Refinancing in a Changed Interest Rate Environment: What Management Boards Need to Know Now in Light of the “Wall of Maturity”

The era of zero interest rates is long gone. Energy prices have risen as a result of the war in the Middle East, and the inflation rate in the eurozone reached a peak of 3.2 percent in May 2026. The ECB has responded by raising key interest rates for the first time in almost three years, by 0.25 percentage points to 2.25 percent. A further rate increase in the course of the year is partially expected.

At the same time, particularly in the real estate sector, the volume of maturing liabilities is increasing significantly. In Germany alone, commercial real estate financings totaling approximately EUR 82 billion will mature in 2026. A large portion of these loans originated during the low-interest-rate period of 2015–2020. Refinancing is now only possible on significantly less favorable terms. The risk of covenant breaches and loan terminations is growing. Simultaneously, available capital is being allocated more selectively, in part due to increased regulatory requirements for credit institutions. In summary: a wave of refinancing is hitting a market environment that has become considerably more challenging.

For management boards, the question therefore arises as to what courses of action are available when necessary follow-on financings are difficult or even impossible to obtain.

I. Options Review in the Case of Difficult Follow-On Financing

Option 1: Buying Time Through Amend & Extend Arrangements

The significance of amend & extend arrangements has increased against the backdrop of the elevated interest rate environment and the “Wall of Maturity.” On the one hand, the terms of existing loans are adjusted or supplemented (“Amend”), for example through “lighter” covenants (financial ratios) and restricted termination rights. On the other hand, the maturities of financial liabilities are extended (“Extend”). This is particularly useful for overcoming a temporally manageable liquidity shortfall. By deferring the immediately upcoming maturity of a loan, time is gained for restructuring measures. An amend and extend arrangement therefore regularly constitutes a bridging instrument before more extensive restructuring measures are implemented or an improved market environment later enables refinancing. Unless the StaRUG (German Corporate Stabilization and Restructuring Act) or the SchVG (German Bond Act) are utilized, consensus between the debtor and all financiers involved in the restructuring is required.

Option 2: Restructuring of Liabilities Under StaRUG Proceedings

From the onset of imminent illiquidity (Section 18 InsO), restructuring by means of the StaRUG is a proven course of action in practice. The centerpiece of the reorganization of liabilities in this case is a detailed restructuring plan, together with a comparative calculation regarding the next-best alternative scenario. In particular, the plan may provide for new maturity dates, interest arrangements, debt haircuts, or the exchange of claims for equity interests. A key advantage of restructuring under StaRUG proceedings is that the restructuring plan does not need to include all creditors and shareholders. Rather, the company itself selects the plan-affected parties based on objective criteria and allocates them into groups accordingly. Plan adoption requires a majority of 75 % of voting rights, measured by the value of claims or equity interests, in all groups. The lack of consent by one or more groups may, under certain conditions, be judicially overridden by means of a “cross-class cram-down.”

Once the required majorities are achieved, the restructuring plan is binding on all plan-affected parties, regardless of whether they participated in the vote or how they may have voted.

Option 3: Restructuring of Bonds Under the German Bond Act (SchVG)

In cases where only bonds are affected, restructuring under the German Bond Act (Schuldverschreibungsgesetz – SchVG) is possible. The SchVG enables amendments to the bond terms, such as the reduction of interest rates, changes to the maturity of the principal claim, or the replacement of security interests. The prerequisite is a resolution by the bondholders, which is adopted at an initial bondholders’ meeting or in a vote without a meeting pursuant to Section 18 SchVG. The meeting has a quorum if at least 50 % of the outstanding bonds of an issue are represented (Section 15(3) sentence 1 SchVG). However, for amendments to the material content of the bond terms, a qualified majority of at least 75 % of the participating voting rights is required. If the quorum requirement is not met, a second bondholders’ meeting may be convened. For the resolutions of interest here, which require a qualified majority (see above), a quorum of 25 % of the outstanding bonds is then required for the meeting to have a quorum.

A key difference from StaRUG proceedings is that a separate SchVG procedure is required for each affected bond issue, in which the respective required majorities must be achieved.

Option 4: Plan-Based Reorganization Under Debtor-in-Possession Management

Once mandatory insolvency grounds exist (inability to pay debts as they fall due pursuant to Section 17 InsO, and in the case of entities with limited liability, also over-indebtedness pursuant to Section 19 InsO), the members of the representative body are obligated to file for insolvency (Section 15a(1) InsO). With sufficient preparation, reorganization is generally possible under debtor-in-possession management pursuant to Sections 270 et seq. InsO, whereby the management board or managing directors retain their powers of disposition and ability to act. Instead of an insolvency administrator, only a custodian (Sachwalter) is appointed as a supervisory person, who monitors compliance with creditors’ rights in particular. The key prerequisite is careful debtor-in-possession planning, demonstrating that the company is fully funded for six months during the proceedings. In addition, a preliminary concept for reorganization must be presented. Preservation of the insolvent legal entity – i. e., the stock corporation (AG) or limited liability company (GmbH) – is possible through an insolvency plan reorganization. Provided that inability to pay has not yet occurred and the intended reorganization is not without prospect of success, there is the possibility of protective shield proceedings (Section 270d InsO) during the opening phase, which grants the debtor a fundamentally binding right to propose the person of the custodian.

Due to insolvency money (Insolvenzgeld) and the possibility of intervening in contracts that are binding outside of insolvency through election rights and special termination rights, insolvency reorganization may, after careful deliberation, be the best course of action in individual cases. It is available on a voluntary basis from the onset of imminent illiquidity (time horizon: 24 months) as an alternative to a purely financial restructuring under the StaRUG.

II. Conclusion

The “Wall of Maturity” is hitting the German economy with full force and will continue to occupy it for a considerable period of time. In fulfillment of their general duties to avert crises pursuant to Section 1 StaRUG, management boards should therefore examine in a timely manner which legal and commercial courses of action are available to them in the event of problematic refinancings. Time pressure, complexity, and liability risks can at times overwhelm even experienced management boards. The early and consistent involvement of experts as well as a thorough options analysis are therefore recommended.