Optimizing the distressed workout process for struggling or failing companies in Germany

Wortmann, Cedric Jan

http://hdl.handle.net/10400.14/55690

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Authors

Wortmann, Cedric Jan

Advisor(s)

Rajsingh, Peter

Abstract(s)

Corporate distress and insolvencies are rising in Germany, exposing limitations in the existing restructuring framework. Instruments like the Insolvenzordnung (InsO) and StaRUG exist, but their effectiveness is undermined by stigma, rigid procedures, and weak investor incentives. This thesis examines how Germany’s restructuring process can be improved to foster early intervention and attract financial investors, particularly in private equity and distressed debt. Based on expert interviews, legal comparison, and literature review, key barriers are identified: high advisory costs, limited StaRUG tools, an underdeveloped DIP market, and fragmented court expertise. Additionally, the strong influence of insolvency administrators, often driven by procedural incentives, discourages early out-of-court solutions. Using U.S. Chapter 11 as a benchmark, the study recommends reforms such as judicial specialization, improved operational tools, incentivized DIP financing, a cultural shift in restructuring perception, and revised governance roles for administrators. A correlation analysis supports the link between legal fragmentation, administrator dominance, and investor hesitancy. The thesis offers actionable recommendations to build a more agile, transparent, and investor-friendly restructuring system, vital for resolving zombie firms, the rising numbers of insolvencies and ensuring long-term economic stability.

A deterioração financeira empresarial e as insolvências estão a aumentar na Alemanha, revelando limitações no atual quadro de reestruturação. Existem instrumentos como a Insolvenzordnung (InsO) e o StaRUG, mas a sua eficácia é comprometida pelo estigma, por procedimentos rígidos e por incentivos fracos aos investidores. Esta dissertação analisa como o processo de reestruturação na Alemanha pode ser melhorado para promover intervenções precoces e atrair investidores financeiros, especialmente no capital de risco e dívida distressed. Com base em entrevistas com especialistas, comparação jurídica e revisão de literatura, são identificados os principais obstáculos: elevados custos de consultoria, ferramentas limitadas do StaRUG, um mercado DIP pouco desenvolvido e fragmentação da especialização judicial. Adicionalmente, a forte influência dos administradores de insolvência, frequentemente motivada por incentivos processuais, desincentiva soluções extrajudiciais precoces. Utilizando o Capítulo 11 dos EUA como referência, o estudo recomenda reformas como especialização judicial, reforço de ferramentas operacionais, incentivo ao financiamento DIP, uma mudança cultural na perceção da reestruturação e revisão do papel dos administradores. Uma análise de correlação confirma a ligação entre a fragmentação legal, o domínio dos administradores e a hesitação dos investidores. A dissertação propõe recomendações concretas para construir um sistema de reestruturação mais ágil, transparente e atrativo para os investidores 3 essencial para resolver empresas "zombie", lidar com o aumento das insolvências e garantir a estabilidade económica a longo prazo.

Keywords

Capítulo 11 Chapter 11 Corporate distress Dificuldade corporativa Distressed investing Insolvency law Investimento em dificuldades Lei de insolvência Reestruturação Restructuring StaRUG