Insolvency and Restructuring

Entrepreneurial success or failure is not always the result of the actions of the entrepreneur himself. It frequently comes from a number of factors that can be beyond his control. Crisis situations are thus not necessarily due to entrepreneurial failure. However, it is crucial that crisis situations be quickly recognised and sustainably managed. Business crises demand rapid and often painful restructuring, both economically and legally. It’s about discovering new perspectives and opportunities.

GEMS SCHINDHELM advises you on all of your company’s issues relating to crisis and insolvency and develops with you workable and sustainable restructuring strategies. In addition to that, we will show you safe paths forward and advise you on the best possible way to avoid liability.

Our Expertise in Proceedings Involving Insolvency Law and Restructuring

GEMS SCHINDHELM has many years of experience and expertise in overcoming and working through corporate crises in the role of advisor to companies, insolvency administrators, and creditors. Our services focus on the following areas.

Advising companies in crisis

A crisis and pending insolvency place high demands on managing directors, boards of directors, supervisory boards, as well as shareholders. The primary objective is to ensure the sustainable existence of the company as a going concern. We accompany all phases of restructuring from a legal perspective and work hand in hand with other advisers who are involved such as auditors, tax advisors, and management consultants. We will support you with the following steps:

• Legal status analysis of the company in crisis
• Legal support in the preparation of reorganisation concepts and expert opinions
• Development of restructuring strategies, legal implementation of restructuring measures in restructuring procedures
• Legal guidance and support in the area of restructuring financing (incl. acquisition financing)
• Legal guidance in the preparation of going-concern forecasts
• Advice on equity replacement and avoidance of prohibited contribution restitution
• Establishment of hive-off vehicles in which a newly formed company takes over assets and business units from the company in crisis. This allows business operations to continue and jobs to be secured.
• Preparation of the initiation and structuring of insolvency proceedings or reorganization procedures, drafting of the appropriate petitions (for instance, an insolvency petition), and ongoing legal support and representation as the debtor
• Consultation on cross-border insolvency and wage garnishments
• Cross-border Mergers & Acquisition Consulting (M&A Consulting)

Advice on avoiding liability

Especially in insolvency-related situations, the risk of personal liability increases. Particularly when companies fail, the question arises as to whether entrepreneurial decisions were made in compliance with the statutory due diligence standard. GmbH liability presents special challenges.

It is essential to use the existing legal options in the best possible way to achieve the restructuring objective. This can be done through reorganisation, restructuring and the related residual debt relief, and/or through the sale of the company or parts of the company. In particular, we provide the following services:

• Advising the management and other bodies in the performance of their special tasks and duties in the crisis
• Advising managing directors, boards, supervisory boards, and shareholders to avoid liability risks (civil, criminal, social security, and tax law).
• Legal support in the examination of insolvency and/or over-indebtedness

Advice to creditors and contractual partners

Insolvency affects not only the company itself, but also its contractual partners. The debtor’s contractual partners, particularly those who rely on the debtor’s services (e.g. because they are under obligations to render services to third parties, the fulfilment of which is essential for the debtor's performance), can experience significant disadvantages. Thus, continuing as a going concern or at least the best possible realisation of the company is also in the interest of the creditors.

In the best scenario, crises that occur with the contractual partner are already taken into account contractually when entering into a business relationship. We will advise you in contract design with regard to securing your claims, deliveries, and other claims. Of course, we also support you in negotiations or disputes with insolvency administrators in order to make the economic result as optimal as possible for you as a creditor. Our services especially include:

• Advising and accompanying creditors or important contractual partners (customers, suppliers, financing banks) in the crisis or (impending) insolvency of a contractual partner
• Advising on insolvency disputes
• Assertion and enforcement of creditor’s claims
• Creditor protection

Acquisition of companies in crisis

Competitors and investors have the opportunity to take over a company when it is in a crisis situation. Competitors can expand market share or strategically reposition themselves, while investors see the potential to restructure the company and generate long-term profits.

In the case of acquiring an insolvent company, the risk of successor liability is generally low to non-existent. On the other hand, an acquisition outside of insolvency proceedings requires special care and can take place within the framework of a process for Mergers & Acquisition (M&A). In particular, we will support you with the following issues:

• M&A transactions in crisis situations and insolvency (transferring reorganisation)
• Acquisition of companies in crisis and insolvency
• Refinancing.