Die Mitgliedschaft in der Insolvenz

After recent legislative reform in Germany (‘ESUG’), insolvency plans not only regulate existing debt but can also impact on shareholders in a corporation or partners in a partnership. Under a cram-down mechanism almost exclusively steered by creditors, shareholders can be forced to forfeit their shares and exit a company or accept creditors as co-shareholders without the need for material consent. The author points out that such a mechanism is generally in accordance with German constitutional law and EU directives but must provide for the proper evaluation of equity interest and the adequate participation of old equity in a restructured product. This study also highlights how efficient mechanisms to remove shareholders by means of an insolvency plan adversely affect the timely initiation of insolvency proceedings.