German law · English information
The insolvency of a corporate group is not automatically a single proceeding. Each company generally retains its own estate and creditors.
Assess each entity
Insolvency grounds and filing duties must be assessed separately for each entity. Intra-group transfers, cash pools, guarantees and security can create additional liability and avoidance issues.
Use coordination mechanisms
Group jurisdiction, cooperation between administrators and courts, and coordination proceedings may assist a consistent approach. They do not automatically merge assets.
Map operational dependencies
Shared IT, staff, brands, supply chains and finance may link several companies. A continuation or sale strategy must address these dependencies while respecting the rights of the creditors of each entity.
Related information
Procedures overview · Creditor rights · Corporate insolvency
Official German Insolvency Code · Official StaRUG
Practical implementation
Assess each company separately
A corporate group does not automatically form a single insolvency estate. Insolvency grounds, filing duties and assets require company-specific examination. Shared accounts or accounting processes can complicate the work without removing legal separation. Cash pooling, guarantees, security and intercompany balances need reliable documentation. Directors should assess whether a measure is permissible for their own company even where it appears commercially beneficial to the group as a whole.
Coordinate without losing accountability
Group jurisdiction and coordination mechanisms may assist, but do not replace assessment of each estate's creditor interests. Continued operations or a sale require identification of supply links, employees, data access and shared rights. A buyer needs to know which administrator controls which assets. Disputed intercompany claims and conflicts should be identified early. Joint negotiations need separate claim and asset schedules, with a defensible basis for allocations between entities.
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 cash pool closes
A subsidiary suddenly loses access to central funds. Its ability to pay needs a fresh assessment independent of the previous group forecast. Claims against the pool leader require review of legal basis, maturity and recoverability.
Example 2: A parent guarantee is called
Following a subsidiary's insolvency, a lender demands payment from the parent. Wording, triggering conditions and effects on the parent's liquidity must be examined. Group membership does not itself cap contractual liability.
Example 3: Shared IT must continue
Several entities rely on the same servers and licences. Ownership, use rights and cost allocation need clarity. Otherwise, one entity's insolvency may threaten access for companies that are not themselves insolvent.
Example 4: An investor bids for the whole group
A single price is offered for several businesses. Asset ownership, authority and allocation of proceeds must be justified. Commercial convenience does not permit disregard of a particular estate's creditors.
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