Every corporate crisis has its own individual causes and phases. That is why restructuring management requires individual solutions – even in the various stages of the crisis. In some cases, out-of-court restructuring without insolvency proceedings cannot be avoided. This always occurs when you cannot reach a settlement agreement with your creditors. Insolvency does not necessarily mean the "end" for the company, however. The new Insolvency Code, rather, promotes options to reorganise the company by means of planned, structured insolvency proceedings. Debtor-in-possession or protective shield proceedings (section 270a and 270b of the Insolvency Code (InsO)) basically pursue the goal of achieving greater satisfaction for creditors than would be expected, for example, in the case of a collapse. The preservation of the company's value is always the priority. With the court's approval, the existing management remains in charge and steers the company through the turnaround. TMC supports the preparation and draws up a sustainable restructuring strategy as an essential component for the insolvency plan.
Our primary goal is to provide you with sustainable support throughout the entire restructuring process. If desired, we will support you in the implementation of the insolvency plan. In this context, we will be happy to take part in the mandatory communication process with creditors, lenders, insolvency administrators or new investors. Our services include:
An insolvency plan is an alternative to regular insolvency proceedings in the context of an out-of-court restructuring. The aim is to resolve the case of insolvency outside the liquidation rules of the Insolvency Code, which usually results in better satisfaction of creditors.
The pre-packaged plan is drawn up before the application is filed and pre-negotiated or agreed with creditors. It is submitted to the court when the insolvency petition is filed. After approval by the court, the planned measures can be implemented immediately, which can significantly accelerate the insolvency plan procedure. One advantage of the pre-packaged plan is the transparency created with regard to creditors as well as the participation of shareholders and their contribution to the success of the restructuring.
TMC reviews and prepares insolvency and pre-packaged plans. Due to the large number of completed projects with companies that have found themselves on the brink of insolvency, we can draw on a considerable amount of expertise and react quickly and nimbly to unexpected situations. We support you with the following services:
- Preparation of the necessary planning calculations (e.g. integrated continuation planning or plan comparison calculation)
- Comprehensive preparation of the representative part of the insolvency plan (section 220 of the German Insolvency Code (InsO))
- Business management preparation of insolvency and pre-packaged plans
- Business assessment and validation of submitted insolvency plans for the insolvency administration
The protective shield procedure (section 270b of the German Insolvency Code (InsO)) is derived from its US model, Chapter 11 proceedings. The protective shield procedure is a special form of provisional self-administration and is limited to the period between application for commencement of insolvency proceedings and opening of insolvency proceedings. With the support of a trustee, the debtor can draw up a restructuring plan within a period of three months. The protective shield procedure thus takes place outside the insolvency proceedings. In principle, the procedure aims to create incentives for early restructuring and self-administration.
The protective shield procedure offers debtors the opportunity to assume responsibility and influence the restructuring of the company. According to section 270b of the German Insolvency Code (InsO), the prerequisites for this are:
- A justified personal application
- An application for self-administration
- An application for a maximum of three months to submit a reorganisation plan
- The reorganisation plan must not be obviously futile
We offer our clients comprehensive support in every stage of the process. This includes preparation and drafting of applications and the recovery plan. Additionally, we assist in the implementation of reorganisation in the proceedings and in the selection of the right trustee. If necessary, we take on responsibility as corporate manager or CRO, e.g. to build trust with stakeholders and to reduce risks for the management.
The purpose of a debtor-in-possession procedure is to facilitate reorganisation of the company. The power of disposal as well as responsibility and control over the restructuring is not transferred to the insolvency administrator when insolvency proceedings are opened, but remains in the hands of the company's management (section 270 para. 1 cl. 1 of the German Insolvency Code (InsO)). The restructuring, including administration and disposal of the insolvent estate, is the responsibility of the debtor under the supervision of a trustee.
Debtor-in-possession procedures can only be considered as an option if this would not mean any disadvantages for creditors. In this case, certain requirements have to be fulfilled, which we examine and prepare for our clients, such as:
- Demonstration of facts that show that there will not be any disadvantage for creditors
- Presentation of the economic advantages offered by debtor-in-possession proceedings for creditors
- Support in the preparation of the application for self-administration
A debtor-in-possession procedure requires not only determination to implement the reorganisation measures, but also profound business and legal knowledge. TMC supports the "self-administrating managing director" as well as the trustee in this regard.
When applying for a protective shield procedure, the applicant must submit a certificate issued by a consultant, auditor or lawyer with insolvency experience. The certificate confirms that the company is not yet considered insolvent, but is threatened by insolvency or excessive over-indebtedness. In addition, the company's ability to be restructured must be assessed as feasible. The certificate pursuant to section 270b (1) cl. 3 of the Insolvency Code (InsO) is a prerequisite for the protective shield procedure. We are qualified to issue the certificate in accordance with the IDW standard (certificate according to section 270b of the Insolvency Code (InsO – IDW S 9)).