IFLR 1000
The Guide to the World's Leading Financial Law Firms

Economic stability has dampened the German restructuring market to a certain extent and the number of insolvencies has plateaued rather than rising, as anticipated. "The overall restructuring market has been less active than people actually thought it would be and the situation is still that the upswing in the market has reduced," explains one lawyer.

However, there are sectors in which over-leveraged companies are struggling. "We are talking about mezzanine finance companies, we are talking about shipping, where the banks postpone, postpone, postpone, we are talking about the financial sector, which we think will all play a role in the future," says one insolvency lawyer. Another anticipated driver for work is the numerous mezzanine loans and leveraged finance transactions which are due to mature in the coming few years: "There are mezzanine programmes outstanding and this year or the next will be when a lot of leveraged transactions have to be refunded," says one partner.

Despite the countries revival, the market has not been quiet and one interesting development lawyers note is that creditors have shown a willingness to find solutions out of court. "There has been the trend in Germany to have a broad toolbox, either lender-lead restructuring, as in the case of Primacom, or trusteeships structures," observes a restructuring partner. "We are seeing more debt for equity swaps and, in particular, we expect to see this by way of German bond restructuring which we think will be a trend in next 24 months."

Germany's legal and business communities are eagerly awaiting ESUG, the reform of the current German insolvency code, which it is hoped, when implemented, will facilitate smoother, more restructuring-friendly insolvencies. "We are looking forward to our current insolvency reform which would bring us to, or at least enable us to, be a little more restructuring friendly. Some important flaws will be corrected so they can compete with the UK," says one partner.

Another notable legal development was the German restructuring act or Restrukturierungsgesetz to use its native language. Implemented in January 2011, the act is intended to allow all banks, but particularly those whose demise could affect the financial markets, to either restructure or wind-down through a smoother transitional period. The act also introduced an annual bank levy, which German financial institutions are now obliged to contribute to annually, for a restructuring fund that will be used by banks in crisis.

"Definitely tier one, a classic advisor to the lenders with Hoegen. He's not a problem solver he's more a problem identifier, but he's good," says a restructuring lawyer of Allen & Overy's practice head Peter Hoegen. Another key figure at the firm is Walter Uebelhoer, who is highly regarded by clients: "Very good, on top of things, knows the market. If he's not available when we call, he calls the moment he is," says one.

Long-standing client the Schaeffler Group required the firm's continuing advice on refinancing its loan agreement in 2011. Uebelhoer was active for the automotive and industrial supplier on a deal which reduced the debt of the holding company from €7.4 billion to €4.6 billion and improved the financing terms and conditions it agreed with its lending banks.

Another complicated restructuring saw Uebelhoer lead a team advising PrimaCom Management on the restructuring of its financial liabilities and those related to the insolvency filing of its listed parent company PrimaCom. The corporate structure of the PrimaCom group was simplified and the company taken over by Perseus, a group controlled by investors Alcentra, Avenue Capital Group, ING and Tennenbaum Capital Partners in debt-for-equity swap.

Hoegen and Oliver Waldburg were active for the steering committee of senior banks in relation to the financial restructuring of the Jost Group, which manufactures vehicle components.

There is a resounding consensus throughout the market that the practice can't compete with the those ranked in the top echelon since highly regarded partner von Bismarck moved to its magic circle rival back in July 2009. "Clifford Chance has definitely lost their first position for me since Kolja von Bismarck joined Linklaters," says one competitor Having also reputedly lost a significant proportion of its market share, the firm has been relegated a tier.

The firm promoted Stefan Sax to partner in May 2010 and commentators feel he gives its restructuring practice good prospects for the future: "Clifford Chance has a great guy there, Stefan Saxs, who has been crucial in finalising Rodenstock. Stefan is outstanding, he's widely considered to be the leader in that group," says one restructuring partner. Listed as a leading lawyer for the first time, Sax has been advising: the Senior Coordinating Committee of the previously mentioned Rodenstock on €300 million worth of financial arrangements implemented in the form of a scheme of arrangement under English law. Sax has also been negotiating the debts of Carl Zeiss Vision; and, acting for the management of MWH Metallwerke Helmstadt on the filing of an insolvency petition.

Practice head Heinz-Günter Gondert, who one peer says "clients won't leave home without calling," has been active for the banks financing the insolvent shipping group Beluga and advising the committee of senior creditors on the restructuring and €270 million sale of the automotive supplier.

Freshfields Bruckhaus Deringer's restructuring practice is seen as a leader in its field and its ranking is uncontested: "I have no doubt about Freshfields they were most active last year," observes one competitor.

Market recommended practice head, Lars Westphal, was active for the mezzanine and the cross-over lenders to the PrimaCom Group, a large German cable network operator. He advised on the financial restructuring and acquisition of the PrimaCom Group out of insolvency through an indirect debt for equity swap.

German high street retailer Kardstadt's insolvency was one of the biggest in German history until private investor Nicolas Berggruen, with the advice of Westphal, acquired the group from its administrator. The deal was complicated by outstanding lease agreements the company held and required €975 million of financing before it was finalised in September 2010.

A deal involving another struggling German retailer saw the firm advising the senior steering committee on the restructuring of nearly €800 million of Carl Zeiss Vision's corporate finance debt. The restructuring reduced the aggregate amount of the senior and second lien debt by two thirds.

Westphal also acted in conjunction with the firm's structured finance and securitisation team advising the German Financial Markets Stabilisation Fund (SoFFin) and the Financial Markets Stabilisation Agency on the transfer of loans and securities of €173 billion from Hypo Real Estate Group (HRE) to FMS Wertmanagement, the Abwicklungsanstalt (bad bank) of HRE. The deal involved the transfer of derivatives, which will hedge the transferred assets against interest rate risks, and in total it included more than 12,500 products in 70 jurisdictions and was the most substantial asset transfer in German economic history.

The market perception of Gleiss Lutz's restructuring practice is entirely positive. "They have a very good practice," says one competitor. "They are very active with Spahringer and Gopfert."

Head of department Andreas Spahlinger lead a team advising Luxembourg based investment firm Medfort on acquiring the PrimaCom Group from its insolvency administrator. The deal required a simultaneous preparation of an alternative purchase of PrimaCom Management, through the utilisation of liens for shares, and the restructuring and refinancing of PrimaCom.

An extensive transaction saw Spahlinger and partner Burkard Göpfert advising on the restructuring of the German Nortel in UK administration proceedings and the sale of various divisions by way of a total of six transactions at an overall value of in excess $2 billion. The transaction closed in spring 2011.

Hengeler Mueller has secured roles on several headline restructuring and insolvency mandates recently and its growing prominence in the market has not gone unnoticed. "They are building a group and we see them on a number of transactions and they are technically very good," remarks one competitor, adding: "Their people are good and they know the business."

The firm's restructuring and insolvency team is headed by Frankfurt partner Daniel Weiss, who took the helm on a key deal for the firm advising Carl Zeiss Vision in its €586 million restructuring.

In another highly publicised matter, the firm advised on the double restructuring of retailer Highstreet. Within eight months the firm assisted in two senior financings, which were refinanced as CMBS and mortgage bond, mezzanine financings with several tranches.

The most substantial deal the firm was mandated on was advising Hypo Real Estate's transfer of loans, securities and derivatives transactions to FMS Wertmanagement, its Bad Bank. A portfolio comprising 12,500 individual positions relating to 70 different jurisdictions worth €173 billion was relocated in what is the largest transfer of its kind in Germany.

A further deal saw the firm act for a paper manufacturer on the restructuring of €1.1 billion in a syndicated credit facility, several loans, bilateral facilities, and a hybrid bond within a debt for equity swap.

Commentators question Hogan Lovells ranking, claiming that the firm has been markedly absent from the market in the last 12 months: "I really didn't notice them," observes one peer.

Head of department, Heiko Tschauner, has, however, picked up some interesting mandates in the last 12 months. He advised Ford on selling Volvo, which involved advice on restructuring the overall business and protection of licences. Elsewhere, working with partner Christian Herweg, Tschauner advised Sunrise Senior Living on restructuring the financing of portfolio of nursing homes in Germany. Also, assisting the corporate team, Tschauner advised the Japanese IHI Corporation and the Keppel Seghers group based in to the acquisition of two projects of the German A-TEC subsidiary AE&E.

On another notable deal, Herweg and Tschauner were part of the team advised FMS Wertmanagement, the bad bank set up by the German state earlier this year specifically to take on non-strategic assets and risk positions from Hypo Real Estate, on the transfer of €173 billion in risk assets and nonstrategic business units spread over 70 jurisdictions. The transaction involved a combination of various transfer mechanisms, such as: transfer by way of statutory spinoff; asset sale; synthetic asset transfer; and, financial guarantees.

Competitors note that Kirkland & Ellis is becoming a more common sight across the table on restructuring and insolvency deals.

The four-partner group at the Chicago-based firm's Munich office is jointly headed by Bernd Meyer-Löwy and Leo Plank.

In the firm's standout deals, Plank led a team acting for Rodenstock, a lens and spectacle manufacturer, on the €300 million restructuring of its capital structure. The deal, which was moved to the UK to make use of its more favourable insolvency laws, was finalised via a scheme of arrangement. Sanctioned in April 2011, it was only the second successful matter completed by a German company in this way.

Private equity firm PVC Investments also mandated Plank to assist n the refinancing of the Profine group a plastic window profile systems producer headquartered in Germany.

In the automotive sector, Meyer-Löwy acted for Visteon Corporation on its Chapter 11 bankruptcy filing which enabled the global automotive supplier to reduce its debt from approximately $2.7 billion to about $600 million in October 2010.

Linklaters received a flood of recommendations from the market as a candidate that deserved consideration for the rankings and this, in addition to a good year in which it secured strongly contested mandates, sees the practice ranked in the second tier.

The appointment of partner Kolja von Bismarck from rival magic circle firm Clifford Chance in July 2009 played no small part in competitors thinking and it was an undeniably impressive coup which has given the firm one of the leading practitioners in Germany in this area. Another of the firm's restructuring partners Sven Schelo, who heads the practice with von Bismarck, is praised by clients: "Sven is very versatile, very knowledgeable about the German market in terms of restructuring. He's good on his feet, bright, tactical, and strategic but also very user-friendly," explains one client, adding: "He is completely accessible 24/7, equally as responsive."

After two years negotiations between the sponsor, the senior lenders and junior lenders, von Bismarck closed the cross-border financial restructuring of Almatis, an international aluminium producer, in October 2010. The first lien lenders were repaid in full, the existing second lien lenders exchanged their debt claims for Pik Notes and the existing mezzanine lenders received a 40 % equity stake in Almatis in exchange for their debt claims.

On the lenders side, von Bismarck was active for Commerzbank, Deutsche Bank, UniCredit, WestLB, Nord/LB and BNP Paribas, which as joint lenders to Conergy who acquired its debt on the secondary market which required restructuring. It was the first time the firm prepared a debt-to-equity swap of a publicly listed company which, in co-operation with the debtor, Conergy, is being implemented to rescue the company from insolvency.

Fellow practice head Schelo closed a significant mandate in January 2011. The partner advised a group of senior lenders on the corporate and financial restructuring of the PrimaCom group which necessitated extracting PrimaCom from its insolvent parent company. The restructuring resulted in a group of lenders granting the company a new second lien facility and becoming shareholders of the group via a debt-for-equity swap.

In a continuing role, Schelo is advising the joint administrators of UK Lehman companies regarding questions arising in Germany in connection with the insolvency proceedings of Lehman Brothers Bankhaus. Principally, in regards to the pending lawsuit for the restitution of $1 billion from Lehman Brothers Bankhaus to a Lehman group company based in the UK.

As part of the Lehman Brothers insolvency Mayer Brown acted for KPMG, the liquidators of several Lehman Brothers subsidiaries in Asia, with practice head Marco Wilhelm advising on the €250 million matter of LB Bankhaus.

Elsewhere, the firm acted for the mezzanine A lenders to real estate joint venture Highstreet in relation to its debt restructuring.

Since its inception in 2009, Noerr's corporate restructuring, refinancing and rescue group, as the firm has christened it, has assisted 21 troubled German companies.

In the past 12 months AKsys, Conergy, Cinterion, Halberg-Guss, Reum, Pfleiderer, MPC, Qimonda and VEM all sought the firm's assistance.

More recently, Noerr advised MPC Münchmeyer Petersen on a €44.5 million restructuring which made of use of a debt for equity swap that left the banking creditors with a 9% stake in MPC's share capital.

In March 2011, the firm resolved the restructuring of SAF Holland, which it began in 2009, with a capital increase worth €138 million. The proceeds enabled the truck and trailer supplier to reduce its debt and strengthen its equity capital. In mid-2011, the firm was advising manufacturer Pfleiderer on its restructuring and attempts to avoid insolvency.

Paul Hasting's has assisted a number of private equity clients with restructuring matters in the last 12 months.

Partners Christopher Wolff and Christian Mock teamed up to act on two deals. The pair advised MTH Handels Holding on the restructuring of Mäc Geiz and Pfennigpfeiffer stores after it had bought the shop's parent companies out of insolvency.

A further role saw Wolf act alone in providing counsel to MML Capital Partners, a mezzanine fund, in the restructuring and refinancing of W.I.S. Beteiligungsholding.

Competitors don't dispute Pluta's rankings amongst the top tier of the insolvency administrators and the firm have been busy in the last 12 months overseeing proceedings for German companies.

The firm was appointed to act over the assets of Frenzel Tiefkühlkost a German frozen food producer. Stephan Thiemann sold the company in March 2011.

Pampolina Europe, a retailer of children's clothes, applied for insolvency proceedings on October 2010. Martin Prager as appointed to act for the firm and the business continued to operate until all assets were sold in March 2011.

Name partner Michael Pluta also closed the insolvency of Rudolf Bohnacker Systeme, a producer and global distributor in March 2011.

In addition Michael Schoor acted as administrator for the German supermarkets chain Konsum Sachsen Nord.

Head of Restructuring and Insolvency Salans, Andreas Ziegenhagen took the lead role on all the firm's notable deals.

In July 2010 the practice head closed a mandate advising law firm Freitag & Co, which had been appointed by the management of PrimaCom to devise a restructuring plan for the company.

On the side of the lenders, Ziegenhagen was active in the €40 million insolvency proceedings of AKT Altmärker Kunststoff-Techniks. The firm was also appointed administrator of the banks' securities pool.

Sherman & Sterling's five-partner restructuring and insolvency practice has been active for both creditors and debtors in the past 12 months.

A standout deal saw Rainer Wilkie advise private equity firm Axel Springer in the insolvency proceedings for the PIN Group, of which it is a shareholder and creditor.

A further matter saw Esther Jansen act for a German service provider in the €300 million restructuring of its bank debt.

Considered as contender in the market, Weil Gotshal & Manges restructuring team's approach leaves competitors divided. Some question if it is too aggressive while others feel it is affective: "Indeed they are important in restructuring. They are very good and very tough guys but they are heavily involved in restructuring. They are good place to go to," remarks one.

The firm has lived up to its bullish reputation and secured some headline mandates. Most recently, the firm has been advising a group of investors: Strategic Value Partners; Oak Hill Advisors; and, TPG Opportunities Partners, on the international financial restructuring of listed company Pfleiderer, an international manufacturer of engineered wood products. The deal involves granting of new senior loans and a debt to equity swap.

The German shipping industry has suffered in the wake of financial crisis and an ongoing deal sees the firm advising Oaktree on the financial and corporate restructuring of its portfolio company Beluga, a German heavy-lift cargo company, which applied for insolvency in March 2011.

Schmidt is also leading a team who are working in parallel with the firms New York and Houston, representing the trusts advised by financial investor JC Flowers in negotiating the restructuring of their investments in HSH Nordbank. The €375 million transaction closed in February.

The only international firm to act as an insolvency administrator and as an advisor, White & Case's competitors query how active the firm is on the restructuring side of the market and the majority of the firm's notable mandates corroborate this. "They are not someone we would see on any of the major transactions," explains one peer.

The practice is headed jointly by partners Biner Bähr and Sven-Holger Undritz who are both experienced insolvency administrators but some felt they are lacking a true restructuring partner. "They have the two administrators but in restructuring they haven't played very prominent roles recently," says one peer.

Acting as administrators, Bähr was appointed to act over the assets of Systaic, a listed German manufacturer of decentralized energy supply, and Undritz acted on a deal for German charter airline HI Hamburg International Luftverkehrsgesellschaft. Undritz closed the deal in April 2011, succeeding in the transfer of business assets and the company continues to operate under the new name Hamburg Airways.

In an ongoing deal partner Christoph Schulte Kaubrügger has been appointed to act for AKT, which produces plastic injection-moulding components for the automotive industry and has operations in Germany, Czech Republic and Spain.