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Understanding what happens when a company files for insolvency in Germany is one of the most urgent compliance questions a director, managing director (Geschäftsführer) or board member can face. The German Insolvency Code (Insolvenzordnung, or InsO) imposes strict statutory deadlines, three weeks from the onset of illiquidity and six weeks from the onset of over-indebtedness, after which directors who have not filed a petition face both criminal prosecution and personal civil liability for every payment made from company funds. This guide sets out the complete process: from the moment a filing obligation arises, through preliminary insolvency proceedings in Germany, to the appointment of an administrator, the impact on employees and creditors, and the rescue options that may still be available.
Directors, in-house counsel and lenders with exposure to German operations should treat the checklist below as an immediate action framework.
When a company files for insolvency in Germany, the local insolvency court (Amtsgericht) opens a structured legal process governed by the German Insolvency Code. The process is designed to satisfy creditors’ claims in an orderly manner, either by liquidating the company’s assets or, where viable, restructuring the business as a going concern. According to the European e-Justice Portal, the principal objective of German insolvency proceedings is the collective satisfaction of creditors.
In practice, the filing triggers the following chain of events:
For directors, the critical point is that filing does not end their responsibilities. It shifts them. From the moment the administrator is appointed, management powers transfer to that administrator unless the court grants self-administration (Eigenverwaltung).
The Germany insolvency filing obligation for GmbH managing directors, AG board members and other corporate representatives is set out in §15a of the InsO. This provision creates a mandatory, non-delegable duty to file for insolvency without culpable delay, and in any event within strict maximum periods that begin running the moment the relevant insolvency ground materialises.
Under §15a(1) InsO, where a company is unable to meet its payment obligations as they fall due (Zahlungsunfähigkeit), directors must file an insolvency petition without culpable delay and no later than three weeks after the onset of illiquidity. The three-week period is a maximum, not a default entitlement. If no realistic prospect of eliminating the liquidity shortfall exists within those three weeks, the obligation to file arises immediately.
How to calculate the deadline in practice:
Industry observers note that German courts apply the three-week rule strictly. The Federal Court of Justice (Bundesgerichtshof, BGH) has consistently held that mere negotiations with potential investors, without binding commitments, do not toll the deadline.
Where the company’s liabilities exceed the value of its assets (Überschuldung) but the company can still pay its bills, directors have a maximum of six weeks to file under §15a(1) InsO. This longer window reflects the legislator’s view that over-indebtedness alone, without illiquidity, may be resolved through restructuring measures, provided a positive going-concern prognosis exists.
The six-week period was formalised by the SanInsKG reform, which became permanent law. It applies only where the company’s continued existence is overwhelmingly probable based on a documented business plan covering the current and following financial year. If the going-concern prognosis turns negative at any point during those six weeks, the deadline immediately collapses to the three-week illiquidity rule.
Under the InsO, an insolvency petition may be filed by:
For a GmbH, the filing obligation falls on every managing director individually. A single director cannot delegate the duty to a co-director; each is independently obliged. For an AG, the obligation falls on each member of the management board (Vorstand). According to the government procedural overview published by the Verwaltung Bund, the petition is filed with the insolvency court at the company’s registered seat.
Although the InsO does not prescribe a rigid checklist of attachments, in practice the insolvency court expects the petition to be accompanied by:
Directors should simultaneously notify their D&O insurer, key contractual counterparties with change-of-control clauses, and, where applicable, the works council.
Once the petition is received, the insolvency court opens preliminary insolvency proceedings in Germany. The court’s first major decision is whether to appoint a preliminary insolvency administrator with full or limited powers, or to permit the debtor to remain in possession under self-administration (Eigenverwaltung, §§270 et seq. InsO).
Under standard preliminary administration, the court typically appoints a “strong” preliminary administrator who takes control of the company’s assets and must consent to all disposals. Management’s authority to act is suspended or significantly curtailed. Under self-administration, which is available only where the debtor can demonstrate that it is in creditors’ interests and that the company remains capable of meeting current obligations, the existing management retains day-to-day control, subject to oversight by a court-appointed supervisor (Sachwalter).
The practical consequences for directors are immediate and far-reaching:
Directors’ liability in insolvency in Germany is among the most severe in any major European jurisdiction. The consequences of late or non-filing extend well beyond removal from office, they reach into personal assets and, in the worst case, personal freedom.
Under §15a(4) InsO, any director who fails to file for insolvency in time, or who files an incorrect petition, commits a criminal offence punishable by up to three years’ imprisonment or a fine. Where the delay is negligent rather than intentional, §15a(5) InsO still imposes criminal liability, with a maximum penalty of one year’s imprisonment or a fine.
As practitioner commentary from Schlun & Elseven notes, German prosecutors have become increasingly active in pursuing delayed-filing offences. The offence is complete the moment the filing deadline expires without a petition having been submitted, no creditor loss needs to be proven. Early indications suggest that enforcement activity has continued to intensify through 2025 and into 2026, with prosecutors in major commercial centres reportedly giving higher priority to insolvency-related criminal investigations.
Additional criminal provisions that directors should be aware of include:
Under §15b InsO (formerly §64 GmbHG for GmbH directors), directors are personally liable to repay to the insolvency estate any payments made from company assets after the onset of illiquidity or over-indebtedness. This liability is strict: the insolvency administrator can and routinely does pursue former directors for the full amount of every payment, including supplier invoices, tax remittances and payroll transfers, made after the filing obligation arose.
Exceptions are narrow. Payments that are compatible with the diligence of an orderly businessperson (Sorgfalt eines ordentlichen Geschäftsleiters) remain permissible during the three-week or six-week window, provided they are genuinely necessary to preserve the company’s value and are made in pursuit of a realistic rescue plan. Examples typically accepted by courts include payments to maintain essential utilities and payments to employees where those employees are needed to preserve the business as a going concern.
D&O policies typically cover civil liability claims, but directors must check whether their policy contains exclusions for wilful or grossly negligent delay in filing. Notification to the insurer must generally occur immediately upon awareness of a potential insolvency scenario, not after the claim is made. Late notification is a common ground for coverage denial.
Practical defences available to directors include:
When the board first identifies a potential insolvency ground, the following week-by-week action plan provides a defensible compliance framework. What happens when a company files for insolvency in Germany depends significantly on the quality of preparation in these critical weeks.
Employees are not left unprotected. Under German law, if the employer becomes insolvent, employees are entitled to Insolvenzgeld, a state-funded benefit administered by the Federal Employment Agency (Bundesagentur für Arbeit) that covers outstanding wages for up to three months prior to the opening of insolvency proceedings. This benefit applies to all employees regardless of nationality or contract type, provided they were employed in Germany.
Employment contracts are not automatically terminated by the filing. The insolvency administrator may, however, terminate contracts with a maximum notice period of three months (§113 InsO), regardless of longer contractual or statutory notice periods.
Creditors must register their claims with the insolvency administrator within the deadline set by the court, typically between two and four weeks after the formal opening order. Claims that are not registered in time risk being excluded from the distribution. The opening of proceedings and key dates are published in the German insolvency register (Insolvenzbekanntmachungen), which is publicly accessible. Directors should ensure that all known creditors are included in the petition filing to facilitate an orderly claims process.
Filing for insolvency does not necessarily mean the end of the company. The German Insolvency Code and the related Stabilisation and Restructuring Framework (StaRUG) offer several pathways to preserve the business.
| Option | When used | Key effect on management powers |
|---|---|---|
| Liquidation / insolvency administration | When rescue is not viable and creditors’ interest lies in realising assets | Court appoints insolvency administrator; management loses all disposal powers |
| Self-administration (Eigenverwaltung) | Where a going-concern rescue is potentially viable and creditors’ interests are served | Debtor remains in control under court-appointed supervisor; higher chance of successful restructuring |
| StaRUG preventive restructuring | When imminent insolvency can be addressed through a creditor restructuring plan before actual insolvency materialises | Restructuring plan negotiated and court-sanctioned; management preserved but formal conditions and creditor voting thresholds apply |
The StaRUG framework, which implements the EU Restructuring Directive, is available only at the stage of imminent illiquidity, before actual illiquidity or over-indebtedness has occurred. Once the company crosses into actual insolvency, the StaRUG route closes and only InsO proceedings remain available. Early engagement with specialist counsel is therefore critical to preserving the widest range of options.
Directors who act decisively and document every step can significantly reduce their personal exposure. The following measures represent the minimum standard expected by German courts when assessing whether a director exercised the required duty of care.
What happens when a company files for insolvency in Germany is not a single event but a structured sequence of legal consequences, each carrying significant risk for directors who delay or misstep. The three-week and six-week filing deadlines under the InsO are among the strictest in Europe, and the personal consequences, criminal prosecution, civil repayment claims and D&O coverage disputes, are severe. The early indications from enforcement trends between 2022 and 2026 suggest that prosecutors and insolvency administrators are becoming more, not less, aggressive in pursuing directors who fail to act in time.
For boards and in-house counsel navigating financial distress in a German subsidiary or group company, the single most important step is to obtain specialist insolvency advice the moment liquidity concerns emerge, not after the deadline has started running. Proactive engagement preserves the widest range of rescue options, provides the strongest liability defence, and gives the company the best chance of emerging from insolvency proceedings as a viable business.
This article was produced by Global Law Experts. For specialist advice on this topic, contact Oliver Otto at Rimon Falkenfort, a member of the Global Law Experts network.
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