Your Lawyer for Insolvency and Financial Restructuring
For decades, our law firm has specialized in all legal areas related to Insolvency Law.
Whether you are a business or a private individual and wish to avoid insolvency by seeking restructuring, securing claims and receivables or applying for consumer or regular insolvency. A careful analysis of the legal facts is always necessary. In our law firm, we advise you on issues relating to insolvency and restructuring. Please contact us, we look forward to your call or e-mail. Together we will draw up a plan for the right procedure in advance or help you if you are already in the middle of the insolvency process or restructuring.
An important part of insolvency and restructuring: managing director liability
Despite the limitation of liability, the managing director in insolvency is threatened with full liability with his entire assets if he does not file for insolvency immediately at the first signs of crisis. Deadlines that have already been missed can quickly become problematic. Your lawyer for Insolvency Law and reorganisation will draw your attention to all possible pitfalls from the outset and help you to handle an insolvency and reorganisation in the best possible way.
There is a liability risk, especially towards the insolvency administrator, the social security funds and the tax office.
The insolvency administrator checks which payments the managing director has still made after the existence of insolvency or overindebtedness and can demand these back from the managing director.
The social security funds check whether the managing director has correctly calculated and paid the social security contributions owed on wages. It is irrelevant whether the manager has also paid the wages for the respective period. If the owed social security contributions have not been paid, the social security funds immediately claim an intentional withholding of employer and employee contributions and sue the managing director personally. The managing director should carefully check the social security accounts in insolvency proceedings. A distinction should be made between whether the social funds file a claim for the tabulation because the insolvency administrator has contested the previous payments or whether the social funds claim that the managing director has not paid the contributions owed. The extent of liability is also important for subsequent criminal proceedings and the expected level of penalties.
The financial administration checks whether the managing director has given preference to creditors in the company crisis without at the same time paying the taxes due to the tax office. The managing director can only object that he has satisfied his creditors equally. An exception applies to the non-payment of wage tax if the managing director has paid the net wages. In this case the managing director is personally liable for the outstanding wage tax in any event.
A managing director in a company crisis usually has other concerns than worrying about his personal liability. However, in order to successfully overcome a company crisis or at least to get out of the line of fire of civil and criminal claims, a managing director must keep an eye on the personal liability issues and adjust his company management accordingly.
Strategies in the corporate crisis
In the lead-up to insolvency, negotiations with creditors for the purpose of deferral or remission of claims are a good idea. If deferral is granted, the insolvency can be eliminated. The remission of claims can lead to the elimination of the over-indebtedness, but in this case it must be examined whether a taxable reorganization profit is generated, which again largely eats up the advantages of the remission of claims.
If there is only excessive debt, but not yet insolvency, an application for insolvency can also be combined with an application for a self-administration order. The prerequisite is that this application must present a comprehensible positive continuation prognosis, which must meet the requirements of a restructuring concept.
The application for self-administration has the advantage that the debtor can exert the greatest possible influence on the choice of the administrator.
If a crisis in the company is unavoidable, the only way for the managing director to avoid personal liability is to file for insolvency immediately. It may be possible to prevent the appointment of an undesirable insolvency administrator by making a suggestion to the insolvency court, provided that there is an appropriate justification for this.
After the opening of insolvency proceedings, the insolvency administrator must be requested in writing to inform the managing director of all claims filed for the insolvency list so that the managing director has the opportunity to object to the filing of claims. The filing of such an objection can prevent future legal disadvantages in a subsequent lawsuit, especially if this is sought by the social security funds or the tax authorities. It is true that even in the event of an objection, the insolvency administrator is not prevented from determining the claim filed for the table. However, the objection can also be of importance for the point in time from which an insolvency occurred. Unsubstantiated claims are not to be used to determine insolvency.
Your attorney for consumer insolvency proceedings
It is also advisable to cooperate with a specialist lawyer for Insolvency Law in the case of consumer insolvency. Are you looking for a lawyer for consumer insolvency? Then we are the right partner for you.
Although a debt settlement strategy with the creditors outside of insolvency proceedings can be sought first of all, and depending on the individual case, this may also be promising, consumer insolvency (private insolvency) is often the more sensible way for the debtor to reach an agreement with the creditors and to settle the asset situation. A comprehensive instalment payment agreement outside of a consumer insolvency rarely leads to a reduction in debt.
The insolvency file must be regularly monitored by the debtor to determine whether claims arising from an intentionally committed unlawful act have been entered in the insolvency file. The successful filing of a claim from an intentionally committed unauthorized act has the consequence that it is excluded from the residual debt discharge to be granted. It is therefore not uncommon for creditors to be able to get to the point quickly by filing such a claim.
An immediate appeal must be lodged against this and, if necessary, an action for a negative declaratory judgment must be filed with the court.
Claims arising from maintenance backlogs or a tax evasion conviction that has become nonappealable, are excluded from the granting of residual debt discharge.
Creditor strategies before and during the subsequent insolvency
Creditors of a claim should, as it were, protect themselves against possible insolvency challenges in order to secure their capital even after payment by the debtor.
If the creditor and the debtor agree on a deferral or partial remission of the claim in the run-up to the insolvency, the written agreement should contain the debtor’s assurance that the debtor company is in a position to pay the debt without jeopardizing the remaining ability to pay. If there is an enforceable title against the debtor enterprise, immediate security in kind must be ensured.
The greatest risk for a creditor in the lead-up to insolvency is the later challenge of insolvency by the administrator. Insolvency administrators like to refer to the fact that the debtor company was already insolvent at the time of payment and the creditor knew this. If this is the case, the avoidance period is four or ten years. Indications of the creditor’s awareness of the insolvency include agreements on payment by instalments, unsuccessful attempts at enforcement and an attachment protocol, etc.
The creditor should therefore make sure that the debtor assures him that he will be able to make the payment without otherwise jeopardizing his ability to pay in favor of the other creditors. If necessary, the creditor should make a memorandum here or have the debtor confirm this in writing.
If the transaction is a cash transaction, whereby such a cash transaction still exists if the debtor makes payment on the creditor’s claim within 30 days, a subsequent insolvency challenge is excluded, unless the cash transaction does not serve the interests of the company, which will be assumed in the rarest case.
Do you have any further questions on the subject of insolvency and restructuring? We are at your side as an insolvency lawyer and will accompany you through the entire process. In our office, we will be happy to point out the possible risks of insolvency during an initial consultation and show you the first steps. Contact us – we will help you.