In its ruling of 23 April 2026 (IX ZB 18/25), the Federal Court of Justice (BGH) has, for the first time, commented on key provisions of the Corporate Stabilisation and Restructuring Act (StaRUG), which has been in force since 2021. The decision clarifies the conditions under which a restructuring court may refrain from terminating restructuring proceedings despite the company subsequently becoming insolvent. At the same time, it strengthens the review and discretionary powers of the restructuring courts and sets out important guidelines for restructuring practice.
If insolvency or over-indebtedness occurs whilst a restructuring case is pending, the restructuring case must, in principle, be discontinued pursuant to section 33(2), first sentence, no. 1, first clause of the StaRUG. However, the Act provides for two exceptions to this in section 33(2), first sentence, no. 1, clauses 2 and 3 of the StaRUG: Dismissal may be waived if the opening of insolvency proceedings is manifestly not in the interests of the creditors as a whole (Section 33(2), first sentence, No. 1, first clause 2 StaRUG) or if the insolvency is due to the termination or demand for payment of a claim covered by the plan and it is highly probable that the restructuring objective will be achieved (Section 33(2), first sentence, No. 1, clauses 3 StaRUG).
The Federal Court of Justice’s ruling was based on the restructuring plan of a limited liability company (GmbH) whose activities were limited to holding shareholdings in two companies that were already insolvent. The GmbH’s restructuring plan provided for two creditor groups, each comprising a single creditor, who were each to be satisfied at a rate of 1 per cent: a bank’s claim amounting to approximately EUR 610,000 and a service provider’s claim amounting to approximately EUR 1,900. The plan was to be financed exclusively by a contribution of EUR 42,000 from a Polish company. In the event of liquidation, however, no repayment to creditors was to be expected.
Following notification of the restructuring plan, the bank declared its claim due. The debtor subsequently declared insolvency in accordance with section 32(3) of the German Restructuring Act (StaRUG) and applied for the restructuring proceedings not to be set aside. The restructuring court nevertheless terminated the restructuring proceedings. The immediate appeal to the Düsseldorf Regional Court was unsuccessful, as was the appeal on points of law to the Federal Court of Justice.
In its decision, the Federal Court of Justice first emphasises the exceptional nature of Section 33(2), first sentence, no. 1, clauses 2 and 3 of the StaRUG. Once a company becomes insolvent, insolvency proceedings – and no longer the stabilisation and restructuring framework – are, in principle, the appropriate instrument for crisis management.
The Senate also clarifies that the restructuring court has a margin of discretion – subject only to limited judicial review – when deciding whether to refrain from terminating the restructuring proceedings despite the company having reached the point of insolvency. In doing so, the court may take into account uncertainties regarding the feasibility of the restructuring plan and the viability of the projected creditor recovery rates. The decisive factor is not whether creditors would gain an advantage from the opening of insolvency proceedings, but whether the opening of such proceedings is manifestly not in the overall interests of the creditors. In view of the only slight difference between the planned and insolvency distribution rates, as well as the unsecured third-party payment, the Federal Court of Justice held that the appeal court was not guilty of an error of discretion in assuming that no exceptional case under section 33(2), first sentence, no. 1, clause 2 of the StaRUG.
The Federal Court of Justice also considered that the conditions of Section 33(2), first sentence, No. 1, clause 3 of the StaRUG were not met. It is true that the insolvency was based on the demand for payment of a claim subject to the plan. However, the required preponderance of probability that the restructuring objective would be achieved could not be assumed if the implementation of the restructuring plan depended on a voluntary contribution by a third party that was not sufficiently secured in law. The debtor bears the burden of presentation and proof regarding the circumstances justifying a preponderance of probability. Given the unsecured contribution to the plan, the appeal court was entitled, without any error of discretion, to rule out a preponderance of probability of the restructuring’s success in the present case.
From a procedural perspective, the Federal Court of Justice clarifies that the debtor’s interest in legal protection for an appeal against the discontinuance of the restructuring proceedings does not cease to exist merely because the decision of the restructuring court results in the restructuring proceedings ceasing to be pending or more than six months have elapsed since the receipt of the notice of restructuring (see Section 33(4)(4) of the German Restructuring Act (StaRUG)). Otherwise, the statutory right of appeal would be rendered virtually meaningless, as the decision to terminate generally takes effect immediately (and is not subject to a suspensive condition). Decisions by the restructuring court to terminate proceedings must remain subject to effective judicial review.
With its first decision on the StaRUG, the Federal Court of Justice (BGH) delineates the boundaries of the preventive restructuring framework. It confirms the function of Section 33 StaRUG as a procedural corrective mechanism subject to careful judicial review and makes it clear that the StaRUG procedure serves to prevent, rather than to manage, insolvency that has already arisen.
The ruling provides important guidance for the structuring of future StaRUG proceedings. It specifies the requirements for the debtor’s submission and makes it clear that restructuring plans must be based on a sound factual and financial foundation. Particularly in the case of third-party financing, mere declarations of intent or optimistic assumptions in the plan are not sufficient to establish the overwhelming probability of achieving the restructuring objective. For the assumption of an exceptional case under Section 33(2), first sentence, No. 1, clause 2 of the StaRUG, it is not sufficient merely for creditors to receive better satisfaction under the plan scenario. What is decisive is a comprehensive assessment of creditors’ interests that goes beyond a mere comparison of the plan distribution ratio and the insolvency distribution ratio within the framework of the comparative calculation.
The Federal Court of Justice (BGH) further safeguards the effectiveness of the statutory right of appeal. However, it appears doubtful whether the Senate’s reasoning is entirely convincing in the present case, which concerns annulment on the grounds that the company has become insolvent. Pursuant to section 42(4) of the Restructuring Act (StaRUG), the obligation to file for insolvency is reinstated upon the annulment of the restructuring proceedings. If insolvency proceedings are opened whilst the appeal proceedings are still ongoing, the continuation of the restructuring proceedings is likely to be effectively precluded as a matter of course. The practical benefit of a successful appeal therefore remains limited in such cases.
(Federal Court of Justice, decision of 23 April 2026 – IX ZB 18/25)
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