INKOVEMA Podcast „Well through time“

#31 – StaRUG – Reorganisation and conflict culture.

Mediation skills for the economic restructuring and stabilisation of companies in distress.

Lines of development from bankruptcy and insolvency law to an entrepreneurial reorganisation culture.

In conversation with Lucas Flöther

Well through time. The podcast about mediation, conflict coaching and organisational consulting.

Lawyer Prof Dr Lucas Flöther, expert in insolvency and reorganisation law. Currently responsible for the insolvency of Air Berlin. He teaches insolvency and enforcement law at MLU Halle and has been the spokesperson for the Gravenbrucher Kreis, an association of Germany's leading insolvency administrators and restructuring experts, since 2015. As the youngest insolvency administrator in Germany, Lucas Flöther has accompanied and shaped the developments from classic, break-up-orientated bankruptcy law to insolvency and self-administration law to modern restructuring law like hardly anyone else in Germany. In an interview with Sascha Weigel, he traces the key lines of development.

A. Contents:

1st StaRUG 2021:

  • Preliminary highlight of a modernised restructuring law for companies in (financial) economic difficulties.
  • Debtor-activated reorganisation right in the event of economic difficulties
  • Applicable for foreseeable financing requirements in 12-24 months.

2. historical lines of development from creditor-driven bankruptcy law to debtor-activated reorganisation law

  • Until 1999: Bankruptcy Code
    • Classic bankruptcy law => creditor-driven break-up orientation
    • Insolvency administrator = liquidator, liquidator
    • Management (Managing Director) = Managing Director was removed.
  • From 1999: Insolvency Code
    • Modernised insolvency law => Examination of restructuring options
    • Insolvency administrator = New role as trustee in self-administration proceedings became possible.
    • Management = In exceptional cases, self-administration was possible (e.g. by the previous managing director).
    • Findings: economic break-up regularly brings less for creditors than going concern activities. In addition, job security is possible. Approaches to a learning culture for the company as a result of a legislative learning curve from British and US legal cultures (Chapter 11 proceedings)
  • From 2012: ESUG – Act to further facilitate the reorganisation of companies
    • Self-administration => The exceptional case of self-administration is declared the rule.
  • From 2021: StaRUG – Act on the Stabilisation and Restructuring of Companies
    • Pre-insolvency phase => debtor-activated reorganisation right
    • Applicable in the event of foreseeable „financial difficulties in 12-24 months“
    • Management => crisis-orientated work, no incapacitation in (official) crisis management
    • Learning and error culture is established
    • procedure is more entrepreneurial, but only serves the financial reorganisation of companies.

The official crisis status

can – with the StaRUG – lose its terribleness for management in the future,

very similar to the concept of conflict

thanks to the mediative idea for managers.

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