Insolvency is rarely a sudden event. It is usually the final stage of a longer-lasting corporate crisis. The classic progression ranges from a loss of confidence among stakeholders to strategy and sales crises to an acute liquidity crisis. At the latest when a company enters an “advanced crisis” – i.e. a performance crisis or even a liquidity crisis – the utmost attention is required.

The obligation to file for insolvency: no room for discretion

According to Section 15a InsO, legal representatives of insolvent companies (e.g. GmbH, AG, GmbH & Co. KG) must file for insolvency immediately – but at the latest within three or six weeks – in the event of insolvency or over-indebtedness. Simply hoping for better times is not enough: Only those who demonstrably initiate concrete restructuring measures may exhaust the deadline.

Insolvency or just payment stagnation?

Insolvency occurs when a company is no longer in a position to meet its payment obligations as they fall due. The decisive factor here is whether this gap can be closed within three weeks with a high degree of probability. If this cannot be ensured, there is a risk of liability – up to and including criminal liability for delaying insolvency.

Over-indebtedness is not purely a balance sheet issue

In addition to insolvency, over-indebtedness is also a reason for insolvency – particularly in the case of legal entities. In a two-stage procedure, a prognosis of continued existence must first be drawn up. Only if this is negative is an over-indebtedness status to be drawn up. A positive forecast (overwhelming probability of solvency) therefore protects against the obligation to file for insolvency – but requires sound planning and reliable data.

What we can do for you

We support you in analyzing your liquidity, prepare well-founded going concern forecasts and help you assess your application obligations. We also assist you in communicating with courts, creditors and investors – so that a crisis does not turn into a liability case.

Disclaimer: The content presented in this article is for general guidance only and does not replace individual advice. Each individual case is different and requires a specific legal and economic assessment. Despite careful research, we assume no liability for the accuracy, completeness or timeliness of the information.