Berlin, 03 November 2025 – The international law firm ADVANT Beiten continues to…
Until now, there has been uncertainty about whether restructuring plans under Part 26A of the UK Companies Act 2006 ("Part 26A Restructuring Plan") would be recognised in Germany. Numerous companies have used this restructuring process in England to restructure their debts in a manner that deviates from the originally applicable law to the claim, often to the detriment of entire groups of creditors. In a recent ruling, the Frankfurt am Main Regional Court (preliminary ruling dated August 22, 2025, case no. 2-12 O 239/24) for the first time ruled that such a restructuring cannot be recognised in Germany. According to the court, the procedure cannot have any legal effect in Germany under any of the potentially applicable recognition provisions.
Even after its exit from the European Union, the United Kingdom still strives to be an attractive location for insolvency and restructuring proceedings. In a number of high-profile cases, debtors have deliberately relocated their Centre of Main Interests (COMI) to the UK to take advantage of the comparatively debtor-friendly legal framework there. Of particular interest to debtors is a restructuring plan under Part 26A UK Companies Act 2006. This process allows for either all creditors or only certain classes of creditors to be included in the proceedings. The key advantage of this instrument, from the debtor’s perspective, is precisely that a large number of creditors can be excluded from participation in the process. The associated, significant, costs—typically running into the millions—for relocating the COMI, engaging specialised lawyers and advisors, and utilising the English courts are willingly borne by many companies in the hope of achieving more flexible debt relief.
The recent decision by the English Court of Appeal to tighten the fairness requirements for such restructuring plans (ruling dated July 1, 2025), was unlikely to significantly reduce the attractiveness of the Part 26A Restructuring Plan for debtors. However, the recent decision of 22 August 2025 from the Frankfurt am Main Regional Court changes the picture entirely: now, from the debtor’s perspective, a major obstacle has been put before them because such restructuring plans are not recognised in Germany. Although Germany is only one jurisdiction, this is of critical significance because, in principle, a cross-border restructuring plan can only be approved by an English court if there is a reasonable prospect of recognition in the other jurisdictions involved. So far, where English courts have considered the question of whether a Part 26A Restructuring Plan is capable of recognition in Germany, they have (until now) affirmed the possibility of such recognition.
The crucial question of how courts in Germany assess the recognisability of Part 26A Restructuring Plans has had many lawyers on tenterhooks. The opinion of the English courts on this matter is irrelevant for recognition in Germany: only German law is decisive.
The recognisability of a Part 26A Restructuring Plan under German law has been a matter of controversial debate. Possible legal bases for recognition include Section 343 of the German Insolvency Code (InsO), Section 328 of the German Code of Civil Procedure (ZPO), and Article 26(1) of the Brussels Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters (EuGVÜ). However, there have been significant reservations about applying any of these provisions, which is why the prevailing view in legal literature has so far been to fundamentally reject recognition. However, until now, no decision by German courts had addressed this question.
On August 22, 2025, the Frankfurt am Main Regional Court ruled that a Part 26A Restructuring Plan cannot be recognised in Germany. In doing so, it adopted the arguments frequently presented in legal literature and confirmed a legal position that ADVANT Beiten had already represented on behalf of creditors before the Frankfurt am Main Regional Court.
The court rejected recognition under Sect. 343 InsO, as this provision applies exclusively to insolvency proceedings. Insolvency proceedings under the German Insolvency Code are characterized by the inclusion of all creditors. Since the Part 26A Restructuring Plan does not include all creditors, the required collective nature of the proceeding is lacking.
The Regional Court also followed its previous case law by the Higher Regional Court (OLG Frankfurt am Main) rejecting the recognition of the restructuring plan under the EuGVÜ (Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters of 1968), on the basis that it was replaced in 2002 by the Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (EuGVVO). Although the EuGVVO no longer applies to the United Kingdom since Brexit, the EuGVÜ as its predecessor does not become applicable again due to Brexit.
Regarding Sect. 328 ZPO, the Frankfurt am Main Regional Court emphasised that mutual recognition of judgments must be ensured. Accordingly, the recognition of a Part 26A Restructuring Plan in Germany depends on whether comparable decisions by German courts would also be recognised in England. According to the Frankfurt am Main Regional Court, this is a question of fact rather than law, as it depends on the actual practice of recognition. In the case at hand, evidence for the claimed recognition in England could not be provided. Therefore, the court, based on the burden of proof, denied reciprocity and thus rejected recognition under Sect. 328 ZPO. As this is a regional court ruling, the decision is not yet final. It is possible – though in our view unlikely – that evidence of reciprocity could still be submitted later in the proceedings. From our perspective, it is doubtful whether reciprocity can be proven at all. It seems unlikely that a German restructuring decision regarding a claim governed by English law would be recognised in the United Kingdom. This is particularly supported by the so-called Rule of Gibbs, recently confirmed in UK case law. According to this principle, rooted in English common law, foreign insolvency or restructuring decisions have no effect on claims governed by English law.
The decision of the Frankfurt am Main Regional Court is welcome news for creditors, because it upholds the protection that German insolvency law intends to grant them. Moreover, it ensures that the choice of governing law made at the time of contract conclusion remains effective throughout the entire duration of the legal relationship. A relocation of proceedings and a flight to non-European jurisdictions aimed at circumventing the interests of specific creditor groups is no longer easily possible. Companies considering such an “insolvency relocation” must now seriously consider the lack of recognition of their restructuring measures in Germany. From the creditors’ perspective, this means that affected creditors in Germany no longer must accept the consequences of English restructurings and can continue to assert their original rights.
If the Frankfurt court’s case law prevails, English courts will also have to take notice. They would be unable to approve Part 26A Restructuring Plan involving Germany, as the lack of recognition would be established. Whether this will happen, and the decision will become final remains to be seen. However, a clear first signal against insolvency tourism abroad has been sent. Creditors affected by a foreign restructuring should examine whether it is also recognisable in Germany and whether their claims have indeed been extinguished.
If you are affected by a foreign restructuring, we are happy to offer a consultation.
