Frankfurt Regional Court refuses to recognise UK Part 26A Restructuring Plan in Preliminary Judgment

1. Background and Case History

This case concerns the complex cross-border restructuring of the "Fürst" project, a major real estate development located on Lietzenburger Straße in Berlin. Aggregate Holdings, the original project sponsor, shifted the centre of main interest (COMI) of the borrower to England to facilitate a restructuring. The company then sought approval of a restructuring plan under Part 26A of the UK Companies Act 2006 (the "Restructuring Plan" or "RP") in respect of finance instruments governed by German law. The plan included provisions for new senior financing, extended maturities for senior debt, and the elimination of €245 million in subordinated debt in exchange for nominal consideration. Importantly, not all creditor groups were included in the plan. The English High Court approved the plan in March 2024.

A German senior creditor, whose claim maturity was extended without its consent, challenged the recognition of the plan in Germany and brought a claim for payment against the borrower and a guarantor. In its judgment dated 22 August 2025 (case no. 2-12 O 239/24), the Frankfurt Regional Court (Landgericht Frankfurt am Main) found in favour of the creditor, refusing to recognise the UK Restructuring Plan and the maturity extension it contained.

2. Summary of the Court’s Reasoning

a. No Recognition as Insolvency Proceedings (Section 343 InsO):

The court held that the Restructuring Plan did not qualify as "insolvency proceedings" for the purposes of recognition under Section 343 of the German Insolvency Code (InsO). The court reasoned that the plan lacked the necessary collective character, as it only included certain classes of creditors (mainly financial creditors) and excluded others (such as trade creditors and professional advisers).

b. No Recognition as a Foreign Judgment (Section 328 ZPO):

The court also found that the Restructuring Plan could not be recognised as a "foreign judgment" under Section 328 of the German Code of Civil Procedure (ZPO). Recognition under this provision requires reciprocity, meaning that English courts would need to recognise a comparable German judgment. The court determined that the defendant had not demonstrated such reciprocity. This may be due to the "Gibbs rule" under English law, which provides that English law-governed debts cannot be compromised by foreign proceedings unless the relevant creditors participate.

c. No Recognition under the Brussels Convention:

Finally, the court held that the Restructuring Plan could not be recognised under the 1968 Brussels Convention, as the Convention did not revive following Brexit.

3. Is the Decision Correct?

The question of whether a UK Restructuring Plan can be recognised in Germany remains unresolved. German legal literature has consistently highlighted uncertainties regarding recognition under both Section 343 InsO and Section 328 ZPO, which the court followed in its reasoning.

A key argument for challenging the decision may be whether the UK Restructuring Plan should be recognised as insolvency proceedings, contrary to the Frankfurt Regional Court’s view. The European Insolvency Regulation recognises certain semi-collective proceedings in EU member states, such as the German StaRUG, as "insolvency proceedings." This raises the question of whether similar recognition could extend to the UK Restructuring Plan, even though the UK is no longer an EU member state.

4. Impact of the Decision in Germany and the EU

This judgment is preliminary, subject to further hearings, and is currently under appeal by the claimant.

Until a final decision is reached, the Frankfurt Regional Court’s judgment introduces uncertainty and additional limitations for cross-border restructurings, which could temporarily hinder the use of the English market for such purposes. It remains to be seen whether the decision will affect only German restructuring proceedings or whether it will also influence restructuring and recognition issues in other EU member states, at least temporarily. The outcome of this case will be closely monitored.