German law · English information
Under German Eigenverwaltung, the debtor retains the power to administer and dispose of assets if the court orders this form of proceedings. A court-appointed supervisor, the Sachwalter, monitors the process.
Preparation is essential
The plan required under section 270a InsO includes a six-month financial plan, a procedural strategy, the status of negotiations and arrangements for meeting insolvency duties. Further disclosures cover matters such as arrears. A wish to retain control is not sufficient.
Management and supervision
Management must meet insolvency requirements for payments, accounting and reporting. The supervisor performs statutory monitoring functions. Our legal advice is distinct from appointment by a court as an administrator or supervisor.
Restructuring routes and risks
An insolvency plan or a sale of the business may be suitable, depending on financing and stakeholder interests. Funding gaps, serious breaches of duty or disadvantages for creditors may prevent or terminate debtor-in-possession proceedings. Preparing such proceedings does not suspend filing duties.
Related information
Procedures overview · Creditor rights · Corporate insolvency
Official German Insolvency Code · Official StaRUG
Practical implementation
Preparing the organisation for debtor-in-possession proceedings
The company must be able to meet insolvency duties reliably. Preparation covers funding, the restructuring objective, accounting, payment approvals, reporting and suitably qualified support. Section 270a InsO requires, among other matters, a six-month financial plan. Management needs to explain the assumptions and proposed responses to deviations. Arrears, previous protective measures and compliance with disclosure duties also form part of the assessment. A proposed procedure cannot compensate for a lack of reliable financial records.
Working under supervision
Management retains an operational role within the insolvency framework and under a court-appointed supervisor. Authority and court orders must be distinguished for each procedural stage. Suppliers need to know who can place orders and how new obligations are treated. A creditors' committee may support preparation and monitoring, but does not replace the court or supervisor. If planning proves unreliable or the objective becomes unattainable, ordinary administration may be required. Reporting should therefore address downside scenarios as well as the preferred outcome.
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: Accounts are incomplete
A company seeks debtor-in-possession proceedings but bank and receivables reconciliations are outstanding. Those gaps must be addressed before the forecast can be relied upon. Historic annual accounts alone cannot establish current funding for operations and procedural costs.
Example 2: A supplier requests assurance
A supplier asks whether a new delivery will generate an estate liability. The answer depends on the stage of proceedings, ordering authority and any necessary court authorisation. The label debtor-in-possession is not itself a payment guarantee.
Example 3: Revenue falls below forecast
A major order is cancelled during the procedure. The forecast needs prompt revision and material changes must be reported to the appropriate participants. Management must assess mitigation, additional finance and whether the restructuring objective remains achievable.
Example 4: Management faces potential claims
A director may owe compensation to the company. Conflicts must not obstruct recovery for creditors. Independent assessment, clear responsibility and possible management changes need consideration before the issue undermines the process.
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.