Shareholders in Restructurings under the StaRUG

Key findings:

• The German StaRUG allows shareholders to be included as plan-affected parties in pre-insolvency restructurings and to be crammed down by a cross-class cram-down — including through capital reductions to zero and exclusion of subscription rights, as seen in the landmark VARTA AG case.
• Whether management needs a shareholder resolution before filing for a StaRUG restructuring remains contested; the OLG Stuttgart has carved out an exception for cases where the StaRUG proceeding is the only viable alternative to insolvency.
• Two constitutional complaints pending before the Federal Constitutional Court (BVerfG) will test the constitutional limits of shareholder cram-down under the StaRUG — with the German Federal Bar itself split on whether the framework is constitutionally adequate.
• A comparative look at England and France reveals significant differences in how shareholder rights are treated: the English Part 26A Restructuring Plan offers court-assessed fairness protections, while French law provides for a cross-class cram-down with separate shareholder classes.
• We will debate those issues at the panel “With or without you — or even against you” at the 14th European Insolvency & Restructuring Congress in Brussels on 25/26 June 2026.

 

A Preview of the Panel “With or without you – or even against you: shareholders in restructuring proceedings” at the 14th European Insolvency & Restructuring Congress on 25/26 June 2026 in Brussels

Restructurings under the StaRUG are on the rise. Among the issues publicly debated – including in the case of VARTA AG – is one of the central corporate law tensions of our time: What role do shareholders play when a company falls into financial distress? Is it legitimate to push through a restructuring without or even against them? The answer can be uncomfortable for shareholders, but it also offers opportunities for those willing to actively shape the process.

 

Shareholders as Plan-Affected Parties: A Paradigm Shift

Until the StaRUG, German law largely adhered to the principle that shareholders remain outside the scope of pre-insolvency restructuring proceedings or, where their equity rights were to be impaired, had to consent (except for a very limited concept of fiduciary duties among shareholders which is being more often cited than applied). Only within a formal insolvency plan in insolvency proceedings could interventions into equity rights be effected. The StaRUG changed this: shareholders may be included in the restructuring plan pursuant to section 9(1) no. 4 StaRUG. Their voting rights, dividend claims, the equity interest itself are thereby subject to disposition. The statutory framework is premised on the assumption that, in a situation of imminent illiquidity, the economic value of equity interests has typically been largely, or even entirely, consumed, and creditor interests may (or must) take priority to enable a viable restructuring.

Typically, and so too in the case of VARTA A, the share capital is first reduced to zero. Immediately following this capital cut, new funds are raised through a capital increase, subscribed only by selected new and/or existing shareholders. The cross-class cram-down mechanism provided for in section 26 StaRUG further tightens the position of shareholders: dissenting groups, such as the shareholder group, can be overridden, provided, among other conditions, that no plan-affected party is left worse off than in the next-best alternative, which is typically insolvency.

 

Opportunities: A Controlled Fresh Start

For shareholders willing to take an active role, the StaRUG offers considerable latitude. The proceedings are debtor-initiated: only the debtor, i.e. management, can file the notice of the restructuring project (section 31 StaRUG), thereby initiating a StaRUG restructuring proceeding. This gives engaged shareholders who are aligned with management a significant advantage over creditors. Those who shape the restructuring framework early also determine the plan architecture.

Moreover, the StaRUG enables targeted interventions in the financing structure without pushing the company into insolvency. For shareholders with an entrepreneurial commitment, such as family shareholders or strategic investors, this can be an opportunity to restructure financial liabilities while retaining control. This does not, however, come for free: it requires subscription and payment for the new shares, and thus entails bearing the risk of the failure of the restructuring.

 

Open Questions: Shareholder Resolution and Constitutional Law

The most fiercely debated question in German restructuring law is whether management must obtain a shareholder resolution before filing the notice of the restructuring project. The courts have now largely held that no such resolution is required for external purposes, and certainly not in the case of a stock corporation (AG). In its widely noted decision of 21 August 2024 (case no. 20 U 30/24), the Higher Regional Court of Stuttgart (OLG Stuttgart) confirmed a differentiated approach developed in the literature for the limited liability company (GmbH): a shareholder resolution is not required where the StaRUG proceeding is the only sufficiently promising alternative to insolvency.

The doctrinal foundation of this solution is hotly debated in literature, whether it rests on the shareholders’ fiduciary duty (Treuepflicht), on management’s restructuring responsibility under section 1(1) StaRUG, or on a directive-conforming primacy of restructuring law as lex specialis. In the context of the forthcoming StaRUG evaluation, calls are being made to put the “shift of duties” (sections 2, 3 of the Government Draft StaRUG) – deleted during the legislative process – back on the agenda, thereby resolving the uncertainty that was created precisely by the deletion of these provisions.

At the same time, two constitutional complaints (1 BvR 502/25 and 1 BvR 606/25) are pending before the Federal Constitutional Court (BVerfG), testing the constitutional limits of the StaRUG. The complainants allege, among other things, violations of Article 14(1) of the Basic Law (Grundgesetz, GG, property guarantee), Article 3(1) GG (equality), and the right to effective legal protection. The statements solicited by the Court reveal a sharp divide: even the German Federal Bar (BRAK) itself is split. The BRAK’s Constitutional Law Committee considers the complaints well-founded and identifies constitutional deficiencies regarding compensation, equal treatment, and judicial review. By contrast, the BRAK’s Insolvency Law Committee as well as the insolvency practitioners’ associations (VID, TMA Deutschland, Gravenbrucher Kreis) uniformly defend the constitutionality of the StaRUG and see the proceedings as an opportunity for the BVerfG to establish legal certainty.

 

Reform Perspectives: Exclusion of Subscription Rights and Access to Legal Remedies

The public debate centres intensely on the exclusion of subscription rights to the detriment of existing shareholders. The literature points out, however, that the real source of controversy lies less in the exclusion of subscription rights itself, which is specifically provided for by section 7(4) StaRUG, than in the circumstance that participation by existing shareholders in a rights issue would likely fail for practical timing reasons (prospectus obligations), and that the company must be free to insist on continuing only with certain shareholders. It has been proposed that at minimum a formal disclosure requirement be introduced at the time of filing, requiring an explanation of what financing options, including participation by existing shareholders, were explored and why they were not pursued.

Regarding access to legal remedies, it can be observed that while the immediate appeal under section 66 StaRUG is formally available, the requirements for substantiating worse treatment are “hardly manageable for small investors” given the short timeframes and information asymmetry. Thole proposes opening the immediate appeal – at least for legal questions of fundamental importance – from the requirement to substantiate worse treatment and making validation of the comparison calculation a standard task of the restructuring commissioner.

 

Looking Beyond German Borders: England and France

The question of how shareholder rights are treated in restructuring proceedings does not arise only in Germany. In England, the Part 26A Restructuring Plan provides a comparable cross-class cram down mechanism to the StaRUG’s. It also provides class of creditors or members with no genuine economic interest in the company to be excluded from voting altogether (s901C(4) Companies Act 2006). English courts may exercise their cross-class cram down power where: (i) a class with a genuine economic interest votes in favour; (ii) no member of the dissenting class would be any worse off under the plan than they would be in the “relevant alternative” – often found to be liquidation or administration; and (iii) the court exercises its discretion to sanction the plan. Following the approach developed by the Court of Appeal in Adler, Thames Water and Petrofac (Re AGPS BondCo PLC [2024] EWCA Civ 24 (Adler), Re Thames Water Utilities Holdings Limited [2025] EWCA Civ 475, and Re Petrofac Limited [2025] EWCA Civ 821), in exercising its discretion the court will assess the fairness of the plan, including how the benefits of the restructuring are shared between those whose rights are compromised, and who has contributed to the creation of those benefits. The position of “out of the money” classes can no longer be disregarded simply because they would receive nothing in the relevant alternative. Unlike StaRUG, the English system does not require a mandatory separate class for shareholders. Shareholders instead gain protection from a combination of the “no worse off test” and the court’s fairness assessment, along with the Court of Appeal’s comments raising the question whether there is no jurisdiction under Part 26A to expropriate or transfer shares for no consideration.

In France, the procédure de sauvegarde (Art. L. 620-1 et seq. of the French code de commerce), the redressement judiciaire (Art. L. 631-1 et seq. of the French code de commerce) and in particular the procédure de sauvegarde accélérée (Art. L. 628-1 et seq. of the French code de commerce) provide a framework in which shareholder rights can also be significantly impaired. The reform introduced by Ordonnance No. 2021-1193 of 15 September 2021, implementing the EU Restructuring Directive, also incorporated the cross-class cram-down (application forcée interclasses, Art. L. 626-32 of the French code de commerce) into French law. Shareholders form a separate class and may be crammed down, with the “best interest of creditors test” serving as the protective mechanism. In France, the practical significance of shareholder cram-down has so far been less pronounced than in Germany, as practice remains more focused on consensual solutions. However, the Tribunal de Commerce de Paris has shown in recent decisions that capital measures and dilution can also be imposed against the will of existing shareholders. Indeed, subject to certain reservations, the court’s decision constitutes approval of the amendments to the shareholding structure or to the rights of equity holders, or to the articles of association, as provided for in the plan (Art. L. 626-34 of the French code de commerce).

The differences between jurisdictions are significant: in doctrinal construction, in the extent of shareholder protection, and in practical enforcement. Whether the English model of court-assessed fairness, the French model of court-moderated agreement, or the German model with its differentiated class formation and cram-down system strikes the best balance between restructuring efficiency and property protection is a question that can only be answered through comparative analysis.

 

Practical Recommendations

For advisors to shareholders, the current legal landscape yields clear practical recommendations: shareholders should seek to be involved early in the development of the restructuring concept, ideally before the onset of imminent illiquidity. In the GmbH, obtaining a shareholder resolution before filing the notice of the restructuring project remains advisable in any event, even if such a resolution may not be strictly required following the OLG Stuttgart’s ruling. Shareholders who actively participate and contribute financing can significantly strengthen their position within the plan up to and including differentiation into separate groups that materially influence the outcome of the plan vote. For minority shareholders, by contrast, the hurdles to legal protection are high and the economic value of the equity interest at the time of restructuring largely determines bargaining power.

 

Discussion at the 14th European Insolvency & Restructuring Congress

The panel “With or without you – or even against you: shareholders in restructuring proceedings” on Thursday, 25 June 2026, at the Stanhope Hotel Brussels brings together voices from academia, the judiciary, and practice to illuminate these questions from different perspectives and legal systems. The panellists are The Honourable Mr Justice Adam Johnson (High Court, London), Dr. Katrin Stohrer (Deutsche Bank AG, Frankfurt am Main), and Christophe Thevenot (Administrateur judiciaire, Paris). The panel will be moderated by Florian Bruder, (DLA Piper) and Dr. Andreas Spahlinger (Gleiss Lutz).

The discussion will address, among other things, the following questions: How far may the intrusion into shareholder rights extend before reaching the constitutional limit of the property guarantee? How does an English judge assess the position of shareholders in a Part 26A Restructuring Plan? How does French practice handle the cross-class cram-down? What lessons can be drawn from comparative law for the forthcoming StaRUG evaluation? And is there a “right to restructure” for shareholders – or merely a “right” to endure the restructuring?

The conference language is English. Registration is available here.