A German court has, for the first time, considered whether an English restructuring plan, seeking to bind local creditors, may be formally recognised under German law.
Decision
On 22 August 2025, in an interim decision allowing only limited evidence, the Regional Court of Frankfurt am Main held that Aggregate group's English restructuring plan (see our alert) is not eligible for recognition in Germany under the following:
- The Insolvency Code, as the restructuring plan lacked the necessary collective nature to qualify as an insolvency proceeding as it did not include all creditors.
- The Code of Civil Procedure as the mutual recognition of judgments must be ensured and the claimant failed to discharge the burden of proof.
- The Brussels Convention, which is not applicable post-Brexit.
What's next?
A cross-border restructuring plan or the similar scheme of arrangement can only be approved by an English court if there is a reasonable prospect of recognition in the other jurisdictions involved. This recent decision will lead to increased scrutiny of the international effectiveness of restructuring plans and schemes in all cross-border cases. At the recent sanction hearing for Standard Profil Automotive GMBH's scheme of arrangement, whilst the court declined to consider whether the Frankfurt court's decision was wrong, it sanctioned the scheme on grounds that there are two other routes to recognition available for a scheme of arrangement (which is not an insolvency proceeding) under the Hague Convention or the Hague Judgments Convention which are unaffected by the decision.
The Frankfurt court's interim decision is subject to revision in the light of further evidence, and it remains to be seen whether the ruling will be overturned on appeal. In the meantime, the decision strengthens the position of creditors protected under German law and we could see an increase in the use of the StaRUG in parallel with or instead of an English restructuring plan.
Find out more
To discuss the issues raised in this article in more detail, please contact a member of our Restructuring and Insolvency team.
Judgment of 9 July 2025 - 2-12 O 239/24
Re Standard Profil Automotive GMBH [2025] EWHC 2313 (Ch)
