German law · English information
A reliable picture of liabilities, available funds and the company’s financial position is the starting point for any restructuring decision.
Liquidity and insolvency grounds
Accounting losses, negative equity and over-indebtedness under insolvency law are not interchangeable. Assess debts as they fall due and the funds actually available. Imminent illiquidity and the going-concern assessment involve different forecasting periods. We identify the legal requirements and coordinate the financial information needed with management and its financial advisers.
Compare the available routes
Out-of-court standstill agreements, new financing, a StaRUG plan and restructuring in insolvency proceedings serve different situations. Funding, timing, affected creditors and contractual restrictions must be considered together. Negotiations do not suspend an existing duty to file for insolvency.
Document decisions and prepare the records
Keep planning assumptions, payment decisions and financing commitments under review. An investor’s non-binding expression of interest is not secured funding. Provide liquidity forecasts, overdue invoices, bank balances, credit facilities, financial statements and key contracts. Tax, social security and shareholder conflicts require separate attention.
Related information
Procedures overview · Creditor rights · Corporate insolvency
Official German Insolvency Code · Official StaRUG
Practical implementation
Turning warning signs into a decision record
A crisis often first becomes visible through shorter supplier terms, rejected payments or exhausted facilities. These signals do not replace a legal assessment of insolvency grounds. The company needs a schedule of due liabilities that distinguishes available funds from expected receipts. Disputed debts, agreed deferrals and financing conditions must be recorded separately. The assessment requires updating when receipts or obligations change. Management should allocate responsibility for reporting, escalation and decisions, and retain the information available at each relevant date.
Making a restructuring agreement workable
A workout requires more than a proposed debt haircut. Conditions, payment dates, security, reporting duties and consequences of failure must fit together. A bank facility may depend on a shareholder contribution that has not arrived. Essential operating contracts and avoidable costs also need assessment. Negotiations do not suspend statutory duties to file for insolvency. External advice supports management's decision-making but does not automatically transfer management responsibility to the adviser. Each financing assumption should identify the evidence supporting it and the circumstances in which it must be revisited.
Four practical examples
The following scenarios are illustrative examples, not reports of client matters. The outcome depends on the facts and applicable rules.
Example 1: A major customer pays late
A machinery supplier expects a substantial final payment while payroll and taxes fall due. The first questions concern the customer's payment date and the realistic availability of funds. Recognising revenue is not the same as having cash. A current liquidity schedule and the customer correspondence are needed.
Example 2: Conditional bank funding
A bank will release funds only once additional security is provided. Management must establish whether the conditions can be met in time and who owns the collateral. Until the facility is drawable, it cannot simply be treated as available cash. Filing duties and alternative funding remain under review.
Example 3: A shareholder promises support
A majority shareholder promises a rescue by telephone. The amount, timing and financial capacity to provide support need verification. Written terms help establish the commitment but do not replace actual funding. A subordinated loan, ordinary loan and equity contribution have different legal effects.
Example 4: A supplier threatens to stop deliveries
An essential supplier demands advance payment. Contractual rights, alternative sourcing and the funding of continued production must be assessed together. Paying that supplier cannot be considered separately from the company's overall liquidity and management liability. Any agreement should be recorded promptly.
Discuss your situation
Tell us your role, the parties involved and any deadlines. We will check conflicts, agree the scope of the work and explain the fees before accepting instructions.