Key Points
- A restructuring plan binds dissenting creditors once a 75% majority by claim value approves it per class.
- Management must maintain a permanent early-warning system for existential threats, regardless of company size.
- Auditors who spot insolvency indicators during financial statement work must warn the client in writing.
- Only pre-insolvent companies qualify; actual cash-flow insolvency triggers the InsO regime instead.
What is StaRUG (Restructuring Framework)?
The StaRUG transposed EU Directive 2019/1023 into German law on 1 January 2021 as part of the SanInsFoG package. The debtor retains control of its assets and selects which creditors to include in a restructuring plan (§§2–4 StaRUG) with modified terms. Creditors vote by class, with a 75% majority (by claim value) required in each class. If a class dissents, the court can impose a cross-class cram-down under §§60 ff. StaRUG provided the dissenting class receives no less than it would without the plan.
Two provisions hit auditors directly. §1 StaRUG requires management of limited-liability entities to install crisis early-detection systems (Krisenfrüherkennungssysteme). When auditing an HGB entity, the auditor evaluates whether that system exists and functions. §102 StaRUG extends a warning obligation to the professionals who prepare or audit financial statements (Wirtschaftsprüfer, Steuerberater, vereidigte Buchprüfer, and Rechtsanwälte): when indicators of insolvency grounds under §§17–19 InsO become apparent, the professional must warn the client in writing. High-profile 2024 cases (VARTA AG's capital reduction to zero, Spark Networks SE) demonstrated the framework's reach. The five-year statutory evaluation now under way at national and EU level will determine whether amendments follow.
Worked example: Fischer Automotive Teile GmbH
Client: German auto parts manufacturer, FY2025, revenue €215M, IFRS reporter. Fischer supplies brake components to two major OEMs. In September 2025, one OEM cancels a long-term supply contract worth €58M of annual revenue. Fischer's liquidity forecast shows it cannot meet loan covenants by Q2 2026 (imminent illiquidity under §18 InsO).
Step 1 — Assess the crisis early-detection system under §1 StaRUG
The engagement team reviews Fischer's internal reporting. Management maintains a rolling 24-month liquidity forecast updated monthly and a covenant compliance dashboard linked to the order pipeline. The system flagged the covenant breach risk within two weeks of the cancellation.
Documentation note: record the assessment of Fischer's Krisenfrüherkennungssystem per §1 StaRUG. State which internal reports were examined and whether the system meets the §1 requirement. Cross-reference to the going concern evaluation under ISA 570.24.
Step 2 — Evaluate the §102 warning obligation
The team identifies the imminent illiquidity indicator under §18 InsO. The engagement partner issues a dated written warning to the Geschäftsführung referencing §102 StaRUG and §18 InsO, because the partner must assume management may not be fully aware of the available restructuring options.
Documentation note: file the dated warning letter. Record the indicators relied upon (OEM contract cancellation, projected cash shortfall of €12M by June 2026, anticipated covenant breach, §18 InsO threshold assessment). Retain management's written acknowledgement of receipt.
Step 3 — Assess audit implications for the financial statements
Fischer's management decides to pursue a StaRUG plan targeting two syndicated lenders (total claim: €85M) with a proposed 18-month maturity extension and partial covenant reset. Trade creditors and employees are excluded. The auditor evaluates whether the going concern assumption remains appropriate under ISA 570.16 by obtaining the draft StaRUG plan, the updated liquidity forecast incorporating the restructured terms, legal counsel's confirmation of StaRUG eligibility (no actual illiquidity), and the most recent bank correspondence on creditor support.
Documentation note: record the going concern assessment per ISA 570.16 alongside the StaRUG plan's key terms and the legal counsel confirmation. State the auditor's conclusion on whether a material uncertainty exists. If uncertainty remains, document the basis for the ISA 570.22 disclosure requirement.
Conclusion: the engagement file links the §1 early-detection assessment, the §102 warning, the ISA 570 going concern evaluation, and the underlying financial data into a single documented chain that traces each step to a statutory provision.
Why it matters in practice
Auditors sometimes treat §102 StaRUG as redundant given the existing HGB reporting obligations under §321(1) sentence 3 and §322(2) sentence 3. The two differ in timing and audience. The HGB provisions require disclosure in the audit report delivered after the audit. §102 requires a warning to the client as soon as indicators become apparent during the engagement, potentially months before the audit report is finalised. Failing to issue the warning exposes the auditor to civil liability under §§280(1), 675(1) BGB.
Practitioners preparing HGB financial statements for smaller GmbH entities (below statutory audit thresholds) overlook that §102 applies to them as well. The obligation triggers when preparing financial statements, not when performing an audit. A Steuerberater compiling annual accounts for a €4M-revenue GmbH carries the same §102 duty as a Wirtschaftsprüfer auditing a €200M entity.
StaRUG vs InsO (Insolvenzordnung)
| Dimension | StaRUG | InsO |
|---|---|---|
| Entry condition | Imminent illiquidity (§18 InsO) or over-indebtedness (§19 InsO); actual illiquidity bars access | Illiquidity (§17), imminent illiquidity (§18), or over-indebtedness (§19) |
| Court involvement | Optional; debtor can implement without court, or seek confirmation to bind dissenters | Mandatory; court opens proceedings and appoints an administrator unless self-administration is granted |
| Debtor control | Debtor retains full control of assets and operations | Administrator takes control in standard proceedings; debtor retains control only under Eigenverwaltung (§§270 ff.) |
| Scope of plan | Debtor selects which creditors to include; trade creditors and employees can be excluded | All creditors included; the plan covers the entire estate |
| Public disclosure | Proceedings can remain confidential unless court confirmation is sought | Public proceedings; opening decision published in the insolvency register |
The distinction matters for auditors because the confidential nature of StaRUG proceedings affects disclosure. A client pursuing a StaRUG restructuring may resist disclosure in the financial statements. The auditor evaluates whether IAS 10 (events after the reporting period) or ISA 570 going concern disclosure requirements apply regardless of the client's confidentiality preference.
Related terms
Frequently asked questions
When does §102 StaRUG require the auditor to warn the client?
The obligation triggers when indicators of insolvency grounds under §§17–19 InsO become apparent during the preparation or audit of financial statements and the professional must assume the client is unaware. §102 StaRUG does not require certainty of insolvency; apparent indicators are sufficient. The warning must be in writing, and non-compliance exposes the professional to liability under §§280(1), 675(1) BGB.
Can a company use StaRUG if it is already insolvent?
No. StaRUG is available only to companies not yet cash-flow insolvent under §17 InsO. Imminent illiquidity (§18 InsO) and over-indebtedness (§19 InsO) qualify as entry conditions. Once actual illiquidity occurs, the company must file for formal insolvency under the InsO within three weeks per §15a InsO. The auditor assessing StaRUG eligibility should verify the entity's current cash position against the §17 threshold.
Does a StaRUG restructuring plan affect the auditor's going concern assessment?
Yes. When management presents a StaRUG plan as its response to going concern doubts, the auditor evaluates that plan under ISA 570.16 as part of management's future actions. The auditor assesses feasibility (creditor support, liquidity projections, legal eligibility, timeline realism). A credible plan can resolve a material uncertainty. An incomplete or speculative plan does not.