Compare US Chapter 11 with German Eigenverwaltung/StaRUG as restructuring tools.
An advanced Restructuring question — expect it in final rounds and case-heavy interviews (IB, PE, Big-4 Transaction Services).
THE SHORT ANSWER
All are debtor-friendly restructuring regimes but differ in mechanics. Chapter 11: a single, powerful court process with an automatic stay, debtor-in-possession (existing management stays in control), readily available DIP financing with priming, the ability to reject executory contracts, and a plan confirmed by class voting with cross-class cram-down and the absolute-priority rule — flexible but can be expensive and lengthy. German Eigenverwaltung is self-administration within insolvency proceedings — management stays in control under a monitor (Sachwalter), broadly the German analogue to DIP — and Schutzschirm gives a debtor a protective shield (preparation period) to draft an Insolvenzplan. StaRUG (since 2021) is a newer pre-insolvency/out-of-court restructuring framework allowing a binding plan with class voting and cross-class cram-down without a full insolvency, for companies that are likely-but-not-yet insolvent — closer to a UK scheme/restructuring plan. Key differences: Germany historically lacked an easy DIP-financing/priming culture and the tools are more fragmented across StaRUG (pre-insolvency) and InsO (Eigenverwaltung/Insolvenzplan), whereas Chapter 11 packages everything in one forum. Choice depends on insolvency status, financing needs, and how many creditors must be bound.
WHAT INTERVIEWERS LISTEN FOR
- ✓Chapter 11: one forum — stay, DIP, contract rejection, cram-down, APR; flexible but costly
- ✓Eigenverwaltung: self-administration under a Sachwalter (German DIP analogue)
- ✓StaRUG: pre-insolvency binding plan with cross-class cram-down (scheme-like)
- ✓Germany: weaker DIP/priming culture, more fragmented tools
COMMON MISTAKES
- ✗Treating them as identical
- ✗Not knowing StaRUG is pre-insolvency
- ✗Unaware of the DIP-financing culture difference
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