Bankruptcy proceedings
What are bankruptcy proceedings?
Bankruptcy proceedings cover all of the debtor’s assets subject to enforcement. Unlike reorganisation proceedings under self-administration, bankruptcy proceedings – as do restructuring proceedings without self-administration – have very far-reaching consequences for the debtor.
Which bodies are involved in the bankruptcy proceedings?
The assets forming part of the insolvency estate are no longer at the debtor’s disposal. In their place, the insolvency administrator acts as the central body of the insolvency proceedings. Other bodies, alongside the insolvency administrator, include the insolvency court, a creditors’ committee, which is routinely appointed in the insolvency proceedings of a debtor operating a business, and the creditors’ meeting.
What is the purpose of insolvency proceedings?
The primary aim of insolvency proceedings is to realise the assets of the insolvency estate and distribute the proceeds to the insolvency creditors. Insolvency proceedings are a process with an open outcome. The aim is to determine, in the course of the proceedings, whether the entrepreneur or the company can be restructured, or whether a break-up is unavoidable. The debtor may avoid the realisation of their assets by entering into a restructuring plan and obtain discharge from liabilities exceeding the restructuring plan quota. Bankruptcy proceedings therefore also ensure that, in the case of debtors operating a business, the business is not unnecessarily broken up, but is instead continued where possible and, in the event of realisation, is preferably sold and preserved in its entirety. Bankruptcy proceedings concerning a natural person who does not operate a business are referred to as debt settlement proceedings.
Learn more about our insolvency and restructuring division. Please feel free to contact us for further information.