Implementation of standard insolvency proceedings against a company Unfortunately this specification of service has not yet been completely translated.

If a company no longer has enough money available, (company) insolvency proceedings can or must be carried out against the assets of the company in some cases.

If a company no longer has enough money available or will soon run out of money, (company) insolvency proceedings can or must be carried out against the assets of the company in some cases.

Corporate insolvency proceedings can be considered both for legal entities (AG, GmbH, etc.) and for natural persons (e.g. sole traders).

In the case of natural persons, it is important to check whether this person can be classified as a consumer under insolvency law for example, in cases where the business is closed and possibly all the prerequisites for consumer insolvency proceedings are met (see also "Conducting consumer insolvency proceedings").

The consumer insolvency proceedings apply to all natural persons,

  • who do not (currently) carry out or have not (in the past) carried out any self-employed economic activity
  • who have carried out an independent economic activity in the past, but whose financial circumstances are manageable and against whom there are no claims from employment relationships.
  • The financial circumstances are only considered manageable if the debtor has fewer than 20 creditors at the time when the application for the opening of insolvency proceedings is filed.
  • Receivables from employment relationships are in particular claims of the tax administration from wage tax as well as claims of social security institutions for contributions from former employees of the debtor.

In order to check the correct type of procedure, you should (if your company is already discontinued) prove to the insolvency court that you are not to be classified as a consumer. For this purpose, you can make the aforementioned claims credible by means of suitable documents (for example, current clear-text account statement of the tax office, certificate from the social security institution on the type of arrears).

Legal entities (AG, GmbH, etc.) should make sure that a person authorized to represent the company has signed the written application for the opening of insolvency proceedings.

With regard to permissions, the following applies:

At

  • legal entities (e.B corporations or registered associations) are
    • any legal representation (managing director, board member),
    • in the case of lack of leadership, also each shareholder,
  • in the case of a stock corporation or a cooperative, any member of the Supervisory Board,
  • in the case of companies without legal personality (e.B. OHG or KG), each personally liable partner individually

entitled to submit the self-application for the legal entity, even if he or she is otherwise only authorized to represent together with other persons.

Hint:
If a shareholder of a legal entity or members of the Supervisory Board submits the application, they must also credibly demonstrate the lack of leadership. In the case of a self-application due to imminent insolvency, special features apply.

If there is an admissible application for the conduct of company insolvency proceedings, the insolvency court will usually appoint an expert and, in some cases, a provisional insolvency administrator.

The insolvency court must also appoint a provisional creditors' committee if your company has fulfilled at least two of the following three characteristics in the previous financial year:

  • at least EUR 6,000,000 balance sheet total after deduction of a deficit shown on the assets side within the meaning of Section 268 (3) of the German Commercial Code (HGB);
  • at least EUR 12,000,000 in sales revenue in the twelve months preceding the balance sheet date;
  • at least fifty employees on an annual average.

Furthermore, the insolvency court examines whether the opening of insolvency proceedings can take place (read more about this under "Opening decision insolvency proceedings").

In doing so, the court examines in particular whether there is a reason for opening the proceedings and whether the financing of the insolvency proceedings is secured. As a debtor or as a legal representative of the debtor company, you are obliged to cooperate comprehensively.

Opening reasons can be used for both the own and the third-party application

  • insolvency (§ 17 InsO) and
  • (only for legal persons) Over-indebtedness (§ 18 InsO)

be.

In the case of a self-application, the opening reason is also the

  • imminent insolvency (§ 19 InsO)

in consideration.

The financing of the insolvency proceedings is secured if the future insolvency estate is likely to be able to cover the costs of the insolvency proceedings.

If a natural person submits a self-application and does not have sufficient assets to finance the insolvency proceedings, he or she can, under certain circumstances, file an application for deferral of the costs of the proceedings (read "Deferral of procedural costs in insolvency proceedings").

In addition, in these cases, you should consider filing an application for discharge of residual debt (more on this under "Procedure of the residual debt discharge procedure")

If the insolvency court has completed its examinations and determined that there is an admissible and reasoned application and the financing of the insolvency proceedings by the insolvency estate is probable or secured by a deferral of procedural costs, the opening of insolvency proceedings shall be effected by order.

What happens to your company (if operations have not yet ceased) after the opening of insolvency proceedings always depends on the circumstances of the individual case. Conceivable is, among other things:

  • Cessation of business operations and realisation of assets
  • Restructuring of the company through an insolvency plan (read more about this at "Insolvency plan as a restructuring instrument")
  • In the case of natural persons: Release of the business operations from the insolvency estate with the consequence that in a certain period of time you have to place the insolvency creditors by payments to the trustee as if you had entered into an appropriate employment relationship (as an employed employee).

Application for the opening of insolvency proceedings and, if necessary, other documents

Preconditions

  • Applicant (in the case of self-application) or debtor (in the case of third-party application) is not to be classified as a consumer (under insolvency law).
  • Existence of a reason for opening
    • Insolvency (§ 17 InsO)
    • imminent insolvency (§ 18 InsO)
    • if applicable, over-indebtedness (§ 19 InsO)
  • Future insolvency estate can probably finance costs of insolvency proceedings (or [in the case of natural persons] deferral of procedural costs is granted on application)
  • Forms of the Lower Saxony State Justice Portal

Related Links

  • §§ 723 to 735 Of the German Civil Code (BGB)
  • §§ 2, 3, 11, 13, 15 to 19 Insolvency Code (InsO)
  • Insolvency Code (InsO)
  • Insolvency Remuneration Regulations (InsVV)

If there is an admissible application for the conduct of company insolvency proceedings, the insolvency court will usually appoint an expert and, in some cases, a provisional insolvency administrator.

The insolvency court must also appoint a provisional creditors' committee if your company has fulfilled at least two of the following three characteristics in the previous financial year:

at least EUR 6,000,000 balance sheet total after deduction of a deficit shown on the assets side within the meaning of Section 268 (3) of the German Commercial Code (HGB);

at least EUR 12,000,000 in sales revenue in the twelve months preceding the balance sheet date;

at least fifty employees on an annual average.

Furthermore, the insolvency court examines whether the opening of insolvency proceedings can take place (read more about this in the opening decision insolvency proceedings).

In doing so, the court examines in particular whether there is a reason for opening the proceedings and whether the financing of the insolvency proceedings is secured. As a debtor or as a legal representative of the debtor company, you are obliged to cooperate comprehensively.

Opening reasons can be used for both the own and the third-party application

insolvency (§ 17 InsO) and

(only for legal persons) Over-indebtedness (§ 18 InsO)

be.

In the case of a self-application, the imminent insolvency (§ 19 InsO) can also be considered as the reason for the opening.

If the insolvency court has completed its examinations and determined that there is an admissible and reasoned application and the financing of the insolvency proceedings by the insolvency estate is probable or secured by a deferral of procedural costs, the opening of insolvency proceedings shall be effected by order.

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Last update or date of publication
29.09.2021