Heuking client Softline AG restructured through a restructuring plan in accordance with the Act on the Stabilization and Restructuring Framework for Businesses
Softline AG was thoroughly advised and assisted in proceedings under the Act on the Stabilization and Restructuring Framework for Businesses by a Heuking team led by Prof. Dr. Georg Streit, Equity Partner, and Boris Dürr, Managing Partner (both from the Munich office).
Softline AG, a Leipzig-based IT and software firm listed on the open market of Munich Stock Exchange (m:access), successfully concluded out-of-insolvency proceedings that were conducted in accordance with the Act on the Stabilization and Restructuring Framework for Businesses. The restructuring plan proposes a capital write-down (capital reduction with subsequent capital increase) omitting existing shareholders’ subscription rights, as well as a change in legal structure to a limited liability corporation. The restructuring plan was adopted by the shareholders with a 75% majority of those eligible to vote. The restructuring plan has already been approved by Dresden Restructuring Court.
In the future, Softline AG will do business as Softline GmbH, with the majority stakeholder, Noventiq Holdings plc, holding all shares. Other shareholders will quit the company in exchange for a fair payout from Noventiq Holdings plc. The comparison computation in the restructuring plan demonstrates that the withdrawal compensation benefits the shareholders in the restructuring plan more than the alternative scenario without a restructuring plan. Softline AG will also receive new money from Noventiq Holdings plc to implement the restructuring plan.
The restructuring plan includes a number of innovations that have not previously been adopted in this form in proceedings under the Act on the Stabilization and Restructuring Framework for Businesses. The plan makes no mention of interfering with creditors’ rights. Supplier and service provider relationships will remain unchanged, current and new orders are unaffected. The events at shareholder level have no impact on Softline AG’s daily operations.
This is the first publicly known restructuring plan that implemented all restructuring steps with only one group of shareholders (one-group plan). The implementation demonstrates that, under certain situations, a squeeze-out can also be performed successfully with a majority of 75% of shareholders under restructuring law rather than the majority of 95% under stock corporation law. The approach also allows for pure shareholder plans to be implemented without the involvement of creditors, which implies that the company’s restructuring can be resolved without harming creditors. Finally, this is the first publicly known mechanism that accomplishes a change of legal form in a restructuring plan under the Act on the Stabilization and Restructuring Framework for Businesses.
The Softline approach is also crucial in the field of corporate restructuring and restructuring solutions through plans in compliance with the Act on the Stabilization and Restructuring Framework for Businesses. Blockades under corporate law may be resolved in this manner in the future. Consequently, Dresden Restructuring Court emphasized that no prior decision of the general meeting is required to commence proceedings under the Act on the Stabilization and Restructuring Framework for Businesses. Otherwise, the resolution of shareholder blockades required to resolve a crisis through proceedings in accordance with the Act on the Stabilization and Restructuring Framework for Businesses would frequently fail, for example, due to dissenting shareholder groups’ resistance or the expense and loss of time involved in holding a general meeting.
Legal Counsel to Softline AG
Heuking Kühn Lüer Wojtek:
Prof. Dr. Georg Streit (Lead Restructuring),
Boris Dürr (Lead overall case),
Dr. Kai Uwe Büchler,
Dr. Fabian Bürk, LL.M. (both Restructuring), all Munich,
Dr. Thorsten Kuthe (Capital Markets), Cologne,
Marcel Greubel,
Christian Schild, LL.M. (both Corporate/M&A), both Munich
Noventiq Holdings plc:
In-house: Warren Davies (General Counsel), Elina Girne (Head of Legal, Governance & Compliance)
Simmons & Simmons (Frankfurt am Main): Dr. Christopher Kranz, LL.M (Lead), Dr. Felix Biedermann, Dr. Simon Kirschner, Samuel Aladar, Lucas Denk (all Financial Markets & Derivatives)
Restructuringadvisor: Flöther & Wissing (Halle/Leipzig/Chemnitz): Prof. Dr. Lucas Flöther, Pia Erdmann
RestructuringCourt (Dresden): Gerster, judge at the Local Court
Commercial Register (Leipzig): Scholz, judge at the Local Court
