StaRUG: The preliminary review

Prior to court-supervised plan voting, a court-supervised preliminary review meeting may be scheduled, either upon application by the debtor or by the restructuring court ex officio, if it considers this useful. The reason for such a preliminary review is to answer all questions in advance that may be of significance for plan confirmation. In this regard, section 46 (1) sentence 2 of the Act on the Stabilisation and Restructuring Framework for Businesses (Unternehmensstabilisierungs- und -restrukturierungsgesetz, StaRUG) provides a list – which is not exhaustive – of possible issues, namely classification into groups, conferral of voting rights, and imminent illiquidity.

The restructuring court invites the parties affected by the plan to attend the meeting with seven days’ notice. The meeting notice is to indicate that the meeting may be held even without the attendance of all parties affected by the plan. The court may instruct the debtor to carry out the service of meeting notices.

Pursuant to section 46 (2) StaRUG, the court summarises the result of the preliminary review in a notice. This notice has no binding effect on the further procedure. However, if the restructuring plan is sufficiently specific, the notice will give the parties concerned planning certainty, because if there is a subsequent departure from it, the court will in most cases promptly draw attention to this and give the parties concerned the opportunity to comment.

Since a restructuring plan does not necessarily have to be voted on in a court procedure, section 47 StaRUG allows the debtor to apply for a preliminary review by the restructuring court also in the case of non-court-supervised plan voting. This preliminary review essentially follows the parameters of section 46 StaRUG, although section 47 StaRUG does not provide for a preliminary review ex officio. The preliminary review may cover any issue that is of significance for subsequent plan confirmation, including, in particular, the requirements regarding plan voting organised privately and autonomously.

The parties affected by the plan are to be heard as part of the preliminary review (section 48 (1) StaRUG). For this purpose, the restructuring court can schedule a hearing meeting or conduct the hearing in writing.

The court summarises the result of the preliminary review in a notice, which again has no definitively binding effect. Pursuant to section 48 (2) sentence 2 StaRUG, the notice should be issued within two weeks after the application is lodged or, if a hearing meeting is held, within two weeks of that meeting. If the preliminary review covers several issues, or in the case of significant complexity, a longer period for rendering a decision may be justified.

Dr H. Philipp Esser, LL.M. (Chicago), Attorney at Law

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