Enter into a contract during requested insolvency.
March 18, 2010 | 20,00 EUR | answered by Rechtsanw& Claudia Mölleken
Hello,
I recently filed for bankruptcy as a self-employed individual. I want to continue being self-employed and earn a reasonable income from my work.
Now I am considering joining a franchise system in addition to my current business. This would involve receiving service orders and in return, I would have to pay a percentage of my revenue as well as a fixed monthly franchise fee. Additionally, since I cannot pay the initial entry fee upfront, I would need to pay it in installments during the first year.
By entering into this contract, I am also taking on a liability.
Could it be possible for the bankruptcy trustee to use my income but not allow me to pay the contractual obligations that arise from it?
Or could entering into such a contract jeopardize my bankruptcy and discharge of remaining debts in general?
Unfortunately, I am in a hurry and cannot wait to consult with a bankruptcy trustee before making a decision.
Dear Sir,
Thank you for your inquiry and the trust placed in our consultation.
Based on the information provided, I can give you the following brief explanation:
For individuals who are self-employed, there is generally the possibility to file for regular insolvency. The question of whether regular or consumer insolvency is applicable depends, among other factors, on the number of creditors involved.
For individuals who are self-employed or were self-employed and are filing for insolvency, the options are regular insolvency proceedings or consumer insolvency proceedings.
Former self-employed individuals who meet the following requirements can opt for regular insolvency proceedings if they:
- have more than 19 creditors,
- have claims related to employment relationships (e.g. unpaid social security contributions or taxes for employees, wage and salary claims from former employees),
- and
- have complex financial circumstances (e.g. due to the amount of debt, real estate assets).
All other former self-employed individuals must undergo consumer insolvency proceedings.
Unlike consumer insolvency proceedings, regular insolvency proceedings do not require an out-of-court settlement attempt. However, you are free to attempt one if you wish.
Debtors can immediately submit a written application to the insolvency court to initiate insolvency proceedings and obtain debt relief. It is important to explicitly request both actions!
Note: If a creditor has already filed for insolvency proceedings, the debtor must still apply for debt relief!
During the insolvency proceedings, it is advisable to engage in suitable employment to repay the debts, including self-employment. If engaged in self-employment, business expenses must be deducted from the earnings. This will determine the income subject to paying certain amounts to the insolvency administrator after deducting business expenses. Franchise fees are considered as business expenses. Any change in professional activities must be reported to the insolvency administrator beforehand. While the insolvency administrator cannot generally prohibit starting a specific activity, it is advisable to inform them before taking on new liabilities. If there is a risk that the income may be significantly lower than the debts, such as franchise fees, the insolvency administrator may advise against the activity. I strongly recommend taking the time to inform the insolvency administrator of your intended activities. The franchise provider should allow you this time. If pressured to sign a franchise agreement without prior consultation, it is advisable to request a few days to consider. This decision is crucial for your professional future and should be carefully considered. If the insolvency administrator attempts to dissuade or prohibit you from entering into a franchise agreement - which I hope does not happen - feel free to reach out to me. I will try to determine alternative ways for you to pursue your professional interests or sign the franchise agreement. I wish you success in your professional future, negotiations with the insolvency administrator, and a swift resolution to the insolvency proceedings.
Best regards,
Claudia Mölleken
Attorney-at-law
Lahnstr. 20
51105 Cologne
Tel. 0221-9991788
0221-834462
nc-moellecl2@netcologne.de
Tax ID: 218/5165/0700
