Protective Shield Proceedings

The Protective Shield Proceedings under § 270b InsO is a specialized self-administered insolvency plan procedure that offers companies in crisis effective creditor protection while maximizing their restructuring opportunities. In the face of imminent insolvency or over-indebtedness, the debtor can file an application even before the opening of insolvency proceedings to be placed under a 'protective shield.' During this protective phase, which can last up to three months, enforcement and realization measures are halted, securing valuable liquidity and stabilizing the operational business. Under the supervision of a court-appointed preliminary trustee, management prepares a detailed restructuring or insolvency plan, which is then presented to creditors for approval. If approved, the company can implement its restructuring without a traditional insolvency administrator, preserving key contracts and jobs. The Protective Shield Proceedings thus combines insolvency law, restructuring strategy, and plan proceedings into a flexible tool for medium-sized businesses and corporations aiming to secure their future viability.