Procrastination in insolvency

A delay in filing for insolvency occurs as soon as an insolvency application is filed late. The legal regulations on delayed filing for insolvency can be found in Section 15a (1) of the Insolvency Code. This states that legal entities (e.g. GmbH or AG) are obliged to file for insolvency if there are grounds for insolvency. The grounds for insolvency defined in Section 15a InsO are insolvency or over-indebtedness. According to Section 17 (2) InsO, insolvency exists if a debtor is unable to meet its due payment obligations. Over-indebtedness exists if the debtor's existing assets and expected income cannot cover its liabilities.

If a legal entity is aware of its insolvency or over-indebtedness, it must file for insolvency immediately. If this is not done or is delayed, there are consequences under civil and criminal law. The maximum period for filing for insolvency is 3 weeks, but this depends on the individual case.

The criminal consequences for the managing director of the company are between 1-3 years imprisonment or a fine, depending on the severity of the offense. A further distinction is made here between intentional and negligent delay in filing for insolvency.