In the News Standard & Poor's

Debt-for-Equity Swap? Nein Danke

In Germany, it is required that a company file for bankruptcy within 21 days of knowing that the company is insolvent, or will become so.

This regulation is widely unpopular, with many critics complaining that 21 days is not sufficient time to obtain an out-of-court solution. As a result, it has become popular for German companies to "migrate" to a less rigid legal jurisdiction. Migration poses its own difficulties however, as it must be taken well in advance of knowledge of insolvency. It is also a difficult move for English limited companies registered in Germany, as they are required to file for insolvency in Germany.

"Sacha Luerken, a partner at Kirkland & Ellis, argues that 'it is in particular the extension of the insolvency filing duty to non-German companies [that] may make migrations more difficult.' "

This article appeared in its entirey in the February 2, 2009 edition of Standard & Poor's