StaRUG is Germany's pre-insolvency restructuring tool — a court-supervised but voluntary framework that lets a company restructure financial liabilities without filing for insolvency.
What StaRUG Is
The Unternehmensstabilisierungs- und -restrukturierungsgesetz (StaRUG) entered into force on 1 January 2021. It implements the EU Restructuring Directive in Germany and provides a pre-insolvency framework that allows a company to bind dissenting financial creditors to a restructuring plan, without entering formal insolvency proceedings.
Crucially, StaRUG is voluntary, court-supervised but not court-administered, and does not require the appointment of an insolvency administrator. The existing management remains in place.
When StaRUG Applies
StaRUG is available for companies that are 'imminently illiquid' (drohende Zahlungsunfähigkeit) — i.e. likely to be unable to meet obligations within the next 24 months — but not yet in actual insolvency or over-indebtedness.
It is most useful where the operational business is viable but the financial structure is not — typically a balance sheet that needs deleveraging, an over-leveraged buy-out, or unsustainable debt service in a sector that has reset.
What StaRUG Does and Doesn't Enable
StaRUG enables: binding creditor majorities (cross-class cram-down), restructuring of secured and unsecured financial claims, and cancellation or modification of contracts under specific conditions.
StaRUG does not enable: changes to employment contracts, restructuring of trade payables in most cases, or the kind of operational restructuring that requires the formal protections of insolvency proceedings.
For situations where StaRUG is insufficient, the next-step instruments are Eigenverwaltung and Schutzschirmverfahren — both of which preserve management continuity but offer broader restructuring power.