When the StaRUG restructuring procedure came into effect at the beginning of 2021, it was seen by experts as a valuable addition to German legal practice. The procedure focuses on financial restructuring before insolvency, and allows majority decisions against individual creditors.

However the public first became aware of StaRUG in 2023 via Leoni, and the impression was far from positive. Leoni’s minority shareholders ended up with nothing in the restructuring. This fate is shared by the shareholders of Gerry Weber, and a similar fate awaits shareholders at Varta, whose restructuring plan is currently being finalised.

Many shareholder advocates are now critical of StaRUG, and the recent twist in the Leoni case likely fuels the critics' arguments: Stefan Pierer, who became the sole owner during the StaRUG restructuring, is selling the majority of the cable specialist to China. While the minority shareholders, who were outvoted under StaRUG, ended up with nothing after a capital reduction, Pierer subscribed to the subsequent cash capital increase of 150 million euros. Now, just over a year after the restructuring was completed, Chinese Luxshare is paying a nine-figure sum. One can assume that former shareholders like Pierer contributed significantly to the restructuring of the formerly heavily indebted Leoni. However, the public narrative is different.

StaRUG is cast in a negative light. The procedure achieved important goals with Leoni. The auto supplier survived, operations continue, and a new investor is on board. However, every business decision is tainted by the outcry of former minority shareholders who feel unfairly treated. When StaRUG restructuring appears to be the best option for a company in distress, management must pursue it. Yet, in the stock market environment, executives may struggle to rely on a procedure that is blacklisted by small shareholders and shareholder protection associations.

Leoni was meant to be a trailblazer for the use of StaRUG, providing all parties with a sense of its practical application. This objective has failed completely. Many small shareholders perceive StaRUG as a tool for expropriating them, while others emerge as winners from the crisis. The reputation of the young restructuring procedure couldn’t have been more negatively affected.