Dr. Susann Brackmann
Lawyer

Dr. Susann Brackmann advises German and internationally operating companies on insolvency law, corporate restructuring (incl. under the German Corporate Stabilisation and Restructuring Act) as well as related financing matters, with a focus on supporting her clients in crisis and other special situations, particularly in the context of complex cross-border restructurings. She also has extensive special expertise advising on distressed M&A and NPL-transactions, both on the purchaser’s side and on the seller’s side. Susann’s practice furthermore covers liability avoidance in crisis situations as well as insolvency claw-back claims.

She is a member of the Executive Committee (Geschäftsführender Ausschuss) of the Restructuring and Insolvency Law Working Group (Arbeitsgruppe Sanierung und Insolvenzrecht) of the German Bar Association (Deutscher Anwaltverein) and regularly publishes and speaks as an expert on restructuring and insolvency topics.

Susann joined CMS in 2024. Prior to that, she worked for several years in the restructuring teams of a leading UK law firm and subsequently at a US/UK law firm.

Prof. Dr. Alexandra Schluck-Amend
Lawyer

Prof. Alexandra Schluck-Amend specialises in corporate and insolvency law, focusing on reorganisations and restructurings. She advises on developing and implementing reorganisation concepts in out-of-court and formal insolvency proceedings, including pre-insolvency processes under German law. She supports corporate groups on financing, restructurings, and distressed M&A, with emphasis on mitigating liability risks for parent companies, affiliates, and management. She also advises creditors in crisis situations, helping enforce their interests and define effective strategies.

Her expertise includes avoidance issues, risk reduction, ESG matters, corporate governance, and compliance, with experience in automotive and energy sectors.

She joined CMS in 2002 after studies in business administration and law, and experience at Deutsche Bundesbank, in insolvency administration, and academia. She became partner in 2008 and has led the Restructuring & Insolvency practice since 2018.

She teaches at Heidelberg University, Andrassy University Budapest, and Nuertingen-Geislingen University, and was appointed honorary professor in 2013 and 2025.

Dr. Alina Holze
Lawyer

Dr Alina Holze studied law in Hanover and Rouen. She has been working as a research associate in the team of Dr Susann Brackmann since 2021.

Key Developments and the Latest Trends in Germany – A Legal Perspective

Germany’s restructuring landscape is going through fundamental changes. As global economic pressures rise and once-solid industries face structural disruptions, companies are being pushed to rethink how they sustain long-term viability. The German restructuring market has therefore had to react to this tectonic shift. By implementing and promoting a modern and resilient legal framework and equipping itself with tools designed to help businesses navigate an increasingly complex and competitive environment, German restructuring law has successfully reinvented itself.

I. The Economic Outset – Challenging times for German industry

“Can anything halt the decline of German industry?” – the Financial Times asked on 12 November 2025. The answer to this question is: Yes, the restructuring market can.

Admittedly, this answer is telling – it is half glum, half optimistic. It acknowledges that Germany is indeed in one of the most challenging periods of its history as “Europe’s manufacturing champion”. Confronted with accelerated global digitalisation, ground-shaking technological innovations (AI in general and LLMs in particular) and new competitors on the global market, especially from China, Germany’s industry seems almost paralysed.

Current restructuring and insolvency activity in Germany shows pronounced sector clustering, in particular in (i) real estate development, (ii) chemicals, (iii) fibre/broadband infrastructure, and (iv) the “evergreen” automotive sector which is currently in the transformative process of writing off 140 years of internal combustion engine expertise – values that really ought to be preserved. In real estate development, higher interest rates, a repricing of refinancing risk and persistently elevated construction costs continue to put pressure on project economics and liquidity. In the chemicals sector, structural pressure results from high energy costs (in particular in energy-intensive sub-segments), global overcapacity and fierce international competition, combined with a subdued demand in certain downstream industries. In the fibre/broadband sector, business plans are stressed by slower-than-expected take-up rates, delays in roll-outs and permit grants, and capex inflation, while refinancing windows have tightened significantly. In the automotive sector, the combination of transformation pressure (electrification, software-defined vehicles), cost inflation and global competitive dynamics continues to drive both financial and operational restructurings across OEMs and suppliers.

At the intersection of global socioeconomic pressures and the specific challenges facing the German industrial landscape, restructuring measures are there to enable the investments necessary for sustainable, future-proof and forward-thinking transformations and to give companies the leeway they need to achieve a sustainable turnaround so that they can once again become the powerhouses they once were.

II. Creative Financial Restructuring Solutions

The German legal framework offers a variety of options for conducting successful corporate restructuring proceedings, ranging from amicable out-of-court settlements to court-assisted negotiations and as a last resort to in-court insolvency and restructuring proceedings.

Even in the event of in-court insolvency proceedings, the company must not be stigmatised as a lost cause; German insolvency law encourages debtors to stay in the driver’s seat (debtor-in-possession proceedings) or to apply for a protective shield which gives the company’s management time and the necessary “wiggle room” to develop a thorough and well-thought-out insolvency plan (protective shield proceedings). Finally, the insolvency plan itself does not necessarily lead to a company being liquidated. On the contrary, in many cases, the plan develops alternative scenarios that preserve value and prevent the loss of expertise. This trend was further reinforced by the “StaRUG Scheme”, i.e. the “Act on the Stabilisation and Restructuring Framework for Businesses” which, for the first time, introduced the possibility of restructuring imminently illiquid companies outside of insolvency proceedings and within a statutory framework. As such, the StaRUG Scheme is tailored to financial restructuring proceedings.

We currently see the most creative restructuring solutions in the real estate, energy and infrastructure sectors. Achieving a turnaround in these sectors is particularly challenging where projects are financed through multi-layered structures (SPVs, intercreditor arrangements, mezzanine tranches, bond or promissory note components). In such settings, financiers are often required to agree to sophisticated out-of-court solutions that (a) preserve the company as a going concern and its potential future monetisation and (b) address the hold-out dynamics among exiting lenders. A recurring theme is the need to offer exiting lenders a viable path to value recovery – potentially via structured exit options and value recovery instruments – while simultaneously providing the remaining lenders with a sound, forward-looking financing platform post-restructuring.

III. The Ongoing Success of the StaRUG Scheme

The StaRUG Scheme is both a testament to the ongoing trend of preventive restructuring proceedings as well as a contributor to their success. In 2025 the number of StaRUG cases rose once again: 87 proceedings before 24 courts, including major restructuring proceedings, such as Varta AG or Leoni AG. The StaRUG Scheme filled the gap between consensual pre-insolvency restructuring and restructuring in the context of formal and comprehensive in-court insolvency proceedings.

The StaRUG Scheme offers struggling companies a toolbox that they can use for restructuring without having to open formal insolvency proceedings. At the heart of the StaRUG Scheme lies the restructuring plan, which can technically be drawn up without any or just minimal court involvement. It allows for profound changes in the legal relationships between the debtor and its creditors and shareholders, including claims, security interests, certain intra-group third-party securities as well as shareholder rights. We see the most common use cases in classical financial restructurings, ranging from haircuts and payment deferrals to the redesign of financing and workout documentation, as well as the restructuring of the equity layer through the removal of existing shareholders and the facilitation of the entry of new investors. In addition, the StaRUG Scheme is increasingly used for what are known as “Sleeping Beauty” solutions in which parts of the financing are “parked” (economically dormant) to enable the stabilisation of the company and the completion of project-driven situations.

When conceptualising the restructuring plan, the debtor makes an objective decision as to which creditors and/or shareholders should be included in the plan and which measures are to be taken, e.g. reorganising liabilities or agreeing on “fresh money”.

The creditors and shareholders are strategically put into different stakeholder classes (e.g. one class for shareholders, one class for creditors, etc.). For the restructuring plan to interfere with their respective rights, it must generally be accepted by all of the classes. This requires a 75 % majority vote in each class, whereby the voting rights are determined by the amount of the claim, the value of the security and, in the case of share or membership rights, the debtor’s share of the subscribed capital. However, if the required majority in one class is not achieved, the consent of this class may be replaced by way of a cross-class cram-down, i.e. the required consent of a dissenting creditor class is substituted or deemed given subject to certain conditions. This particularly applies where the debtor can demonstrate that the restructuring plan yields the best outcome compared to the next-best alternative scenario.

IV. Holistic Transformation Approaches

In sectors facing structural transformation, restructurings are frequently no longer purely financial. Instead, stakeholders pursue more comprehensive transformation agendas, including carve-out transactions and deeper digitalisation and sustainability-related adaptations. In practice, this has expanded the toolkit beyond classical restructuring and insolvency law measures towards a full-service approach: corporate/M&A work to implement separations, reorganisations and governance changes; general finance advice to restructure capital structures and document fresh money, super-senior and interim funding, and, increasingly, IP, IT and data-related work to implement and roll out new technical solutions, secure and transfer core intangible assets, manage software and platform dependencies, ensure continuity of critical licences, and address data protection and cybersecurity requirements. These measures are often combined with financing solutions (including fresh money and interim funding) to bridge the period until the transformed business model becomes bankable again.

V. New Wave of NPL and distressed M&A dynamics

Particularly in recent years there has been a significant rise in activities in the non-performing loan (NPL) space. For institutional lenders with concentrations in specific asset classes – most notably real estate – solutions increasingly focus on maximising value in the underlying secured assets. This includes lender-led strategies ranging from NPL enforcement and asset realisation to credit bid-driven ownership pathways, as well as structures involving external specialist players (e.g. trustee/fiduciary arrangements for asset administration and disposal). In parallel, foreign investors are seeking entry points into specific German sectors through distressed portfolio acquisitions, aiming to combine fresh money with risk capital and active stewardship to deliver sustainable turnarounds. In practice, such NPL disposals and work-outs are subject to an increasingly demanding regulatory framework in Germany, in particular under the German Secondary Credit Market Act (Kreditzweitmarktgesetz), which is based on and implements Directive (EU) 2021/2167 on credit servicers and credit purchasers, and amending Directives 2008/48/EC and 2014/17/EU (commonly referred to in Germany as the “Secondary Credit Market Directive”). This regulatory overlay can add execution complexity to NPL transfers and post-closing servicing, including additional documentation, governance and operational requirements. A recurring practical consequence is the need to involve a dedicated (and, where necessary, appropriately regulated) servicer for the acquired exposures where the underlying debtors are small and medium-sized enterprises (SMEs).

VI. The EU Directive Harmonising Certain Aspects of Insolvency Law (EU COM/2022/702)

On 1 April 2026 the EU Directive harmonising certain aspects of insolvency law entered into force and marked another milestone for European insolvency law. It is aimed at removing obstacles to the European single market and its capital market, arising from differing national insolvency laws. As the title of the Directive suggests, it seeks to harmonise certain aspects of the substantive rules of insolvency law in the EU Member States unlike the previous regulations and directives which imposed either rules of private international law for cross-border insolvency proceedings (Regulation (EU) 2015/848) or rules for preventive restructuring proceedings (Directive (EU) 2019/1023). The Directive covers five key areas: avoidance actions, pre-pack proceedings, the duty to file for insolvency, creditors’ committees and asset tracing. Undoubtedly, given the significant cultural differences among the insolvency regimes of EU Member States, this is an ambitious project, and its final outcome remains subject to ongoing debate.

Nevertheless, the Directive is an indicator of a steady trend towards modern and resilient European insolvency legislation, demonstrating a European consensus on insolvency-related issues as well as on corporate issues. As to the latter, the EU plans to create a “28th regime”. The 28th regime mainly focuses on company law, particularly the introduction of a uniform EU-wide legal form for companies. This, in turn, should reassure both European as well as foreign investors of a good cross-border investment climate in the EU, even in distressed situations.

VII. Summary and Outlook

Investors are advised to familiarise themselves with new financing possibilities under the StaRUG Scheme which allows for the inclusion of “fresh money” in a restructuring plan. Distressed companies can only be encouraged to implement early crisis-detection management and to rethink restructuring proceedings, whether they are preventive out-of-court restructuring measures or financial restructuring measures under the StaRUG Scheme. Both options are preferable to insolvency proceedings which often lead to bad debts for suppliers and other creditors as well as to job losses and other damage.

The high number of successful restructuring proceedings and the enormous amount of expertise in Germany mean that companies are able to preserve economic value and expertise, become future-ready and resilient amid the pressures of global transformation. Investors are offered interesting, and sometimes creative, investment opportunities to enter both traditional and future-facing industries in the German market. Persistent European efforts to harmonise insolvency law and facilitate cross-border insolvency proceedings aim to strengthen the EU’s resilience to volatile market conditions and unpredictable trade policies.