German insolvency law – The disadvantages
Whitelaw can assure you: German insolvency law throws up problems. It’s been clear for a long time that it has to be changed. In terms of making a fresh start, German insolvency law is one of the worst systems you could choose to deal with.
German insolvency law is extraordinarily complicated and bureaucratic; the many clauses are hard to understand even for legal professionals and a number of mistakes are made.
We have compiled important aspects of German insolvency law, which are far from beneficial to a businessman looking for a fresh start. You will understand why Whitelaw advises against dealing with German insolvency law.
1. German insolvency law puts businessmen out of action
If a company goes into crisis, you as a businessman are already no longer free to make your own decisions. The contractual obligations tied into German insolvency law are a pain in the neck and you can no longer do all that you can, to get your business into shape. If it is determined later that you applied to late for bankruptcy, German insolvency law dictates that you will have to pay charges (procrastination).
If you file for bankruptcy, the law determines that an insolvency administrator must be employed. From this point onwards, you are no longer pulling the strings. The administrator (and your creditors) will decide your future and that of your company.
You have no say in who is chosen for you as lawyer. You will have to rely on his commitment and competence. In addition, insolvency administrators are generally lawyers without any experience in business management.
2. German insolvency law is expensive
For an bankruptcy to be carried out at all, financial resources have to be available to cover the costs of the procedure. To determine this, an bankruptcy report will be commissioned. If the resources available are not sufficient, a German bankruptcy cannot be carried out.
An insolvency administrator’s salary is huge. Costs for insolvency lawyers, courts, trustees….have to be added in. All this has to be accounted for by your company’s assets! Often the businessman has to dip into his own pocket or file for personal bankruptcy.
Whitelaw believes, that these financial resources must be used more profitably! For the benefit of your company, your employees and you.
3. German insolvency law is long winded
Provisional insolvency proceedings, administrators, reports, creditors’ meetings….this all costs time. Your time.
According to German insolvency law, a debt relief order is only possible after six years at the earliest; in any case, in German insolvency law there are reasons for a refusal to issue a debt relief order. Often proceedings can go on for up to 15 years.
4. German insolvency law doesn’t allow you a fresh start
Unfortunately in German insolvency law, companies are often simply bled dry. The proceeding ends in liquidation. A restructuring and a new start are generally not the expected result.
Often the businessman has to dip into his own pocket or file for personal bankruptcy.
For good measure, authorities in German insolvency law threaten with deferred charges and liabilities (insolvency procrastination). In German insolvency law there are over 70 clauses to take into consideration, so that courts and state lawyers don’t intervene.
- The burdening procedure as dictated by German insolvency law can last years.
- Capital and assets are obliterated.
- Given the lack of capital there are no ways to make fresh start.
- Your company is finished and your own life will be in disarray for years.
At Whitelaw we understand, that facing this sequence of events resulting from German bankruptcy law, a businessman can hesitate. This is dangerous!
Make an early decision and grab the chance to save your company and reshape your future.
Our advice / our services
- We will fully commit to supporting you in a regular procedure as dictated by German insolvency law.
- If you have the opportunity to undertake bankruptcy in the UK, then we urgently advise you to seek out information on your options.
Give us a call!