Focus Abroad: Corporate Insolvency In Germany

Five years after the new German Insolvency Code ( Insolvenzordnung) came into Insolvenzordnung force, German insolvency law is of considerable interest to both the national and international business communities. This is mainly due to the record number of corporate bankruptcies in recent years, including such spectacular cases as Kirch Media, Philipp Holzmann, Herlitz, Fairchild Dornier & Babcock Borsig. Corporate bankruptcies amounted to 26,600 cases in 1999. The number has increased to almost 39,500 cases in 2003 and amounts to about 19,300 in the first half of 2004. While stakeholders face the special challenges associated with corporate bankruptcy, investors in distressed assets are presented with unique opportunities. The following article provides an overview of German insolvency proceedings with a special emphasis on the restructuring instruments introduced by the Insolvency Code such as the plan of reorganization ("Insolvency Plan", Insolvenzplan) and self-admin- Insolvenzplan