Failure is an opportunity to begin again with a new attitude.
In this article, our colleague from Gurcan Partners Düsseldorf Office, Att. Ieva Thibodeaux LLM will mention Bankruptcy and its proceedings in Germany.
Half of the new businesses go bankrupt
In 2019 almost 19 000 business insolvencies and nearly 89 000 bankruptcy proceedings of private individuals were registered in Germany. According to world statistics, 50% of all new companies fail. Not only know-how, financial resources, and experience contribute to the success or failure of the business, but also luck and the economic situation play an important role.
More and more companies fail amid the coronavirus pandemic
The covid-19 pandemic has shown how business and the global economic situation can change. Now it is obvious that anyone can end up in an insolvency situation as a company or as a private individual. In Germany, an insolvency proceeding takes between 3 and 7 years, depending on the individual situation. In German law, there is a difference between private bankruptcy (Verbraucherinsolvenz) and business bankruptcy (Regelinsolvenz).
Business bankruptcy of a German GmbH or UG can last in some cases insolvency for up to 4 years. It depends on such factors like the size of the business, the number of employees, the estimated inventory.
Private bankruptcy can end in three years if the debtor has been able to pay off at least 35 percent of his debts and the full costs of the proceedings during this period. Five years is more or less the “standard” duration of the bankruptcy proceedings if the debtor has managed to pay at least the full costs of the proceedings by then. In some more complicated cases, private bankruptcy can last up to 7 years.
How are the bankruptcy procedures in Germany?
The cost of the bankruptcy procedure varies between 1500 EUR for the private bankruptcy proceedings and up to 7000 EUR for a business entity. But it is important to mention that every situation is individual and complex, therefore, the cost for the courts, lawyers, and other professionals may vary as well.
In some cases, you and your business can avoid it, if you agree with your creditors and/or find restructuring opportunities for your business. As German bankruptcy proceedings are slightly complicated, it is recommended to proceed with the help of a bankruptcy lawyer or bankruptcy practitioner.
Gurcan Partners is a Foreign Economic Relations Board and Association of German Chambers of Industry and Commerce member international law and consultancy firm.
Our team will help you. We will accompany you during the insolvency proceedings right from the start. Arrange a free consultation appointment with us!
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All rights reserved. All rights of Bankruptcy in Germany article belong to Gurcan Partners. The author has no responsibilities for the information in this article. This article is prepared just to inform.
Att. Ieva Thibodeaux LLM
Gurcan Partners Germany Office
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