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HomePracticesRestructuring & Insolvency
Practice 03

When a German counterparty wobbles, timing is the law.

German insolvency law runs on hard deadlines and personal liability — for directors, and indirectly for the foreign parents and creditors behind them. We act for international creditors, investors and shareholders in German restructurings and insolvencies: protecting claims, defending against claw-back, and finding value in distressed situations.

Book an orientation call Frequently asked questions
§ I — Context

The InsO and StaRUG set the clock — not the balance sheet

Germany's insolvency regime is creditor-oriented and deadline-driven. Under sec. 15a InsO, the managing directors of an illiquid or overindebted company must file for insolvency without culpable delay — within three weeks at the latest in the case of illiquidity. Breach is a criminal offence and triggers personal liability. For a foreign parent, this means a German subsidiary in distress cannot simply be carried along while the group decides: the local directors are on a statutory clock, and instructions from abroad do not suspend it.

For creditors and business partners, the sharpest instrument is claw-back. Under secs. 129 et seq. InsO, an insolvency administrator can challenge payments and security received before the filing — in some constellations reaching years back. Foreign suppliers who continued deliveries against payments from a distressed German customer regularly face repayment demands long after the money arrived. Early advice on payment terms and security can dramatically reduce that exposure.

Since 2021 the StaRUG offers a court-supervised restructuring outside formal insolvency: a restructuring plan (secs. 29 et seq. StaRUG) can bind dissenting creditors by majority vote. We represent foreign creditors in insolvency proceedings and creditor committees, defend claw-back claims, advise parents and directors on the duties around sec. 15a InsO and sec. 43 GmbHG, and structure acquisitions of distressed German assets. The recommended step in every distress scenario: assess the legal position in writing before the next payment, delivery or instruction.

§ II — Services & scenarios

What we handle — and in which situations.

Services

  • Creditor representation — filing and defending claims in German insolvency proceedings, representation in creditors' meetings and committees.
  • Claw-back defence — defence of foreign suppliers and lenders against avoidance claims under secs. 129 et seq. InsO.
  • StaRUG proceedings — advising creditors and shareholders in restructuring-plan proceedings, including cross-class questions.
  • Director and parent advice — duties and liability around sec. 15a InsO and sec. 43 GmbHG for locally appointed directors and foreign parents.
  • Distressed M&A — acquisition of German businesses or assets out of insolvency or pre-insolvency situations.
  • Counterparty risk management — payment terms, retention of title and security when a German customer or supplier shows distress signals.
  • Cross-border insolvencies — German side of multi-jurisdiction insolvencies, coordinated with foreign main or secondary proceedings.

Typical scenarios

  • A foreign supplier receives a letter from a German insolvency administrator demanding repayment of EUR 800,000 received in the year before the filing.
  • The German subsidiary of an international group slides toward illiquidity; the parent needs an immediate assessment of the directors' filing duties and its own exposure.
  • A foreign lender holds security over the assets of a German borrower entering StaRUG proceedings and must protect its position in the plan vote.
  • An investor wants to acquire the operating assets of an insolvent German manufacturer from the administrator.
  • A foreign customer depends on a distressed German supplier and needs delivery security without creating claw-back exposure.
  • A creditors' committee seat is offered to a major foreign creditor, who needs German counsel to exercise it.
§ III — Statutes & forums

The legal framework.

InsO § 15a
The Insolvency Code's filing duty: directors of an illiquid or overindebted company must file for insolvency without culpable delay — within three weeks at the latest in the case of illiquidity. Breach is criminally sanctioned and creates personal liability.
InsO §§ 129 ff.
The claw-back (avoidance) regime: the administrator can challenge payments, security and other transactions made before the filing and demand their return — a central risk for suppliers and lenders of distressed German companies.
StaRUG §§ 29 ff.
The Corporate Stabilisation and Restructuring Act: a court-supervised restructuring plan outside insolvency that can bind dissenting creditors by majority vote — Germany's implementation of the EU preventive-restructuring framework.
GmbHG § 43
The managing director's duty of care in the GmbH. In the crisis it sharpens: payments after illiquidity, missed filings or preferred creditors lead to personal liability of the director.
BGB §§ 195, 199
The general limitation rules of the Civil Code — relevant for the question of how long claims against directors, shareholders or counterparties around an insolvency remain enforceable.
LG / OLG / BGH
Avoidance claims and director-liability cases are litigated through the civil court hierarchy: Landgericht, Oberlandesgericht, and on points of law the Bundesgerichtshof.
§ IV — How we start

How an engagement begins.

01

First contact

Describe the situation — administrator letter, distressed counterparty, subsidiary in trouble. We reply within one business day and offer a free 30-minute orientation call.

02

Legal assessment

We put exposure, deadlines and options in writing — for example a claw-back risk analysis — at a fixed fee from EUR 1,500 plus VAT.

03

Mandate

Depending on the matter: hourly rates, a fixed fee for defined work packages, or a fee agreement under sec. 3a RVG.

04

Ongoing support

Insolvency proceedings run for years. We monitor the proceeding, file and defend as needed, and report in English at every material step.

From practice
In a German insolvency, the question is rarely whether the rules apply to a foreign creditor. It is whether the creditor acted before the rules did.
Dr. Matthias Wegener · Partner
§ V — Team

Your contacts in this practice.

Partner

Dr. Matthias Wegener

Restructuring & Insolvency · Berlin

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Associate

Jan Hofmeister

Restructuring & Insolvency · Berlin

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§ VI — Fees

Clear before the engagement begins.

Distress mandates need cost certainty more than most. We define the work package and the fee model before we start — and update both when the proceeding changes shape.

  • Orientation call — 30 minutes, free of charge: deadlines, exposure, immediate do's and don'ts.
  • Legal assessment — a written analysis of a defined question (claw-back exposure, filing duties, claim strategy) at a fixed fee from EUR 1,500 plus VAT.
  • Mandate — hourly rates, a fixed fee for defined phases, or a fee agreement under sec. 3a RVG.
  • Court proceedings — in avoidance and liability litigation, the statutory fees under the RVG form the floor; we do not undercut them.
§ VII — FAQ

What clients ask first.

Our German customer filed for insolvency. What happens to our claims?

Open claims become insolvency claims: you file them with the administrator for the schedule, and recovery depends on the estate's quota — often paid years later. Three things deserve immediate attention: first, retention-of-title and security rights, which can give you separate satisfaction rather than a quota; second, current contracts, because the administrator chooses whether to perform them; third, claw-back risk for payments you received before the filing. We review all three in writing before you respond to the administrator, file claims or continue deliveries.

The administrator demands repayment of money we received. Is that real?

Yes — claw-back under secs. 129 et seq. InsO is one of the most active areas of German insolvency practice, and foreign creditors are routinely targeted. Whether the claim holds depends on the specific avoidance ground: when the payments were made, what you knew or should have known about the debtor's distress, and whether the terms were congruent with the contract. These claims are defensible more often than the administrator's letter suggests, and they are negotiable. Do not pay or acknowledge anything before the legal position is assessed; responses here shape the litigation that may follow.

As a foreign parent, are we liable for our German subsidiary's insolvency?

Not automatically — the GmbH shields its shareholders. But the crisis creates specific exposure: instructions to the local directors that delay the insolvency filing, cash-pool withdrawals in the crisis period, or financing promises that fail can all generate claims against the parent or its representatives. The directors themselves face personal liability under sec. 15a InsO and sec. 43 GmbHG, and they will document instructions from abroad. We advise parents and directors together or separately, map the exposure in writing and sequence the decisions — file, finance or restructure — against the statutory deadlines.

What is StaRUG and does it affect us as creditors?

The StaRUG, in force since 2021, allows a distressed but not yet insolvent German company to restructure its liabilities through a court-supervised plan — outside formal insolvency and largely out of public view. For creditors the key feature is majority rule: under secs. 29 et seq. StaRUG a plan can bind dissenting creditors if the required majorities in each class approve it. If a German debtor invites you into plan negotiations, your class placement, valuation assumptions and voting strategy decide the outcome. We represent foreign creditors throughout these proceedings.

Can we buy a German company out of insolvency?

Yes — acquisitions from the administrator, typically as asset deals, are an established route to German targets at realistic valuations. The administrator sells assets free of most legacy liabilities, but the process runs on the proceeding's timetable: short exclusivity, limited warranties, works-council and employment transfer rules to manage. Speed and credibility with the administrator matter more than in a standard M&A process. We run due diligence focused on what an estate sale can and cannot transfer, negotiate with the administrator and coordinate the employment and register steps to closing.
§ VIII — Insights

Articles on this practice area.

Articles on German insolvency practice, StaRUG and creditor strategy appear in our knowledge base.

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Distress on the German side of your business? Assess before you act.

Payments, deliveries and instructions made this week decide liability questions years later. We reply within one business day.

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BRANDT & FALK Rechtsanwälte is a German business-law firm with offices in Munich and Berlin. The content of this website is general information about our fields of work and does not constitute legal advice. An attorney–client relationship is established only by a separate engagement agreement. Unless stated otherwise, all fees are quoted plus statutory VAT. Our lawyers are admitted to the bar in Germany; advice on foreign law is provided by independent local partner firms.