The rising energy prices present many companies with great financial challenges. Managing directors must be aware that an insolvency application must be filed in a timely manner.
According to corporate law, managing directors or executive bodies are obliged to file for insolvency immediately upon the occurrence of insolvency, at the latest within three weeks. Reasons for the occurrence of insolvency include over-indebtedness or the company’s inability to pay. If the insolvency application is not submitted on time, the managing director or executive bodies are liable.
During the corona pandemic, the obligation to file for insolvency was temporarily suspended. Meanwhile, many companies face new difficult challenges due to disrupted supply chains and high energy prices. However, there is currently no renewed suspension of the obligation to file for insolvency. Due to the high liability risk, it should be examined in a timely manner whether there is a reason for insolvency and an application for insolvency must be filed, says attorney Michael Rainer, contact person for corporate law at MTR Rechtsanwälte.
In the event of insolvency or over-indebtedness, there is an obligation to file for insolvency. Insolvency occurs when liquid assets are no longer sufficient to meet payment obligations.
Decisive for the due date of payment is an agreement on due date or a corresponding legal requirement. A possibility to postpone the due date is deferral. Through deferral, insolvency can possibly be avoided. It is important to note that an agreement with the creditor does not necessarily have to be made for a deferral, it can also occur implicitly. According to common jurisprudence, an implicit deferral exists when there is a lack of serious demand for the debt by the creditor.
Over-indebtedness occurs when the company’s assets no longer cover the liabilities, unless it is predominantly likely that the company will continue.
To avert impending over-indebtedness, the company has various options. For example, it can prevent over-indebtedness by injecting fresh equity. Another option is the conversion of loan liabilities into equity in the form of a so-called debt-equity swap. This means the creditor brings their claims as equity and thus ensures a capital increase. Over-indebtedness can also be averted by the waiver of claims by a creditor.
Experienced lawyers in insolvency law and corporate law provide advice on preventing insolvency.
