A restructuring opinion "based on IDW S6" can become a dangerous liability trap. We analyse the requirements of BGH case law regarding integrated planning, cash flow evidence and the target vision of the restructured company.
Introduction: The Deceptive Safety of "Based on"
In restructuring practice, one regularly encounters opinions that are not prepared as a complete restructuring concept under IDW S6, but merely "based on the IDW Standard S6". What at first glance appears to be a permissible, pragmatic simplification turns out upon closer analysis to be one of the most dangerous liability traps in restructuring law. The case law of the Federal Court of Justice (BGH) makes it unmistakably clear: A restructuring concept must be complete in substance – how it is titled is irrelevant.
This article provides an in-depth analysis of the requirements that case law places on a robust restructuring opinion, why an opinion "based on IDW S6" regularly fails to meet these requirements, and the far-reaching liability consequences that arise for all parties involved.
IDW S6 as the Standard of Case Law
Origin and Significance of the Standard
The IDW S6 standard "Requirements for Restructuring Concepts" was developed by the Institut der Wirtschaftsprüfer in Deutschland e.V. (IDW) and last updated in 2018. It defines the minimum requirements for a restructuring concept that coherently and comprehensibly demonstrates a company's restructuring viability. Although IDW S6 is not legislation, case law has accorded it the function of a de facto legal standard.
The BGH has consistently held that a restructuring concept meeting IDW S6 requirements constitutes a suitable basis for assessing restructuring viability (cf. BGH, judgment of 12 May 2016 – IX ZR 65/14). Conversely, this means: An opinion that falls short of these requirements provides no reliable liability protection.
The Core Elements Under IDW S6
A complete restructuring opinion under IDW S6 must contain the following mandatory components:
- Description of the company – legal, economic and organisational circumstances
- Analysis of crisis stages and root causes – complete identification of endogenous and exogenous factors
- Target vision of the restructured company – concrete target state after restructuring
- Measures concept – operational and financial restructuring measures
- Integrated restructuring plan – projected P&L, balance sheet and cash flow as an integrated financial model
- Assessment of restructuring viability – conclusive judgment on feasibility and likelihood of success
If even one of these elements is missing or only rudimentarily addressed, the restructuring opinion does not meet the requirements of case law.
What Does "Based on IDW S6" Mean?
The Practice of Deviation
In practice, the phrase "based on IDW S6" regularly means that the author of the opinion deliberately deviates from the full requirements of the standard. Typical deficiencies include:
- No or only rudimentary integrated financial planning – often only an earnings projection without a corresponding balance sheet and cash flow plan
- Missing or vague target vision – instead of a concrete target state, general statements of intent are formulated
- Incomplete analysis of crisis causes – causes are described but not systematically differentiated into endogenous and exogenous factors
- Missing evidence of avoidance of insolvency grounds – the critical proof that inability to pay and over-indebtedness are avoided throughout the planning period is absent
- Inadequate description of measures – measures are named but not presented in terms of their concrete feasibility, timeline and financial impact
The Motivation of Authors
The reasons for preparing a reduced opinion are varied:
- Cost and time pressure: A complete S6 opinion requires considerable resources, typically taking 6-12 weeks and costing between EUR 50,000 and EUR 250,000 depending on complexity.
- Insufficient data: The company lacks the data required for integrated planning, particularly meaningful cost accounting or liquidity planning.
- Avoidance of a negative conclusion: The author recognises that a complete analysis might lead to a denial of restructuring viability and opts for a "stripped-down" format.
- Lack of specialist expertise: Not every adviser possesses the business and insolvency law expertise required to prepare a complete S6 opinion.
BGH Case Law Requirements in Detail
Landmark Decisions of the BGH
The BGH has specified the requirements for a viable restructuring concept in several landmark decisions:
BGH, judgment of 4 December 1997 – IX ZR 47/97 (BGHZ 137, 267): In this landmark decision, the BGH systematically formulated the requirements for a restructuring concept for the first time. The concept must be based on verifiable factual foundations, be internally coherent, and be prepared by an "unbiased, industry-knowledgeable expert" using current documentation. It must substantiate a positive going-concern prognosis and must not be "obviously impracticable".
BGH, judgment of 12 May 2016 – IX ZR 65/14 (BGHZ 210, 249): The BGH refined and confirmed the 1997 requirements: a restructuring concept must analyse the causes of the crisis, develop a coherent restructuring concept and demonstrate feasibility through concrete measures. Crucially, what matters is not formal IDW S6 compliance but whether the concept meets the substantive minimum requirements. An opinion prepared merely "based on IDW S6" that falls short in substance provides no protection.
BGH, judgment of 14 June 2018 – IX ZR 22/15: The BGH reaffirmed that formal IDW S6 conformity is not required, but the substantive minimum content is: analysis of the causes of losses, earnings and financial planning, and proof of feasibility. The standard remains assessment by an "unbiased, industry-knowledgeable expert".
BGH, judgment of 3 March 2022 – IX ZR 78/20: In this most recent landmark decision, the BGH shifted the burden of proof: the insolvency administrator must demonstrate that the restructuring attempt was unsuitable and that the debtor recognised this. The debtor may rely on qualified expert advice. This underscores the importance of a robust opinion – only those who rely on a complete, requirements-compliant opinion can successfully exculpate themselves in a dispute.
The Verdict: Substance Over Form
The central insight from BGH case law is: What matters is the content, not the title. The phrase "based on IDW S6" does not change the fact that the substantive requirements for a restructuring opinion must be met for it to fulfil its protective function.
Liability Risks in Detail
Management Liability
The management of a company in crisis bears special responsibility. Sections 15a, 15b InsO require the managing director, upon occurrence of inability to pay or over-indebtedness, to file for insolvency without culpable delay, but no later than three weeks (for inability to pay) or six weeks (for over-indebtedness).
An incomplete restructuring opinion "based on IDW S6" can become the management's undoing in several respects:
- Wrongful trading liability (§ 15b InsO): If management relies on an opinion that does not reliably exclude insolvency grounds, it cannot exculpate itself. Personal liability for payments made after the onset of material insolvency looms.
- Duty of care liability (§ 43 GmbHG / § 93 AktG): Management must exercise the diligence of a prudent businessperson. This includes relying on a qualitatively sufficient restructuring opinion.
- Criminal risks (§§ 283 ff. StGB): In cases of delayed insolvency filing, criminal investigations may follow.
Adviser and Opinion Author Liability
Authors of incomplete restructuring opinions also expose themselves to considerable liability risks:
- Contractual liability: The author owes an opinion that meets recognised standards.
- Tortious liability to third parties (§ 826 BGB): Case law recognises that a restructuring opinion can serve as a basis of trust for third parties – particularly lenders.
- Liability under § 311(3) BGB: The opinion author who claims special personal trust may be liable to third parties even without a direct contractual relationship.
Bank Liability
Credit institutions that extend or provide new credit on the basis of an inadequate restructuring opinion take considerable risks:
- Unconscionable lending (§ 826 BGB): If a bank grants credit to a company knowing or having reason to know that the company is incapable of restructuring, thereby delaying insolvency, it may be liable to other creditors.
- MaRisk requirements (BTO 1.2.5): The supervisory minimum requirements for risk management (MaRisk), specifically BTO 1.2.5 (Treatment of restructuring exposures), require a qualified restructuring opinion when supporting distressed exposures. Under BTO 1.2.5 para. 4, the borrower's restructuring viability must be assessed on the basis of a restructuring concept meeting recognised standards of business practice.
- Avoidance risks (§§ 129 ff. InsO): If the company subsequently becomes insolvent, repayments on loans extended on the basis of an inadequate opinion may be subject to insolvency avoidance.
The Integrated Plan: The Heart of the Opinion
Why Integrated Planning Is Indispensable
Integrated restructuring planning is the quantitative backbone of the restructuring opinion. It is the element most frequently missing or only rudimentarily implemented in "based on" opinions – and simultaneously the element without which a restructuring opinion cannot fulfil its purpose.
The integrated plan consists of three inseparably linked financial projections:
1. Projected Profit and Loss Statement
The projected P&L must:
- Quantify the effects of all operational restructuring measures
- Contain realistic revenue and cost projections based on sound assumptions
- Demonstrate the return to sustainable profitability
- Include sensitivity analyses
2. Projected Balance Sheet
The projected balance sheet is essential for demonstrating that no over-indebtedness occurs during the planning period. It must:
- Reflect the effects of financial restructuring measures
- Demonstrate a sustainable improvement in equity ratio
- Provide mathematical proof that over-indebtedness in the insolvency law sense does not occur at any point
3. Projected Cash Flow Statement (Liquidity Planning)
The projected cash flow statement is the most critical component. It must demonstrate that the company is solvent at every point during the planning period:
- Monthly liquidity planning for at least the first 12-24 months
- Proof of sufficient liquidity reserves even under stress conditions
- Solvency prognosis within the meaning of § 17 InsO
The Integration Principle
Critically, the three projections must be integrated – they must stand in a consistent mathematical relationship. Only this ensures that the overall picture of the restructuring is coherent and robust.
Avoiding Insolvency Grounds: The Hard Requirement
Inability to Pay (§ 17 InsO)
A restructuring concept must demonstrate that inability to pay is avoided throughout the entire planning period. The BGH has clearly defined inability to pay (BGH, judgment of 24 May 2005 – IX ZR 123/04):
- Inability to pay exists when the debtor cannot meet due payment obligations
- A mere payment interruption only exists if the liquidity gap can be reduced to below 10% of total due liabilities within three weeks
An opinion "based on IDW S6" that contains no monthly cash flow planning simply cannot provide proof of solvency.
Over-Indebtedness (§ 19 InsO)
Over-indebtedness as an insolvency ground requires proof that the going-concern prognosis is positive and that the company's assets cover its liabilities. This requires a complete projected balance sheet based on going-concern values.
The Target Vision: More Than Just a Vision
The target vision of the restructured company must demonstrate that the company is sustainably competitive after restructuring. A robust target vision must include:
- Future business model: How will the company earn money after restructuring?
- Market positioning and competitive advantages: Why will the company survive in the market?
- Organisational structure: What will the organisation look like after restructuring?
- Financial target structure: What equity ratio, earnings level and cash flow margin should be achieved?
- Workforce structure: How many employees will be needed in which areas?
- Investment requirements: What investments are required for future viability?
Recommendations for Practice
For Managing Directors
- Insist on a complete S6 opinion. The additional costs are marginal compared to personal liability.
- Verify the author's qualifications.
- Have the opinion reviewed by an independent third party.
- Document your decision-making processes.
For Credit Institutions
- Do not accept opinions "based on IDW S6" as a basis for credit decisions.
- Specifically check the integrated plan.
- Require explicit proof of avoidance of insolvency grounds.
For Advisers and Opinion Authors
- Only prepare complete S6 opinions or make it unmistakably clear that the document is not a restructuring concept.
- If the data does not support a complete opinion, communicate this in writing.
- Protect yourself contractually by clearly defining the scope and limitations.
Conclusion: No Room for Half Restructuring Concepts
BGH case law leaves no doubt: There is no "restructuring concept light." An opinion "based on IDW S6" either is a complete restructuring concept meeting all substantive requirements – in which case the phrase "based on" is superfluous and misleading – or it does not meet these requirements – in which case it provides no liability protection.
Integrated planning with projected P&L, balance sheet and cash flow is non-negotiable. Evidence of avoidance of insolvency grounds is not optional. The target vision cannot be replaced by platitudes. Every missing element makes the opinion vulnerable and the decisions based on it fraught with liability.
At compleneo, we have extensive experience in supporting corporate restructurings and critically analysing restructuring opinions. We advise managing directors, shareholders and credit institutions on all aspects of preparing and evaluating restructuring concepts under IDW S6.
