Options for Corporate Restructuring
The number of corporate insolvencies in Germany continues to rise. According to the Institute of the German Economy (IW), the number of businesses filing for insolvency in the past year was the highest since 2015, and the trend is ongoing.
According to IW data, nearly 22,000 companies in Germany filed for insolvency in 2024, and the peak still seems to be on the horizon. IW expects more than 25,000 insolvencies in 2025, reports Handelsblatt. The reasons for the increase are multifaceted. Companies must respond appropriately to crisis situations and, if necessary, file for insolvency in a timely manner. As a business law firm, MTR Legal Rechtsanwälte advises on insolvency law and provides options for corporate restructuring.
Increase in Company Bankruptcies Since 2022
Since 2022, the number of corporate bankruptcies in Germany has been rising, and this trend has continued into this year. In the first quarter of 2025, around 1% more corporations and limited companies filed for insolvency than in the previous quarter, totaling approximately 4,200 companies, as Handelsblatt further reports.
The reasons for the increase are varied. During the COVID-19 pandemic, the obligation to file for insolvency was temporarily suspended, leading to a massive reduction in insolvencies to around 15,000 cases in 2021. After the suspension ended, the number of insolvencies sharply rose again to 22,000 filings. The suspension of the filing requirement led to insolvent companies delaying their applications, but they ultimately could not avoid insolvency.
No Immediate Improvement in Sight
Along with this ongoing catch-up effect, changed economic conditions such as inflation and rising interest rates have added to the pressure. U.S. trade policies may further exacerbate the situation. Under these conditions, it is becoming increasingly difficult for companies to remain competitive.
An immediate improvement in the economic situation is not expected. However, lawmakers have provided opportunities for struggling companies to recover and return to a financially viable position. This may be possible without filing for insolvency.
Options for Restructuring
As long as the company has not yet reached insolvency, it can opt for a protective shield procedure and attempt to restructure within this framework. This is only possible if there is still a prospect of a successful restructuring, which the company must prove. If the protective shield procedure is approved, the company must, together with an administrator, present a viable restructuring plan within three months. During this period, creditors cannot make claims against the company.
If the company is threatened by insolvency but has not yet reached the point of payment incapacity, it is possible to restructure the company under the Corporate Stabilization and Restructuring Act (StaRUG). The core of this process is a restructuring plan that the company must present to save the business. Unlike in insolvency, not all creditors must agree to the plan, but only those who are affected by the planned measures.
In case of self-administered insolvency, the company must present an insolvency plan with the help of an administrator, which must be approved by all creditors. The advantage of self-administered insolvency is that the management continues to represent the company, allowing business relationships to be maintained.
Avoid Delayed Insolvency
If insolvency cannot be avoided, an insolvency application must be filed. An insolvency administrator takes over the process, and the competent court opens the insolvency procedure.
It is important to note that the insolvency application must be filed in a timely manner to avoid delayed insolvency. An insolvency application must be submitted immediately after the occurrence of payment incapacity or over-indebtedness. This means that the insolvency application must be submitted no later than three weeks after the onset of payment incapacity or six weeks after the occurrence of over-indebtedness.
If payments are made despite insolvency, and these payments are not in line with the due diligence of a proper business manager, the responsible managing directors or board members can be held personally liable.
MTR Legal Rechtsanwälte advises on insolvency law with the primary goal of realizing the restructuring of the company.
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