Do you have claims against an insolvent company abroad? Or is your company based abroad facing insolvency?
Support and advice
If you or your company - as a creditor or debtor - are affected by an insolvency (in some countries "bankruptcy") abroad, you must react quickly. Nevertheless, do not make hasty decisions, distrust dubious offers and seek competent advice.
Entrepreneurs can find initial contacts in the
The information in Amt24 is no substitute for legal advice. Whether you are a debtor or a creditor: do not do without tax and/or legal advice. There are good search options on the internet for cross-border searches for specialised tax advisors and lawyers (see legal advice/representation).
Dubious companies offer - often also on the internet - "turbo insolvency processing" in other EU states, exploiting the different insolvency regulations of the EU countries. Despite the liberalisation of insolvency law throughout the EU, we must warn against such practices.
In terms of costs, language and legal difficulties alone, the effort involved is anything but insignificant, contrary to what is often claimed. Affected entrepreneurs or consumers are quickly confronted with a chain of unforeseeable consequences and unexpectedly end up in illegality.
Insolvency within the EU
Since 2002, the Regulation on Insolvency Proceedings (EuInsVO) has provided the legal framework for cross-border insolvencies in the EU member states with the exception of Denmark.
The regulation determines which courts have jurisdiction over the proceedings and which law is applicable. A distinction is made between main insolvency proceedings, which are opened in the Member State where the debtor has the centre of his main interests, and secondary insolvency proceedings, which can be opened in Member States where the debtor has an establishment and are limited to the assets located there. In principle, the insolvency proceedings are governed by the law of the Member State where the proceedings are opened. The judgments are recognised in the other Member States and regularly have the same effects there as in the Member State in which the proceedings are opened. The insolvency administrator can also act in all Member States.
The specific requirements for insolvency, how insolvency proceedings are opened and how they are conducted are determined exclusively by the laws of the individual member states. The EU Insolvency Regulation also contains special rules on the effect of insolvency proceedings and the applicable law, for example on security rights in rem or employment contracts. All the more so, each insolvency is an individual case for which legal and tax advice is advisable.
How do you proceed against debtors?
Before insolvency proceedings are initiated, various regulations make it easier for companies to assert claims within the EU. Since 2007, there has been a Small Claims Procedure (EuBagVVO). Smaller monetary claims can thus be collected in other European countries without time-consuming court proceedings.
- Taking a claim to court
European Justice Portal
In many cases, the debtor is still given the chance of a settlement with the creditors before the insolvency proceedings.
If reminders and settlement attempts were unsuccessful, the path of insolvency proceedings against the company or individual in question is open. However, you can then no longer assert your claims against the company in the course of individual compulsory enforcement measures - the debtor's assets are protected in the proceedings in order to treat the creditors equally.
Opening insolvency proceedings - how and where?
If you have to file for insolvency due to the insolvency of your own company or as a creditor of an indebted company in another EU state, you should contact the competent insolvency court of the respective member state - usually through your legal representation.
Filing an application
You file a petition for the opening of insolvency proceedings with the court in whose territory "the debtor has the centre of his main interests" (EuInsVO). This is usually
- for natural persons, the domicile or place of habitual residence,
- in the case of legal persons (e.g. AG, GmbH, association, foundation), the registered office in accordance with the articles of association.
In general, a written application is required, stating the specific claims (supported by invoices, enforcement orders, acknowledgement of debt and others) - in the case of an own application by the debtor, the reason for insolvency. Sometimes it may also be possible to file an application electronically, whereby here - as in German law - electronic mail must often be provided with a qualified electronic signature.
Details of the procedure, deadlines and formalities are regulated by the respective state law (see legal bases).
In addition to the main insolvency proceedings, further insolvency proceedings may be opened in another member state if necessary. The prerequisite is always that the debtor has an establishment in this other Member State. The effect of these insolvency proceedings is limited to the assets located in the Member State.
Example: Main insolvency proceedings have been opened in London (GB) against the assets of XY Limited. As the company has assets in the form of real estate in the Federal Republic of Germany, among other things, a creditor of the company applies for the opening of secondary proceedings, limited to the company's assets located in the Federal Republic of Germany.
Secondary proceedings are governed by the law of the Member State in which the partial proceedings were commenced. The courts appoint insolvency administrators who are obliged to coordinate with each other on an ongoing basis.
How do creditors find out about an insolvency?
As soon as insolvency proceedings are opened in a Member State involving creditors from the EU, they are immediately notified by the appointed insolvency practitioner. This must be done by means of a form which begins in all the official languages of the institutions of the European Union with the words: "Invitation to lodge a claim. Observe any time limits."
Saxon State Chancellery, Editorial Office Amt24. 01.11.2021