Restructuring & Insolvency

On 1 January 2011 the German Restructuring Act (Restrukturierungsgesetz) came into force. The new law provides special rules to save ailing credit institutions and introduces:

• a special two-tier pre-insolvency restructuring reorganisation regime for credit institutions and
• supervisory powers to transfer assets and liabilities held by a system-relevant (meaning "too big or too connected to fail") credit institution to another bank (incl. special "bridge banks") in order to restructure the business of such bank and in order to prevent insolvency.

The Restructuring Act also sets up a new restructuring fund (Restrukturierungsfonds) to finance the measures under the Restructuring Act. The new restructuring fund has a target size of 70 billion € and is financed by a bank levy. The new bank levy is payable first time on 30 September 2011.

For more details on the new law read our previous article on the draft of the Restructuring Act.

On 25 August 2010 the German government endorsed the Draft Restructuring Act (Restrukturierungsgesetz) aiming to provide special rules to save ailing credit institutions. The draft bill introduces:

• a special two-tier pre-insolvency restructuring & reorganisation regime for credit institutions and
• supervisory powers to transfer assets and liabilities held by a system-relevant (meaning "too big to fail") credit institution to another bank (incl. special "bridge banks") in order to restructure the business of such bank and in order to prevent insolvency.

The Restructuring Act will also set up a new restructuring fund (Restrukturierungsfonds) to finance the measures under the (draft) Restructuring Act. The restructuring fund shall be financed by a bank levy.