Insolvency: Privileges will soon be abolished

From January 1, 2024, the usual requirements regarding the obligation to file for insolvency and the prognosis for going concern will apply again. The special crisis rules will then expire.

This article is part of the special topic: Restructuring, protective shield or insolvency?

The number of corporate insolvencies is steadily rising. At the same time, several temporary special regulations in insolvency law are expiring. From January 1, 2024, the old regulations regarding the obligation to file for insolvency and the going concern forecast will come back into effect. Companies should pay closer attention to this in their financial planning. Management consultant Johannes List explains what to look out for.

In response to the COVID-19 pandemic, comprehensive relaxations of insolvency law were introduced in 2020 , including the suspension of the obligation to file for insolvency , to support companies during this difficult time. Many of these special regulations have already expired, but two significant changes to insolvency law will come into effect at the beginning of 2024 , the implications of which should be considered now.

Six-week deadline for over-indebtedness

From 2024, the deadline for filing for insolvency due to over-indebtedness will be reduced back to six weeks . During the pandemic, this deadline was extended to eight weeks as part of the third relief package . It is important to emphasize that this extended insolvency filing deadline applies exclusively to over-indebted companies that may nevertheless be solvent. In the case of insolvency , the filing deadline remains unchanged at three weeks.

Extended going concern forecast

In addition, the longer going concern forecast of twelve months will come back into effect in 2024. During the pandemic, the German government had reduced the forecast period to four months . Over-indebted companies must file for insolvency if they are expected to be unable to meet their obligations within the next twelve months and insolvency is imminent . Therefore, it is important to analyze the financial situation carefully, as the four-month going concern forecast will extend into 2024, starting September 1, 2023 .

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Start restructuring in good time

Insolvency does not necessarily mean the end of a company. The StaRUG restructuring procedure often offers a rescue option . However, it is crucial to act early , as the window of opportunity is limited. The insolvency petition must be filed within the current eight-week filing period.

It is always a challenging situation for a company to have to deal with potential insolvency. However, in the current transition phase between the regulations in effect until the end of 2023 and the recurring regulations from January 2024 onwards, it is particularly important to keep a close eye on the deadlines.

Source: Ecovis

What is insolvency? Insolvency is the inability of a debtor to pay bills. This is the case in acute or impending insolvency or indebtedness. Insolvency proceedings must be filed with the competent local court. applications can be submitted by creditors and debtors. The procedure is regulated by the Insolvency Code. The aim is to satisfy the creditors by realising the debtor's assets and distributing the proceeds. The insolvency court appoints a liquidator and provides him with the appropriate rights.
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