Bankruptcy is my only option

Corporate bankruptcy - when companies go bankrupt

The most important thing about corporate bankruptcy

Who can file for corporate bankruptcy?

Company insolvency - officially known as regular bankruptcy - is open to sole proprietorships, companies and freelancers, among others.

What happens in the event of a company bankruptcy?

In the course of bankruptcy, a company is liquidated or restructured. Sole proprietorships, freelancers and the self-employed may benefit from the discharge of residual debts.

What is corporate bankruptcy?

For people who have amassed a mountain of debts and see no way of reducing it on their own, this is the Personal bankruptcy is often the only optionto find a way out of debt. However, this simplified bankruptcy procedure is available only open to private individuals. Even former self-employedwho have a maximum of 19 creditors and against whom there are no longer any claims from self-employment can go through private bankruptcy.

For companies that can no longer pay their bills, on the other hand, according to insolvency law, corporate bankruptcy - officially known as regular bankruptcy - is provided. As part of bankruptcy proceedings the company is either liquidated, i.e. dissolved, or restructured.

What does company bankruptcy mean?

Before we go into more detail on the question of when the responsible persons for their company have to file for corporate bankruptcy, let's take a look at what bankruptcy at all means.

The InsO defined exactly, when a Company insolvent is. There are the following three reasons to open a company for bankruptcy:

  1. Insolvency
  2. Impending insolvency
  3. Over-indebtedness

The first general opening reason is that Insolvency. According to Section 17 (2) InsO, this is the case if a debtor is unable to meet its due payment obligations. This can normally be assumed when he has stopped making payments.

Furthermore, the impending insolvency represent the opening reason for a company bankruptcy. According to Section 18 (2) InsO, this is the case if the debtor in all probability will not be able to meet its existing payment obligationsas soon as they are due.

In the case of legal entities, e.g. B. a GmbH or a stock corporation (AG), the over-indebtedness is also considered a reason for insolvency. This is in Section 19 (2) InsO defined in more detail:

Over-indebtedness exists when the debtor's assets no longer cover the existing liabilities, unless the continuation of the company is largely probable under the circumstances.

When do you have to file for corporate bankruptcy?

Legal personshave to according to ยง 15a Abs. 1 S. 1 InsO always then Register for company bankruptcy, If you insolvent are or over-indebted. This applies e.g. B. for companies with the following legal form:

  • Society with personal liability (GmbH)
  • Public companies (AG)
  • registered Cooperatives
  • limited liability company (Basement)

At impending insolvency these companies do not have to file for bankruptcy. But you can do it to save and reorganize your company.

Besides these Corporate forms however, there are other companies. According to Section 15a, Paragraph 1, Sentence 2, InsO, they only have one Obligation to apply to company insolvency if the personally liable partner is not a natural person (as not a human) is. This applies e.g. B. towards the legal form of the GmbH & Co. KG, because here the GmbH acts as a personally liable partner.

No later than three weeks from insolvency or over-indebtedness the responsible persons must have a Register for company bankruptcy. If you don't do this, you may be because of yourself Delaying bankruptcy is a punishable offense do. There is a risk of a fine or imprisonment of up to three years.

For companies that have the following legal forms, usually exists no obligation to file for corporate bankruptcybecause their shareholders or entrepreneurs are personally liable with their private assets:

  • general partnership (OHG)
  • Society under civil law (GbR)
  • Limited partnership (KG)
  • Sole trader (e.K.)
  • freelancerunless they are setting up a GmbH or another legal person

Yet it is here too advisable to file for corporate bankruptcy, because liability or criminal liability cannot be completely ruled out due to the insolvency. For example, anyone who continues to conclude contracts and continue his business even though he knows that he is insolvent can complain about one Incoming fraud criminalize and sometimes risk that the court will give him the Debt discharge fails.

Insolvency proceedings of a company: which process is planned?

Many of those affected may now wonder how a company bankruptcy and its process are precisely regulated. Basically, the following phases have to be passed through:

  1. Application and opening procedure
  2. Bankruptcy proceedings
  3. Completion of the procedure

The process of bankruptcy proceedings for companies begins with the registration. These takes place at the locally responsible district court, which acts as the bankruptcy court. The jurisdiction results from the seat of the company.

If the application for company bankruptcy has been made, the competent court checks whether all requirements are metto open bankruptcy. For this one of the reasons for the opening mentioned above must be present. Furthermore must sufficient realizable assets exist to cover the costs of the bankruptcy proceedings. These include court costs and the remuneration to which the insolvency administrator is entitled. If this is not the case, the Application rejected for lack of assets.

In the actual bankruptcy proceedings A specially appointed insolvency administrator then takes over the management of the company. The attachable assets in the company are confiscated and the debtor can no longer dispose of them. Instead, the power of disposal is transferred to the insolvency administrator. A The alternative is to file for bankruptcy in self-administration.

The process established for the bankruptcy of a company is now about that Either liquidate or reorganize companies. We explain exactly how this works in the following.

The one to be expected for the settlement of a company bankruptcy Duration can hardly be predicted across the board. Influencing factors include the Size of the company as well as the number of creditors. The situation is different with natural persons, i.e. self-employed. After the actual insolvency proceedings, these go through the so-called good conduct phase, at the end of which there is discharge of residual debt. This phase usually lasts six years, but can be shortened to three or five years.

Liquidation or restructuring: can a company still be saved?

How the expected course of insolvency proceedings for a company looks like depends on many different factors. Of great importance is that Decision whether the company can or should be dissolved or rescued.

The aim of the procedure can be that To dispose of assets of bankruptcy firms and distribute the proceeds to the creditors. These steps are carried out by the liquidator. He terminates all existing contracts and at the end of the company's bankruptcy the company becomes deleted from the commercial register.

The insolvency administrator can, however, undertake a restructuring in various ways. The to sell bankrupt company is one possibility. There is also the option of having a Draws up a bankruptcy plan. In such a plan, measures are laid down, which should serve to save the company.

If no insolvency administrator is to take the helm, there is often the option of one Carry out corporate bankruptcy in self-administration, e.g. B. in the context of protective shield proceedings. In this case, the original administration remains capable of acting and implements the measures specified in a restructuring concept. A so-called administrator is placed at the side of the responsible person who monitors the responsible person.

Insolvency for sole proprietorships: As a rule, personal bankruptcy is not possible for them. Private insolvency proceedings can only be undertaken by private individuals and former self-employed persons with a maximum of 19 creditors. However, when a sole proprietorship becomes insolvent, in contrast to other companies, the following must be observed: Sole proprietorships can obtain a discharge of their remaining debts. However, they are also fully liable with their private assets.
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Corporate bankruptcy - when companies go bankrupt
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