Bankruptcy proceedings

Since January 1, 1999, the Insolvency Code (InsO) has replaced the (old) bankruptcy and settlement law.

Objective of the bankruptcy process

Insolvency proceedings can be opened both on the assets of a natural person and on the assets of a legal person.

The aim of insolvency proceedings is to realize a debtor's assets for the benefit of his creditors or to make arrangements to maintain the company with the help of a so-called insolvency plan (Section 1 InsO). The prerequisite for the procedure is that the debtor no longer meets his payment obligations.

Opening of the procedure

The insolvency proceedings are opened at the competent local court (insolvency court). Those entitled to apply are creditors and debtors (Section 13 InsO).

Reasons for opening the procedure are the debtor's insolvency, impending insolvency or over-indebtedness.

The mentioned insolvency is z. B. given when the debtor has stopped his payments. An impending insolvency is to be assumed if the debtor will probably not be able to settle his claims that will soon become due.

One speaks of over-indebtedness when the debtor's assets no longer cover the liabilities.

The court may appoint a provisional insolvency administrator who will look after the debtor's assets and run his business until bankruptcy proceedings are opened.

The bankruptcy proceedings are not opened in every case. If the debtor's assets are not expected to be large enough to cover the costs of the proceedings, the proceedings will be rejected “for lack of assets”.

Example: Court costs as well as costs and expenses of the insolvency administrator: 20,000.00 euros; Realizable assets: 16,000.00 euros. Here the fortune would not be enough; the application would be rejected for lack of funds.

However, a creditor can advance the procedural costs and in this way obtain the initiation of the proceedings.

Execution of bankruptcy proceedings

If the insolvency proceedings are opened, this takes place in the form of a so-called opening resolution. This contains

  • Company name or surname and first name of the debtor
  • Name and address of the (final) liquidator
  • Hour of opening of the proceedings

In the opening resolution, the creditors are requested to register their claims with the insolvency administrator within a period of two weeks to a maximum of three months.

The insolvency administrator is under the supervision of the bankruptcy court. He is supported in his work by the so-called creditors' committee.

The bankruptcy court then calls a meeting of creditors.

Beschlüsse der Gläubigerversammlung kommen zustande, wenn die Summe der Forderungsbeträge der zustimmenden Gläubiger mehr als die Hälfte der Summe der Forderungsbeträge der abstimmenden Gläubiger beträgt. Eine der wesentlichen Aufgaben der Gläubigerversammlung besteht in der Prüfung der Ordnungsmäßigkeit der angemeldeten Forderungen sowie der Entscheidung darüber, ob das Unternehmen des Schuldners stillgelegt (liquidiert) oder fortgeführt werden kann. Dazu kann ein sog. Bankruptcy plan erstellt werden.

Die Verteilung der zur Verfügung stehenden Bankruptcy estate wird durch den Insolvenzverwalter vorgenommen. Er erstellt dazu ein Verteilungsverzeichnis‚ aus dem die Summen der Forderungen und der zu verteilenden Beträge ersichtlich sind. Die Schlussverteilung der den Gläubigern zukommenden Forderungen erfolgt, wenn die Insolvenzmasse verwertet (verkauft) worden ist.

The bankruptcy court must approve the final distribution and, if this is the case, determine the date for the final creditors' meeting. This appointment is used to discuss the final invoice of the insolvency administrator, raise objections to the final list, and make decisions about non-usable items in the bankruptcy estate.

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