inso

The Insolvency Code (Insolvenzordnung, InsO) is Germany’s primary statute governing insolvency proceedings. It provides the framework for initiating, conducting, and resolving insolvencies for individuals and corporations, with aims including preserving viable businesses, maximizing the value of the debtor’s assets, and ensuring fair treatment of creditors.

History and scope: Enacted in 1994 and largely in force since 1999, InsO created a unified framework for corporate and consumer insolvencies. It applies nationwide and interacts with EU cross-border rules to coordinate proceedings involving assets or creditors in multiple member states. The code governs the formation of the insolvency estate (Insolvenzmasse), the role of the competent insolvency court (Insolvenzgericht), and the insolvency administrator (Insolvenzverwalter). It also allows for debtor-in-possession arrangements (Eigenverwaltung).

Proceedings and administration: Insolvency proceedings can be opened by the debtor or a creditor after a filing and examination. Upon opening, an insolvency administrator or trustee is appointed to realize the estate, suspend individual enforcement actions, and maximize asset value. Creditors are filed and ranked, and distributions are made according to statutory priorities. The court may approve an insolvency plan to restructure rights and obligations or order liquidation.

Insolvency plan and restructuring: The plan mechanism enables adjustments of claims, continuance of business operations, or asset sales as part of a reorganization. If a plan fails, liquidation may proceed.

Discharge and consumer insolvency: In consumer cases, the InsO provides for a period of good conduct after which remaining debts may be discharged (Restschuldbefreiung), subject to conditions and exemptions.

Impact and scope: The code shapes creditor protection, debtor rights, and the orderly resolution of insolvencies, and is complemented by other civil and commercial law and EU regulations.