficient ‘German Scheme’ in the Aftermath of COVID-19

Synopsis
The imminent 'German Scheme', driven by the 'EUDirective on Insolvency and Restructuring', overlaps with an ongoing review of the German debtor-inpossession insolvency process dubbed 'rescue umbrella procedure'. Whilst strong industry voices advocate for a swift and pragmatic implementation of the Directive's preventive restructuring framework to manage the aftermath of COVID-19, others would like to see (variations of) the 'rescue umbrella' steering or even 'hibernating' troubled German companies through the crisis. Both options should be available and decided on a case-by-case basis. The article demonstrates that the Directive's objectives: quick, effective and thereby cost-efficient, can be achieved by underpinning the 'German Scheme's' legal framework with tailored, successive restructuring reviews, building into a modular system. These economic reviews match the Directive's 'milestones', likelihood of insolvency, drafting and negotiation of the restructuring plan and the prospects of the restructuring plan to prevent the debtor's insolvency; the latter to be reviewed by the court without delay when confirming a voted plan, ideally based on the reviews already available. The authors further propose for the expert providing such reviews to be appointed as PIFOR to best achieve the Directive's objectives.