The ESUG from the perspective of the debtor
The reform of bankruptcy law goes by the name “Law to further facilitate the restructuring of Companies”(ESUG). What have companies had to consider since March?
The company in an economic imbalance does not have to be due to its own mismanagement. Customer defaults, delivery bottlenecks by suppliers, political unrest in a major buyer area can just as easily lead to insolvency or temporary insolvency.
The so-called opening application at the insolvency court should always be rounded off with the detailed information on the liabilities. There is even the need for legislation in medium-sized to large companies, or if the self-administration is requested or a creditors' committee is to be set up.
What information is required for the application?
The following list must also contain the following information:
- The highest demands
- The highest (secured) claims
- Financial management, social security and occupational pensions
Incorrect information and late application
If false statements are made in the opening request, this can also lead to criminal liability for the debtor, such as a late or unsuccessful application for bankruptcy! If time is short, you should submit the list (incomplete) and ask for a deadline for the correction.
Attention! If the opening application for a corporation is filed too late, the person liable under civil law is obliged to pay an advance to cover the costs of the proceedings (managing director or shareholder involved). This payment is not recommended in advance. It is a guilty admission that the request was made too late.
What does self-administration mean?
The so-called Eigenverwaltung was strengthened by the new insolvency law. If only imminent insolvency or over-indebtedness is present, you can plan and start the remediation via the protective screen of the self-administration. How do you manage your own business?
The self-administration can run in two ways. One is: you apply for it directly. The second way to self-management would be that the constituted creditor committee would apply for or approve the self-administration before the court. An overview:
You apply for self-administration directly - necessary applications are:
- Opening application due to imminent insolvency / over-indebtedness
- Application for self-administration
- Application for the preparation of the sanitation preparation
- Submission of a qualified certificate (tax consultant, auditor, lawyer) that the desired restructuring does not seem hopeless and there is no insolvency
Rejection of the application
The application should only be rejected if the rehabilitation appears to be obviously hopeless. This would be the case, for example, if there is no viable reconstruction project, or the rehabilitation is not supported by the creditors.
If the application is rejected and there is only an imminent insolvency, they can also withdraw this application in order to avoid the opening of a regular insolvency proceedings.
Self-administration and experts
If the application is complied with, you will be assigned an “administrator” who you can usually determine. You must develop a rescue plan in a duet within three months. When selecting the administrator, the lenders should also be involved in the background.
The advantages are apparent. The administrator monitors your business activities to ensure that no creditor damage occurs. However, you keep the book of action in your hands.
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