JUVE Law Firm of the year

Insolvency and Restructuring

Easy money and few proceedings

Little has changed for insolvency administrators: the historic low in insolvency proceedings is reducing the opportunities for all administrators to maintain a good work flow. 2016 saw the already small number of company insolvencies drop once again by almost seven percent, and this year proceedings like Air Berlin, Solarworld and Alno did nothing to change the slump. A strategic shift toward corporate rescue advice would stand to reason, but even this path is blocked for many firms.

Of the manifold potential obstacles, one is of major strategic importance: handling “normal” corporate rescue instructions can rock an administration firm’s cost structures. The system that has been established over the years needs proceedings; it is less suited, or not suited at all, to high-end legal activity.

But even restructuring advisors are complaining about poorly filled order books. As they see it, money is still too easy to come by. This is one of the reasons why the EU’s plan to create a preventive corporate rescue procedure is being so hotly debated. For administrators, this could be the final nail in the coffin; for advisors, on the other hand, it is a welcome expansion of their field of influence.

Concentration process in full swing

For years, the large insolvency firms have followed the same strategy and marched toward nationwide visibility – hww Hermann Wienberg Wilhelm, Kübler, Schultze & Braun and Pluta aimed for assignments from as many insolvency courts as possible and opened offices virtually on a monthly basis. Little of this enthusiasm is evident nowadays: lawyers and administrative staff are being laid off and offices shut down, most obviously in the case of Kübler. The departure of several partners also meant the loss of the Frankfurt and Hamburg offices.

Many firms are reluctant to take on minor proceedings as a loss-making burden. At Wellensiek, the adjustment process has been underway for three years, although the recent losses mainly concerned advisors. Only Schultze & Braun, BBL Bernsau Brockdorff & Partner and above all Pluta are opting for growth in administration and thus contributing to the concentration in the administrator scene. Pluta also broadened its spectrum toward corporate rescue advice.

Little change in hourly fees

But restructuring experts at many large firms are also struggling. Restructuring fees, which used to be on a par with other specialist fields, have now been overtaken by other disciplines. International firms are therefore holding back. Only Sidley Austin, which launched in Germany in 2016, has been building a restructuring team from the beginning. Working closely with the London team, Kolja von Bismarck, who left Linklaters after eight years, is set to occupy this field.

 

The following chapter deals with firms specializing in companies in crisis situations, insolvency proceedings and those cases relevant to the market due to their size and complexity, whether it be entirely or with specialist teams. Restructuring is taken to mean predominantly the renegotiating of loans and the refinancing and changing of shareholder or creditor structures ( ?bank lending and acquisition finance, ?private equity), while corporate rescue primarily involves corporate law aspects and even operational problems ( ?corporate). For restructuring issues specific to the banking sector, please see the ?banking and regulatory chapter. For restructuring focusing on employment law, please refer to the ?employment chapter.


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