How does a bankruptcy proceeding proceed?
December 10, 2023 | 40,00 EUR | answered by Emma Fischer
Dear bankruptcy attorney,
I am reaching out to you as I urgently need information on the process of a bankruptcy proceeding. My name is Marie Richter and I am currently facing the difficult situation of my company having financial problems and I am unsure of how to proceed.
Background information: In the past few months, my company has accumulated large debts due to a decrease in revenue and high expenses. I have already tried to improve the situation, but it has proven to be more challenging than I anticipated. Now, I am considering a bankruptcy proceeding, but I am unsure of how such a process works and what steps I need to take.
My concerns mainly revolve around not knowing the consequences a bankruptcy proceeding could have on me and my company. Additionally, I am worried about how to inform my creditors and how to conduct myself during the proceeding to avoid making mistakes.
Therefore, my question to you is: Can you please explain in detail how a bankruptcy proceeding works, what steps I as a business owner need to take, and what consequences I could face? Are there ways to expedite the process or increase my chances of a successful reorganization? I would greatly appreciate your help and support during this challenging time.
Best regards,
Marie Richter
Dear Mrs. Richter,
Thank you for your inquiry and your trust in my expertise in the field of insolvency law. It is understandable that you are in a difficult situation and have uncertainties regarding an insolvency procedure. I am happy to explain to you in detail how such a procedure works and what steps you as a business owner need to take.
Generally, there are two types of insolvency procedures in Germany: regular insolvency and consumer insolvency. Since you are referring to your company, I assume it is a regular insolvency. The process of an insolvency procedure usually begins with the application to the competent insolvency court. You or your company can file the application if you are insolvent or facing imminent insolvency.
After the application is filed, an insolvency administrator is appointed to manage the company's assets and satisfy the creditors. As a business owner, you will typically need to provide the insolvency administrator with a comprehensive list of all creditors and debts, as well as all assets of the company. The insolvency administrator will then conduct an insolvency procedure where creditors can file their claims.
During the insolvency procedure, you as a business owner must fulfill certain obligations, such as cooperating in the preparation of an insolvency plan or disclosing your financial situation. It is important that you follow all instructions of the insolvency administrator and do not sell or hide assets, as this can lead to legal consequences.
Regarding the consequences of an insolvency procedure for you and your company, you should be prepared for the possibility of your company being liquidated and you personally being liable if there are errors or breaches of duty. Therefore, it is advisable to seek professional advice early on to minimize potential risks and enable a successful restructuring.
To increase your chances of a successful restructuring, you should work closely with the insolvency administrator early on to create an insolvency plan and explore possible restructuring options. It is possible to expedite the process if you are cooperative and provide all necessary information.
I hope that this information has been helpful to you and given you an initial overview of how an insolvency procedure works. Please do not hesitate to contact me for further questions or for a personal consultation. I am at your disposal and will support you during this difficult time.
Best regards,
Emma Fischer, Attorney specialized in insolvency law
