How does insolvency affect my existing contracts?
March 2, 2024 | 30,00 EUR | answered by Erwin Hausdorf
Dear bankruptcy lawyer, my name is Erika Voigt and I am currently facing a difficult situation. I have learned that my company may need to file for bankruptcy and I am very worried about how this will affect my current contracts.
For background information: I am the managing director of a small company that has various contracts with suppliers, customers, and service providers. These contracts are crucial for the smooth operation of my business. I am now wondering if bankruptcy will have an impact on these contracts and if I will still have to fulfill my obligations.
The current situation is that my company is financially struggling and may not be able to fulfill all current contracts. I fear that suppliers may stop their deliveries, customers may not make their payments, and service providers may cease their services. This could lead to a standstill in my business and potentially result in bankruptcy.
Therefore, my question to you as an expert in bankruptcy law: How will bankruptcy affect my current contracts? Do I still have to fulfill my obligations, and what happens if I am unable to do so? Are there ways to restructure or terminate these contracts to save my company? I am grateful for any help and advice you can provide me in this difficult situation. Thank you in advance.
Dear Mrs. Voigt,
I understand your concerns regarding the potential insolvency of your company and the impact this could have on your current contracts. As a bankruptcy attorney, I can provide you with some information and advice that may help you in this difficult situation.
First of all, it is important to know that insolvency can indeed have consequences for your ongoing contracts. In the event of insolvency, as the managing director, you may be required to continue fulfilling the contracts if the insolvency administrator deems it appropriate. However, creditors can decide whether they want to continue the contracts or not. This depends on various factors, such as the financial situation of your company, the type of contract, and the interests of the creditors.
If you are unable to fulfill your obligations under the contracts, this could lead to legal consequences. Creditors may claim damages or try to terminate the contracts. Therefore, it is important to communicate early with your contracting parties and find possible solutions.
There are also ways to restructure or terminate the contracts to save your company. For example, one option could be to negotiate with creditors and reach an out-of-court settlement. In some cases, an insolvency plan can be created that provides for the restructuring and rehabilitation of the company.
It is advisable to seek advice from a bankruptcy expert early on to discuss your options and develop a strategy that can help your company overcome insolvency. Early consultation can help minimize legal risks and find the best possible solution for your company.
I hope this information is helpful to you and I am available for any further questions. Please do not hesitate to contact me if you need additional support. Thank you for your trust, and I wish you success in dealing with this difficult situation.
Kind regards,
Erwin Hausdorf
Bankruptcy Attorney
