The start of the new year 2021 also marks the start of the new German framework for preventive restructurings. The speed at which the German legislator debated and passed the complex new law is due to the impact which the COVID-19 Pandemic had on the German economy. The new regime implements EU Directive 2019/1023 (Directive on Restructuring and Insolvency; “RID
”). Its aim is to give debtors in financial difficulties, but with prospects of survival, the chance to continue their businesses and prevent insolvency proceedings. The Act on the further Development of Recovery and Insolvency Law (“SanInsFOG
”) and its core element, the Law for the Stabilisation and Restructuring of Enterprises (“StaRUG
”), were published in the Federal Gazette on 29 December 2020 and became effective on 1 January 2021.
In our newsletter we summarise the key features of the new law and discuss its impact on counterparties’ rights as well as specific exemptions for derivatives and financial collateral arrangements.
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