Debtor-in-possession insolvency proceedings

Self-determined and supported by experts

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“Debtor-in-possession insolvency proceedings offer enterprises the possibility to also stay in charge of their business in the course of a business crisis. Find out here how we assist the management and creditors with our expertise in this process.”

  • Aktuelles aus der Kanzlei
  • Insolvency in self-administration - support in challenging times

The possibility of debtor-in-possession insolvency proceedings has been created as an alternative to the standard procedure. It offers decision-makers the possibility to continue managing the business in spite of the crisis. Meaning, there is no receiver taking over the management of the business. This way, the management of the enterprise has the chance to reorganise the business on a solid basis on its own and regain crucial trust. We support entrepreneurs, so that they will stay in control of the situation at all times in this complex situation and in light of the special substance of insolvency law.

Whether trustee or restructuring manager: experts are on-board

So that the conditions for debtor-in-possession insolvency proceedings are met, the corresponding application must be received by the court at the latest three weeks after the applicant has become insolvent. The court will subsequently appoint, for example, one of our experts as – initially preliminary – trustee. He will act as an intermediary between the indebted enterprise and the creditors. This means: The trustee will continuously monitor the enterprise’s efficiency, get the stakeholders to the negotiating table, and represent the interests of the creditors.

Our experts meanwhile will also provide assistance to entrepreneurs as independent consultants, interim or restructuring managers. In these capacities, we lend support, for example, in the analysis of the causes for the crisis, the drafting of an insolvency plan or in investor negotiations. Good to know: Of many courts and creditors, debtor-in-possession insolvency proceedings are frequently admitted only if an experienced insolvency advisor assists the company.

Characteristics of debtor-in-possession insolvency proceedings

  • The management retains full authority over a company
  • It remains the point of contact for customers, suppliers, employees and business partners
  • Preliminary trustees appointed by the court merely have a reviewing, coordinating, supporting function
  • The Employment Agency will assume the payment of wages and salaries for up to three months upon application (insolvency pay)
  • No repayment of loans
  • A moratorium is placed on existing liabilities
  • Reduced costs of proceedings
  • From opening of the proceedings: Special right of termination of unprofitable contracts

Debtor-in-possession insolvency proceedings explained in practical examples

What is a possible course of debtor-in-possession insolvency proceedings?
Find out more about some of our cases:

02/2019 – Steakhouse:

02/2018 – Meinen Fleisch:

02/2018 – Papierfabrik Heinsberg:

02/2017 – Manschnower Tiefkühlwerk:

Do you have questions about our work in insolvency administration? You are welcome to contact us.

Creditor information system

View select insolvency proceedings online here.

  • MORE TIME FOR COURSE CORRECTIONS BY THE PROTECTIVE SHIELDING METHOD

If an entrepreneur applies for the so-called protective shield procedure at least two months before an expected and impending inability to pay, a number of factors will simplify the restructuring for the entrepreneur. For example, in this type of debtor-in-possession insolvency proceedings, the enterprise will be protected from creditors’ enforcement measures for three months. In addition, a special right of termination arises for contracts that are no longer profitable.

A benefit of the protective shield is improved possibilities to plan restructuring measures. Apart from that, the control over the enterprise stays with the management throughout the entire procedure. The management also has a right of co-determination when selecting the preliminary trustee. In addition, debtor-in-possession proceedings will initially not be published on the internet.

Observation of deadlines and duties in the protective shield procedure

All simplifications obtained by the protective shield procedure come with a number of obligations. For example, the protective shield is granted only if the enterprise has never been insolvent before. This must be proven by a certificate from a lawyer, tax adviser or auditor with experience in insolvency proceedings. Moreover, an insolvency plan must be drawn up within a period of three months.

All simplifications obtained by the protective shield procedure come with a number of obligations. For example, the protective shield is granted only if the enterprise has never been insolvent before. This must be proven by a certificate from a lawyer, tax adviser or auditor with experience in insolvency proceedings. Moreover, an insolvency plan must be drawn up within a period of three months.

These are some of the possibilities offered by a protective shield procedure:

  • More time and the ability to plan restructuring measures
  • Management stays responsible for the operative business
  • Temporary protection against enforcement measures
  • Special right of termination of unprofitable contracts
  • Co-determination of the appointment of the trustee
  • Liquidity often still available

Do you have questions about the protective shield procedure?

  • As trustee we support creditors and companies

Whether in debtor-in-possession insolvency proceedings or the protective shield procedure – the aim in all cases is to achieve a change of direction and reinstate trust. This requires a mediating partner, who brings the individual interest groups to the table.

As trustees, we will represent the interest of the creditors and simultaneously support the management. The creditors want to collect the greatest part of their claims – this is also referred to as quota – and the entrepreneurs want to reorganise their business. As independent negotiators, we create the connection here between the parties and support constructive shared solutions. Our trustees will furthermore monitor the efficiency of the business operation continuously and support the entrepreneur in complying with the legal insolvency regulations. Of course, we will also be at your side if any questions arise from the restructuring, the drafting of the insolvency plan, or from an investor process.

What makes a good trustee?

  • Independent and neutral partner
  • Mediates between debtor and creditors
  • Represents creditors’ interests, supports the restructuring process
  • Checks the efficiency of measures taken at the company
  • Monitors the compliance with regulations and adherence to deadlines
  • Available for legal and business management questions

Would you like to find out more about our tasks in debtor-in-possession insolvency proceedings, in the protective shield procedure, or our tasks as trustees? You are welcome to register with us today.

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