Reorganising companies early, before insolvency occurs – that is the objective of the Act on the Stabilisation and Restructuring Framework for Businesses (Gesetz über den Stabilisierungs- und Restrukturierungsrahmen für Unternehmen), or StaRUG for short. The StaRUG offers companies more options than out-of-court reorganisation, without any need for insolvency proceedings. The aim is to enable companies to keep trading and preserve jobs.
The StaRUG, also referred to as a preventive restructuring framework, gives debtors an extensive business reorganisation toolbox to facilitate quick and targeted restructuring of their financial liabilities. One important requirement for access to reorganisation under the StaRUG is that illiquidity must not yet have occurred. As with protective shield proceedings, there can be at most imminent illiquidity. So businesses wishing to make use of the options and tools provided by the StaRUG should start to think about preventive reorganisation at an early stage, when the first signs of crisis appear.