Insolvency monitoring is a special form of insolvency proceeding. Within the framework of insolvency (application) proceedings, (provisional) self-administration is ordered and a (provisional) insolvency monitor is appointed instead of a (provisional) insolvency administrator. The main difference between insolvency monitoring and standard insolvency proceedings is that the powers of administration and disposition remain with the board of management and a (provisional) insolvency administrator is not appointed. The (provisional) insolvency monitor does not serve as an advisor to the company, but rather must monitor the proper management of the company as carried out by the board of management and its legal advisor (reorganisation advisor).
In the context of temporary insolvency monitoring, two different procedures must be distinguished. The first procedure is laid out in section 270a of the Insolvency Statute (InsO). The second procedure is laid out in section 270b of the Insolvency Statute, which is also known as “Schutzschirmverfahren” (insolvency protection proceedings).
The main difference here is that insolvency protection proceedings pursuant to section 270b can only be initiated in the event of imminent insolvency and/or over-indebtedness. The initiation of the procedure laid out in section 270b requires the attestation of a person with particular experience in insolvency matters (lawyer, tax consultant or auditor) that the company is not currently insolvent (unable to meet its mature obligations to pay), but reorganisation measures are appropriate. The goal here is to draw up and submit an insolvency plan. The court sets a maximum deadline of three months for this. Another special feature of this type of procedure is that the person of the insolvency monitor, i.e. the person who monitors the proper execution of the procedure, can be proposed in the application and the court – insofar as the proposed person is qualified and not a person previously involved in the matter – must in principle agree to the proposal.
The procedure laid out in section 270a of the Insolvency Statute can also be initiated without a corresponding certificate. This procedure may also be initiated in the event of insolvency. Here too, however, it must be shown that the implementation of the procedure would not be detrimental to the creditors. In contrast to the insolvency protection proceedings laid out in section 270b, however, it is not possible to propose an insolvency monitor with binding effect.
Our lawyers and insolvency administrators at LEONHARDT RATTUNDE can act both as mandated reorganisation consultants and as court-appointed insolvency monitors in a large number of self-administration proceedings. Time is often a critical factor in situations where it is necessary to initiate insolvency protection proceedings. We at LEONHARDT RATTUNDE have a large team of specialists throughout Germany that enables us to operate nationwide and within a tight time frame.
We have accompanied a large number of successful self-administration processes − as consultants and as insolvency monitors.