Key terms explained

Insolvency proceeding under § 270 InsO in which management stays in office and continues to operate under supervisor oversight. read more →

Restructuring instrument in German insolvency. Governs debt restructuring, monetisation and, where relevant, going-concern continuation. read more →

A court-ordered security measure (§§ 21 f. InsO) between the insolvency petition and the opening decision, protecting the debtor's assets until the court rules on opening proceedings. read more →

Standard German insolvency proceeding with appointed administrator who takes over disposal rights from the debtor. read more →

Preliminary Eigenverwaltung with restructuring protection. Grants the debtor up to 3 months without enforcement to file a restructuring plan. read more →

Preliminary court measures between insolvency filing and opening decision. Protects the insolvency estate. read more →

Out-of-court restructuring procedure without formal insolvency. Enables restructuring without opening an insolvency case. read more →

The insolvency administrator's right to choose, for contracts not yet fully performed by either side, between performance (which becomes a preferential estate liability) and refusal (leaving the counterparty with a mere insolvency claim). read more →

German statutory rule under which the debtor's rental, lease and employment relationships continue automatically once insolvency proceedings open — unlike most other contracts, the administrator has no right of election here under § 103 InsO. read more →

Lets the insolvency administrator terminate employment relationships with a maximum notice period of three months to the end of a month — regardless of longer contractual or statutory notice periods. read more →

An agreement between the insolvency administrator and the works council that names the employees to be dismissed — court review of the underlying social selection is then limited to gross error. read more →

Hearing at which claims filed against the estate are formally admitted or disputed on the insolvency table. Little direct deal relevance for buyers, but a useful signal on creditor structure. read more →

Court decision closing the insolvency proceeding once the final distribution to creditors is complete. The last public milestone in the case — usually too late for a deal. read more →

Duty to appoint a preliminary creditors' committee for larger companies — already before the case opens, with a say in choosing the administrator. read more →

Anyone continuing a business under its existing trade name is generally liable for the debts that arose in that business — a classic pitfall when a buyer wants to keep the brand name in an asset deal. read more →

Court rejection of the petition to open proceedings because the estimated estate wouldn't even cover the costs of the proceeding. Not a regular monetisation route — but the company remains legally in existence. read more →

German statute under which all employment relationships transfer automatically to the buyer when a business or business unit changes hands — the central liability trap in insolvency asset deals. read more →

Governs a business acquirer's liability for certain business tax debts of the predecessor — but expressly does not apply to acquisitions from the insolvency estate, a material advantage of insolvency timing. read more →

Governs the (partial) forfeiture of corporate tax loss carryforwards on a change of shareholders — the central tax pitfall in an insolvency share deal. read more →

German statutory rule on public announcements in insolvency proceedings. Requires opening decisions and case acts to be published on insolvenzbekanntmachungen.de. read more →

Deadline for creditors to file claims with the administrator. Typically 4–6 weeks from publication of the opening decision. read more →

First creditors' assembly in the proceeding. Administrator reports asset status and proposes next steps. read more →

The administrator's notice to the insolvency court that the estate can no longer cover existing estate liabilities in full. Reorders the payment ranking and is a serious warning sign for buyers. read more →

The administrator's right to unwind pre-filing acts that disadvantaged creditors — relevant for buyers who dealt with the later debtor before insolvency. read more →

A liability the administrator incurs against the insolvency estate after proceedings open — paid preferentially from the estate, ahead of the quota owed to ordinary insolvency creditors. read more →

Court decision opening the insolvency proceeding. Essential starting point of the administration and monetisation phase. read more →

Agreement under which a supplier remains owner of delivered goods until the purchase price is paid in full. In its extended form the security also covers the receivable from any resale — relevant for buyers taking over inventory or receivables. read more →

The right to fully reclaim an asset from the insolvency estate because it never belonged to the debtor — e.g. leased equipment, consignment stock or simple retention of title. read more →

A secured creditor's preferential right to be satisfied from the proceeds of a specific estate asset — e.g. a land charge, security ownership, or extended retention of title — rather than sharing a pro-rata quota like ordinary insolvency creditors. read more →

The employer's (or administrator's) duty, when making operationally driven dismissals, to select who is let go among comparable employees using social criteria. Applies in insolvency proceedings too. read more →

Compensation scheme agreed between employer and works council for staff affected by a business change — capped in amount during insolvency, with its own fast-track dispute mechanism. read more →

Insolvency ground for legal entities: assets no longer cover liabilities AND continuation of the business is not more likely than not — a two-stage test. read more →

By far the most common statutory insolvency ground: the debtor can no longer meet due payment obligations. Under settled BGH case law, a liquidity gap of 10% lasting more than three weeks already indicates illiquidity. read more →

Oversight body appointed by the court or creditors' assembly that supervises the administrator and must consent to material decisions. read more →

Court-appointed representative of the insolvency estate. Takes disposal rights, monetises assets in creditors' interest. read more →

Supervisor appointed in Eigenverwaltung. Oversees management without replacing it. read more →

Bank pre-financing of net wages for up to three months after proceedings open, while the Federal Employment Agency's own insolvency benefit has not yet been paid out. Keeps operations running until a sale. read more →

Acquisition of individual assets (brand, inventory, contracts, staff) instead of company shares. read more →

Financial security — typically a bank guarantee or deposit — that bidders in an administrator's sale process must post to prove the seriousness of their offer and protect the administrator against a withdrawal. read more →

Structured, usually two-round investor process the administrator runs to compare several prospective buyers in parallel and secure the best possible proceeds for the estate. read more →

Digital repository of all deal-relevant documents — contracts, financials, headcount, IT — that the administrator or advisor opens up to bidders for review. read more →

Corporate acquisitions in crisis or insolvency contexts. Characterised by compressed timelines, high information asymmetry and alternative price discovery. read more →

Systematic review of the target before the purchase decision. In insolvency, usually a compressed red-flag review within a few weeks rather than the months-long full review of classic M&A. read more →

Time-limited commitment by the administrator not to negotiate with other bidders during the due diligence phase — usually granted only after a binding LOI, and rarely without something in return. read more →

Sale of estate assets outside a formal bidding or auction process — the standard route for asset deals out of insolvency. read more →

Acquisition of the business as a continuing entity — staff, customers, operations stay together. In insolvency the king's road for strategic buyers. read more →

Auditor's note that there are doubts about the going-concern of the business. Early distress warning. read more →

Auditing standard from the German Institute of Public Auditors for restructuring opinions: a structured expert assessment of whether a company is capable of being restructured. Used by banks and investors as a decision basis before restructuring financing. read more →

Non-binding written statement of intent from a prospective buyer to the administrator, setting out the key parameters of a possible deal before a binding purchase agreement is negotiated. read more →

Two valuation benchmarks for the insolvency estate: proceeds from piecemeal liquidation versus the higher value achieved selling the business as a continuing, functioning unit. read more →

Loan the insolvency administrator takes on against the insolvency estate to fund ongoing operations until sale — not a financing source for the buyer. read more →

Part of the purchase price is withheld at signing rather than paid out, held in an escrow account for a defined period to secure warranty or remediation claims. read more →

Acquisition of company shares — including all liabilities. In insolvency the exception. read more →

A fixed-term employment company that takes on, via a tripartite agreement, staff not taken over in a business transfer — qualifying and placing them in new jobs instead of a straight dismissal. read more →

Official federal publication portal. Contains annual accounts of all corporations subject to disclosure. read more →

Officially registered business purpose in the commercial register. Legally binding description of the activity. read more →

Public register of merchants and trading companies. Central primary source for structural and representation data. read more →

Minimum capital of the company. GmbH: EUR 25,000 · UG: from EUR 1 · AG: EUR 50,000. read more →