References	35

Despitethestronglegalpositionoftheinsolvencyadministrator,thefundamental decisions are to be made by the creditors. To this purpose, creditors either establish a creditors’ committee and/or come together in the so-called creditors’ assembly. The creditors’assembly decides whether the insolvent company’s business shall be temporarily continued or closed and has the right to replace the court-appointed insolvency administrator. Furthermore, for transactions of particular importance, the insolvency administrator has to obtain consent of the creditors’ committee or—in case no such committee has been elected—the creditors’assembly.

1.4.3.4  Reorganization Proceedings

One of the core features of the Insolvency Code of 1999 is the introduction of reorganization as an alternative to the standard insolvency proceedings. This alternative option was inspired by US bankruptcy law, in particular, by the so-called ‘Chapter 11’plan proceedings. Briefly summarized, the new reorganization regime allows for the submission of an insolvency plan (Insolvenzplan) and voting on such a plan by various groups of creditors. The main idea of this reorganization regime is to enhance party-autonomy: specific solutions necessary to deal with an insolvent company may best be developed by the parties affected, i.e., the company and its creditors. Thus, the rules of the insolvency plan may deviate from large parts of the statutory provisions of the InsO. Moreover, the insolvency plan may provide for a liquidation of the company, as well as for a reorganization.Although reorganization can be seen as an alternative option, its legislative implementation in Germany is widely considered to be too complex and bureaucratic. Therefore, the importance of the insolvency plan proceedings in practice has up until now remained limited.

Currently, however, German legislature is acting to counter these shortcomings. At the time of this writing, the German government has recently submitted a draft for an Act Serving the Further Facilitation of the Reorganization of Enterprises (Gesetz zur weiteren Erleichterung der Sanierung von Unternehmen, ESUG) to the Federal Parliament (Bundestag). The draft comprises a set of measures to facilitate restructuring and to this purpose, inter alia, aims at improving the reorganization plan proceedings. Therefore, once the Act will be enacted, it will for the first time be possible, take account of participation interests, i.e. shareholders’ rights, in the insolvency plan. By integrating the shareholders into the plan proceedings, it will, among others, be possible to provide for debt-equity-swaps in the plan proceedings.

References

Bayer W, Hoffmann T (2010) Statistiken zur AG—eine kritische Bestandsaufnahme. Die Aktien­ gesellschaft, pp R283–R286

Braun S (2005) German insolvency act: special provisions of consumer insolvency proceedings and the discharge of residual debts. GLJ 7:59–70

Klunzinger E (2009) Grundzüge des Gesellschaftsrechts, 15th edn. Vahlen, Munich

Kornblum U (2010) Bundesweite Rechtstatsachen zum Unternehmensund Gesellschaftsrecht. GmbH-Rundschau, pp 739–748