Full-Service Law Firm: Clear Advice in German Insolvency Law
The legal team at Schlun & Elseven Rechtsanwälte advise and represent clients in all German insolvency matters. The conduct of insolvency proceedings for companies in Germany and the assertion of insolvency claims are part of our daily tasks in this field. Insolvency proceedings can be stressful for the parties involved, and knowing the steps which need to be taken is vital. Our legal team consists of experts in the field with many years of experience, and we can be relied upon during difficult times to provide you with the clear advice you need. As a full-service law firm with industry-specific expertise, you can be assured that you will receive comprehensive service. Contact us now at our email address: info@se-legal.de or by phone at: +49 221 93295960. Our lawyers look forward to working with you.
What is Insolvency under German Law?
In simple terms, insolvency means the inability to pay one’s creditor. In legal terms, a company is insolvent if it is only able to pay less than 90% of its liabilities over a period of at least three weeks and therefore has ceased the payments. If the management realises that it cannot meet its financial obligations anymore, or not longer than throughout the next 12 months, the threat of insolvency is apparent. The basic legal sources governing the issue in Germany are the Insolvency Regulation (Insolvenzverordnung – InsO) and the Avoidance of Transactions Act.
At Schlun & Elseven Rechtsanwälte, we are a full-service law firm with offices in Cologne, Aachen and Düsseldorf along with conference rooms around Germany. Clients of our firm can expect customer service of the highest quality alongside leading legal assistance. The diversity of our legal knowledge and industry-specific expertise ensures that you will receive comprehensive advice when making big decisions.
The German Insolvency Procedure
Insolvency proceedings aim at preventing creditors from realising their own claims through an individual compulsory enforcement procedure if the debtor is insolvent (§17ff. InsO). Therefore, the joint satisfaction of all creditors is sought by dividing the debtor’s assets in a special procedure (§1 InsO). The proceedings are intended to release the debtor from their residual debts. Various parties are involved in the insolvency proceedings, such as the debtor, the creditors, the insolvency court and the insolvency administrator (hereinafter “the Administrator”). The German Insolvency Regulation distinguishes between two types of proceedings, regular insolvency proceedings (corporate insolvency) and consumer insolvency proceedings (private insolvency). While the former governs the insolvency of legal entities, the latter regulates those of natural persons.
Entry into Proceedings: Filing for Insolvency
Before the German insolvency proceedings begin, the debtor (via their own application) or the creditor (in the form of an external application) must file an application for insolvency (§13 I InsO). Such an application must include one of the valid grounds for the commencement of proceedings of imminent or already occurring insolvency (§16 InsO). The competent court will examine the application and check all other conditions for the open