GERMANY Law and Practice Contributed by: Michael Josenhans, Lucas Lengersdorf and Karl Kuhn, Freshfields
cram-down mechanisms are available. Dis - senting lenders are protected by, inter alia, the principles of horizontal fairness (no preferential treatment of equal ranking creditors), absolute priority rule (with a new money exception), and a no-worse-off test, as well as judicial oversight and the need for judicial plan confirmation, which ensure fairness and transparency in the restructuring process. 7.10 Expedited Restructurings Specific expedited restructuring procedures like pre-arranged restructurings are not available under German law. However, in practice, the debtor negotiates the terms of the restructuring with its main stakeholders and would normally only enter into a StaRUG process once at least an agreement in principle has been reached (and a lock-up has been entered into) with the majority of creditors/equity-holders required to implement the restructuring plan. A StaRUG process can then be implemented within a few weeks (often between seven and ten weeks). If the debtor has to file for insolvency proceedings, it may consider protective shield proceedings (generally, a three-months process) to prepare an insolvency plan. Insolvency plan proceed - ings may be completed, if well prepared, within approximately six months after the formal com - mencement of insolvency proceedings. 8. Case Studies and Practical Insights 8.1 Notable Case Studies In March 2024, Näder Holding, repurchased a 20% stake in Ottobock from EQT to take back full ownership of the company. This acquisition was funded by a EUR1.1 billion private credit loan from a consortium of lenders consisting of funds managed by Carlyle Global Credit, KKR,
Hayfin and Macquarie. Freshfields acted as legal advisor to Näder Holding. This transaction demonstrates why private credit finance may be a valuable alternative source of funding even for German corporates. Notable take-aways and advantages from financing such a transaction with private debt include the fol - lowing. • Execution speed – The transaction was extremely complex and posed multiple chal - lenges to both lenders and borrower. Howev - er, the participating lender group managed to move quickly, and the process was able to be completed within a very tight deadline, show - casing the known strength of private credit lenders when it comes to execution speed. • Handling complexity – Private credit has the ability to understand and steer the complex - ity of transactions like the above. Paired with their sector-specific expertise and market experience, private credit lenders are able to move quickly and familiarise themselves at short notice with complex deal structures and challenges. • Flexibilities for borrowers – Private credit ena - bles borrowers to explore a wide variety of financing structures in order to achieve their overall goal. Especially in this transaction, private credit lenders were able to provide financing solutions and features which classic bank lenders would struggle to agree to for multiple reasons. 8.2 Lessons Learned The Ottobock transaction as well as some other recent deals in the German market have shown that private credit is no longer reserved for spon - sors or sponsor-backed companies. Private credit financing has become a real alternative source of funding for German corporates and
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