What are the consequences of delaying insolvency?
January 14, 2022 | 30,00 EUR | answered by Katja Winterberg
Dear bankruptcy attorney,
My name is Günther Gehrmann and I have a question regarding the consequences of delaying insolvency. In my case, it concerns my small family business, which has suffered greatly in recent months due to the economic situation. Due to the Corona pandemic, revenues have plummeted and the order situation is very poor.
I have been facing financial difficulties for some time now, but have not yet taken the path of filing for insolvency. Now I am worried that the situation could worsen through possible insolvency delay. I have heard that there can be legal consequences for delaying insolvency.
My question to you is: What are the exact consequences of insolvency delay and how could this affect my company and myself personally? What measures should I take to prevent insolvency delay and what options do I have to improve my financial situation?
I thank you in advance for your help and advice.
Sincerely,
Günther Gehrmann
Dear Mr. Gehrmann,
Thank you for your inquiry regarding the consequences of insolvency procrastination. Insolvency procrastination occurs when a company is insolvent but does not file for insolvency in a timely manner. This can have far-reaching consequences for both the company and its management.
The consequences of insolvency procrastination are primarily of a legal nature. For instance, in the event of insolvency procrastination, the management may be held personally liable. This means that the directors may be held personally responsible for the company's debts with their own assets. Additionally, there may be criminal consequences, such as fines or even imprisonment of up to three years.
Furthermore, insolvency procrastination can lead to creditors enforcing their claims against the company through legal means. This can result in enforcement measures such as seizure of assets or initiation of insolvency proceedings by a creditor.
To prevent insolvency procrastination, it is important to file for insolvency early once insolvency is established. By taking timely action, you may be able to avoid personal liability and increase the chances of restructuring the company.
To improve your financial situation, you should first conduct a thorough analysis of the current situation. Review your income and expenses, look for cost-saving opportunities, and consider if restructuring the company is advisable. Additionally, you can try to negotiate with creditors for a debt settlement or installment payments.
It is advisable to consult with a lawyer specializing in insolvency law early on to receive comprehensive advice and discuss possible measures to improve your financial situation.
I hope this information was helpful to you. If you have any further questions, please feel free to contact me.
Best regards,
Katja Winterberg
Insolvency lawyer
