Restructuring and Insolvency Attorneys in Germany
Restructuring and Insolvency Attorneys in GermanyUpdated on Tuesday 22nd March 2016
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Foreign investors with business activities in Germany, who are involved in a commercial restructuring of the company or in an insolvency case can address to our team of German attorneys, who can provide legal assistance in accordance with the situation experienced by the business at that specific time. The German insolvency legislation is provided by the Insolvency Act, which has been amended by the Act of Further Facilitation of the Restructuring Companies, applicable since 2012.
Insolvency legislation in Germany
According to the legislation for insolvency cases, the German law stipulates that the insolvency procedure is applicable in the same manner to both natural persons and legal entities. Insolvency cases can be claimed against individuals or companies, but several business domains, such as banking, falls under a special category which prescribes different rules, under the German Banking Act; insurance companies are also considered special entities, with a different insolvency procedure.
Insolvency procedures prescribed by the German legislation
Our team of German attorneys can assist local and foreign investors involved in an insolvency case for both of the stages of this process, which are divided into two categories:
• preliminary insolvency proceedings;
• final insolvency proceedings.
A company in Germany can become insolvent when the business has reached a stage in which the management is required to file for insolvency in order to avoid financial liabilities that will fall under the personal responsibility of the representatives of the company. This stage is referred to as a preliminary insolvency proceeding, which will be held in front of the Germany Insolvency Court.
Final insolvency appears when the Court establishes that the debtor can’t pay its debts up to an established deadline or that the debtor is illiquid.
Restructuring legislation in Germany
According to the legislation provided by the Insurance Act, a company can start its restructuring plan when it faces a challenging situation (a financial crisis or any other type of situation that isn’t reliable for the sustainability of the business). As such, companies can start the restructuring process, which is applicable only with the authorization of an insolvency administrator.
If you need further information on the restructuring and insolvency legislation applicable in Germany, please contact our team of German attorneys for legal advice or legal representation.