Challenges in German Restructuring Under StaRUG

This document is a technical report that discusses the recent restructuring cases of Leoni AG and Varta AG within the framework of the German Act on the Stabilisation and Restructuring Framework for Businesses (StaRUG). It outlines the challenges faced by these companies, particularly regarding shareholder rights and the cram-down provisions that can lead to significant losses for minority shareholders. The report details the legal complexities involved in the StaRUG process, including the necessity of shareholder approval and the implications of excluding subscription rights. It contrasts the German restructuring approach with the UK Restructuring Plan, highlighting the differences in legal requirements and stakeholder protections. The report concludes by addressing the ongoing debates surrounding the use of StaRUG as a potential vehicle for disguised takeovers, emphasizing the uncertainty for stakeholders in these restructuring scenarios. The document serves as a critical analysis of the current state of German restructuring law and its practical implications for equity and debt holders.