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Insolvency lawyer in Germany | Insolvency proceedings

AHS Rechtsanwälte
Insolvency law

Your insolvency lawyer in Germany

We know that insolvency proceedings can be intimidating or frightening for many people. As insolvency lawyers who have been practicing for two decades, we have worked on hundreds of cases in insolvency law, representing a wide range of parties. Because of our approach to the insolvency law and to our clients, we are able to provide a unique perspective to individuals, companies and creditors who are often facing confusing insolvency proceedings.

About our insolvency law firm

Our insolvency law firm supports companies, creditors and private individuals in the preparation and accompaniment of insolvency proceedings. We are active in consumer insolvency proceedings , regular insolvency proceedings (for businesses) and insolvency plan proceedings , representing debtors as well as creditors. Of course, as a specialised insolvency law firm, we also support you in criminal proceedings in the area of insolvency law. We are able to draw on a wide range of expert knowledge to help our clients in any insolvency matter. We negotiate solutions with insolvency administrators for creditors, debtors and managing directors. For creditors, we register the claims with the insolvency administrator. We professionally prepare the insolvency application for debtors. In addition, when working with us, you benefit from our many years of experience as a leading insolvency law firm in Germany.

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Our insolvency lawyers

As specialist lawyers who have been working in the field of insolvency for over 20 years, we know exactly what an enormous burden illiquidity can be and how important it is to get fast professional help. Therefore it is our objective to offer those affected a professional debtor and insolvency counselling without any waiting time.

Nina Haverkamp

Christoph Brühl

Business insolvency and private insolvency in Germany

The German law distinguishes between so called consumer insolvency proceedings and regular insolvency proceedings. Regular insolvency proceedings apply to all business insolvencies and consumer insolvency proceedings apply to all private insolvencies . Please note that you do not have to be a German citizen to file for insolvency – you just have to live in Germany.

Recently, insolvency proceedings in Germany only last three years. This applies to the private insolvency as well as the business insolvency. This means that debtors in Germany are debt-free after 3 years .

The structure of insolvency proceedings in Germany:

Consumer insolvency proceedings and discharge of residual debts

1. Step: Attempt of extra-judicial settlement

Before the consumer debtor can file an insolvency request, he first has to attempt to achieve an extra-judicial settlement with his creditors. One of the reasons of this obligation is that the courts shall not be charged with too many insolvency proceedings which usually require very high efforts of all who are concerned with them. The law demands that the debtor has to present a certificate of a so-called „suitable person or agency“. The certificate has to state that within the last six months an attempt to reach an extra-judicial agreement with the creditors on the basis of a settlement plan has failed. The federal states can determine which preconditions an agency or person has to meet to be regarded as „suitable“ according to the law.

In any case, the specialized AHS attorneys are suitable persons and therefore you competent partners in preparing your insolvency proceedings.

2. Step: The judicial settlement plan – proceedings

If the extra-judicial attempt to reach a settlement with the creditors fails, the debtor can file a request to open insolvency proceedings. Besides the certificate of the suitable agency or person he has to submit a settlement plan and records of his assets and his income, his creditors and his debts. The settlement plan has to contain all provisions which are suited for an appropriate settlement of the debts. It can be identical with the plan on which the debtor’ s extra-judicial settlement attempts were based. The courts accept even a so-called „zero-plan“. These are settlement plans of debtors with no income and no assets which provide no payments to the creditors. The effect of the acceptance of the „zero-plans“ by the courts is that debtors either in the settlement plan – proceedings or at the latest after the six years of the discharge proceedings can be freed of their debts even if they cannot pay anything to their creditors.

After reviewing the documents submitted by the debtor the court decides whether a court guided second attempt to reach a settlement between the debtor and the creditors could be successful. If it decides in favor of settlement-plan-proceedings, it serves the plan and an overview over the assets and the income of the debtor on all creditors who are named by the debtor. The creditors have the opportunity to comment on the settlement plan and the other documents submitted by the debtor. If all creditors consent to or do not object to the plan within a month the plan is deemed to be approved. If the majority of the creditors have approved the plan and if the sum of their claims exceeds half of the total sum of the claims of the named creditors, the court can replace the objections of the other creditors under certain preconditions.

If the majority of the creditors object to the plan, the settlement plan – proceedings end and the insolvency proceedings will be opened.

3. Step: Insolvency and discharge proceedings

After the failure of judicial settlement plan – proceedings and if the bankruptcy estate covers the costs of the proceedings, the insolvency proceedings will be opened. The court appoints an administrator. After that a period of 5 – 6 years starts during which the debtor has to transfer all his attachable wage claims to the administrator. The administrator distributes the collected money among the creditors after having subtracted his legal fees.After six years the court will decide on the discharge of debts. The discharge shall only be for the benefit of honest debtors. Therefore – on request of a creditor – the discharge will be refused if the debtor for example:

- is convicted for a bankruptcy crime,

- within the last three years before the opening of the proceedings made false statements to obtain a loan or grants from

- public funds or to avoid making payments to public funds,

- obtained discharge of debts within the last ten years or

- neglected his information and co-operation duties during the proceedings.

The discharge has the effect that the debtor is freed from all debts except:

- from claims which arose during the insolvency proceedings,

- from obligations of the debtor incumbent on him under a tort by wanton act, insofar as the creditor has stated this legal reason when filing the corresponding claim with the administrator,

- from fines and

- from interest-free loans granted to the debtor to pay the costs of the insolvency proceedings.

General insolvency proceedings

1. Opening proceedings

Insolvency proceedings can only be opened if a request is filed at the first instance court (Amtsgericht) which is competent for the debtor’ s place of residence respectively – if he is a businessman – for the debtor’ s place of business. Different to the insolvency laws of other countries the German Insolvency Statute is not confined only to merchants. Insolvency proceedings on the contrary can be opened regarding the estate of every natural person, legal entity, personal company or partnership. The request can either be filed by the debtor or a creditor.

The Insolvency Statute in general admits two insolvency reasons:

- the illiquidity, i.e. the inability to pay the due obligations and

- the overindebtedness, which requires that the assets of the debtor do not cover his obligations. The overindebtedness is only an insolvency reason for legal entities and not for natural persons.

During the period until the opening decision the court has to take all necessary measures to prevent any detrimental changes of the debtor’s assets. In particular, the court can impose a general prohibition of transfers against the debtor. Any execution against the debtor can be either forbidden or stayed. And above all the court can appoint a temporary administrator. The rights and duties of such a temporary administrator differ depending on whether the court has imposed a general prohibition of transfers against the debtor or not.If an insolvency reason exists the insolvency proceedings have to be opened provided the assets of the debtor cover the costs of the proceedings.

2. The opened insolvency proceedings

If insolvency proceedings are opened the court will appoint an administrator and determine the date of the first meeting of creditors, the so-called „report meeting“, in which the creditors have to decide about the further development of the proceedings. Simultaneously with the opening of the proceedings the debtor loses the right to manage and transfer his assets. This right passes over to the administrator.

When the proceedings are opened the creditors can file their claims with the administrator.

The highest organ of the insolvency proceedings is the meeting of creditors. During their first meeting the creditors can for example replace the court appointed administrator and elect another one. All other essential decisions concerning the proceedings are either made by the meeting of creditors or by the creditors´ committee. The meeting of creditors particularly decides whether the debtor’s enterprise shall be closed or continued. The administrator has to ask for the consent of the creditors´ committee or – if no committee is appointed – for the consent of the meeting of the creditors concerning all transactions which are of particular importance. This of course includes the decision whether an enterprise shall be sold or not.

The task of the creditors´ committee is to support and to monitor the administrator. It can be established by the court before the first meeting of creditors. Later the meeting of creditors will decide whether the committee shall be maintained, changed in its composition or established, if no committee was established by the court.

The claims of the creditors have to be filed with the administrator. He has to enter them in an insolvency schedule. During the so-called verification meeting the amount and the rank of the filed claims are verified. If there are no denials of the administrator or any creditor the claims are deemed to have been determined. Denials and determinations are entered into the insolvency schedule. Concerning the determined claims the entry in the table has – concerning amount and rank – the same effect as a final judgement with respect to the administrator and the creditors. Has a claim been denied by the administrator or a creditor it is up to the creditor of the denied claim to initiate proceedings to determine such claim against the denying party.

After the verification meeting, the distribution can start. It follows a distribution record which is established by the administrator. As soon as the distribution of the debtor’s assets is carried out, the court decides on the termination of the insolvency proceedings.

3. The insolvency plan proceedings

The insolvency plan is one of the cores of the new German insolvency law. It is applicable to both, Consumer insolvency proceedings and general insolvency proceedings. The autonomous mastering of the insolvency by the creditors and the debtor is not any more subject to separate proceedings but part of uniform insolvency proceedings. Within these proceedings it is one of several courses which can be followed on the search for the best opportunity to satisfy the creditors´ claims. This uniform system is different from other insolvency laws like for example the U.S. Bankruptcy Code which demands a decision between the liquidation proceedings of Chapter 7 and the plan proceedings of Chapter 11. Nevertheless there are also many similarities between the insolvency plan proceedings of the German Insolvency Statute and the provisions of Chapter 11.

The law does not define the purpose of the insolvency plan. The parties are allowed to diverge from the provisions of the Insolvency Statute and to find a different solution. Therefore the insolvency plan can even provide liquidation although it was introduced mainly to preserve, to rehabilitate and to reorganize the enterprise of the debtor.

An insolvency plan can be set up and submitted to the court only by the debtor or the administrator. One of the most important principles of the insolvency plan is that the creditors are divided into groups. The creditor groups can be treated differently by the plan if a justifying reason exists. The plan for example can form different groups for secured creditors, for normal insolvency creditors, for those creditors whose claims rank behind the claims of the normal insolvency creditors and for the employees. The number of groups is not limited. It is up to the fantasy of the person who is setting up the plan. The only demand is that there has to be a justifying reason if two creditors are put into two different groups.

The insolvency plan needs the consent of the creditors. It has to be presented to them in a meeting during which the plan is discussed. At the end of that meeting the creditors decide on the adoption of the plan. They vote by groups. The plan is adopted if in each group the majority of the voting creditors backs the plan and if the sum of the claims of the creditors backing the plan exceeds half of the sum of all claims of the voting creditors. There is however a prohibition of obstruction, which shall prevent that an economically sensible plan fails because of the opposition of a single or a few creditors: If in one group the majority is not achieved that group is deemed to have consented if the creditors of that group are not treated worse by the plan than they would be without the plan. Moreover the majority of the groups must have backed the plan.

The debtor has to back the plan, too. He is deemed to have consented if he has not opposed the plan until the voting of the creditors. If he is not treated worse than he would be without the plan his opposition to the plan is irrelevant.Finally the plan has to be confirmed by the court.

After the decision of the court has got legally binding, the plan gets effective, the insolvency proceedings are terminated and the debtor recovers the power to transfer his assets.

AHS Rechtsanwälte: Your specialist insolvency lawyer

If you are considering to file for private or business insolvency or need a representation in insolvency or criminal proceedings, we are here to help. The insolvency lawyers at our lawyer firm are experienced and highly specialised.

Contact us today at our legal offices in Cologne or Bonn to discuss your insolvency case. Call us at +49 221 97.30.960, send us an email to or use our online contact form.

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Kaiser-Wilhelm-Ring 34
50672 Cologne

Phone: +49 221 9730960


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Rüngsdorfer Str. 24
53173 Bonn

Phone: +49 228 9569717


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