What are the consequences of bankruptcy for my company?
November 15, 2022 | 40,00 EUR | answered by Chloé Schmitt
Dear Lawyer,
I am reaching out to you with an urgent question regarding my company. My name is Leon Walter and I am the managing director of a GmbH that is currently in a financially difficult situation. Revenues are declining, costs are increasing, and it is questionable whether we will be able to meet our obligations in the near future. I am very concerned about the potential consequences of insolvency for my company.
Currently, we are facing the question of whether it would be advisable to file for insolvency or if there are other options available to improve the financial situation. I fear that insolvency will not only have negative effects on the company itself, but also on my personal liability as the managing director.
Therefore, I would like to know from you what specific consequences insolvency could have for my company. What impact would this have on the employees, creditors, and business partners? To what extent am I personally affected by insolvency as the managing director, and what liability risks exist for me?
Furthermore, I am interested in whether there are alternative measures to prevent insolvency or at least minimize the consequences. Are there ways to restructure the company or take remedial measures to improve the financial situation?
I would greatly appreciate it if you could provide me with comprehensive information on this matter so that I can make an informed decision for the future of my company.
Sincerely,
Leon Walter
Dear Mr. Walter,
Thank you for your inquiry regarding the financial situation of your GmbH and the possible consequences of insolvency. I understand that you are concerned about the future of your company and would like to provide you with comprehensive information on this topic.
First of all, it is important to understand that insolvency does not necessarily mean the end of a company. Rather, it is a regular procedure to deal with over-indebtedness or insolvency. In the event of insolvency, the assets of the company are liquidated to satisfy the creditors. This can result in the company being dissolved, but there is also the possibility of restructuring to keep the business running.
The impact of insolvency on your company depends on various factors, such as the size of the company, the number of employees, and the nature of the liabilities. Typically, employees are protected by insolvency pay, which is paid by the employment office. Creditors can file claims in the insolvency proceedings and will be satisfied according to the insolvency quota. Business partners may terminate contracts or renegotiate them.
As a managing director, you have a special responsibility for the financial situation of your company. In the event of insolvency, you must ensure that you have not committed any wrongful acts that could lead to personal liability. In particular, you must comply with the obligation to file for insolvency, i.e. to file for insolvency in a timely manner if insolvency or over-indebtedness occurs.
However, there are also alternative measures to avoid insolvency or at least minimize the consequences. These include restructuring the company, implementing cost savings, negotiating with creditors for deferrals or installment payments, seeking new investors, or initiating a restructuring procedure.
It is important to seek legal advice early on to evaluate the best options for your company. I am happy to provide further advice and support you in developing a strategy to overcome your financial difficulties.
Best regards,
Chloé Schmitt
Corporate Lawyer
