The most important regulations on self-administration, insolvency and insolvency proceedings in German law can be found in the Insolvency Statute (InsO).
It goes without saying that there are other laws and regulations that are or can be of significance for insolvency cases, for example: the EU regulation 2015/848 on insolvency proceedings or liability regulations in special laws (e.g. managing director liability pursuant to section 64 of the Limited Liability Companies Act (GmbHG) or pursuant to sections 130a, 177a of the Commercial Code (HGB); board liability pursuant to sections 92, 93 of the Stock Corporation Act (AktG); supervisory board liability pursuant to sections 116, 93 of the Stock Corporation Act (AktG); tax liability pursuant to section 69 of the Fiscal Code of Germany (AO), etc.).
Under German law, a natural person or legal entity is insolvent if it is unable to meet its mature obligations to pay (section 17 of the Insolvency Statute) or/and overindebted (section 19 of the Insolvency Statute).
The threat of insolvency (section 18 of the Insolvency Statute) may also be a reason to open insolvency proceedings if the debtor itself files the necessary application.
The main objectives of insolvency proceedings are set out in section 1 of the Insolvency Statute. The focus here is on the equal satisfaction of all creditors, i.e. in reverse order to avoid the preferential treatment of individual creditors to the detriment of others (par conditio creditorum). In addition, measures can be taken to preserve a company and to enable the bona fide debtor to make a fresh economic start by releasing itself from its liabilities. The latter case is effected either by means of the instrument of the so-called discharge of residual debt (sections 286 ff. of the Insolvency Statute) or by means of an insolvency plan (sections 217 ff. of the Insolvency Statute). An insolvency plan is also possible in consumer insolvency proceedings (sections 304 ff. of the Insolvency Statute).
For companies and entrepreneurs, insolvency law provides for the possibility of self-administration (sections 270 ff. of the Insolvency Statute). A transferring reorganisation by means of an asset deal or a share deal can also serve as a further means of reorganisation.
Our experts at LEONHARDT RATTUNDE include experienced insolvency administrators and specialist lawyers in insolvency law, and we can advise you on all facets of insolvency law. Regardless of whether you are interested in debt relief by means of an insolvency plan, are considering reorganising your company by way of self-administration, or whether you have other insolvency issues, we can help. Get in touch with us. We are happy to advise you.
We can advise you on all aspects of insolvency law.