Duty to file for insolvency (Insolvenzantragspflicht)
Under German law, the managing directors of limited-liability companies must file for insolvency without culpable delay once the company is illiquid or over-indebted – at the latest three weeks after illiquidity and six weeks after over-indebtedness arise (section 15a of the German Insolvency Code, InsO). Failure to file is a criminal offence.
Who the duty applies to
Section 15a(1) InsO addresses the members of the representative body of legal entities – GmbH managing directors, management board members – as well as liquidators and the representatives of partnerships without a personally liable individual. Sole traders and partnerships with a natural person as general partner are not covered.
The two deadlines
| Ground for insolvency | Maximum period | Start of the period |
|---|---|---|
| Illiquidity (section 17 InsO) | three weeks | when the ground arises |
| Over-indebtedness (section 19 InsO) | six weeks | when the ground arises |
Two details are regularly misunderstood. First, the clock starts when the ground for insolvency objectively arises, not when management notices it. Looking late shortens your own deadline. Second, these are maximum periods, not grace periods: the law requires a filing “without culpable delay”. Once it is clear that a restructuring will not succeed, the filing is due immediately – running down the three or six weeks is then a breach of duty.
Whether over-indebtedness exists at all is decided not by the balance sheet but by the going-concern forecast: if continuation over twelve months is more likely than not, there is no over-indebtedness in the legal sense.
The pandemic-era special rules have expired
During the crisis years, the over-indebtedness deadline was temporarily extended to eight weeks by the SanInsKG and the forecast horizon for the over-indebtedness test shortened to four months. Both special rules expired on 31 December 2023. Since 1 January 2024, six weeks and twelve months apply again. Anyone still working with the crisis figures is applying a framework that no longer exists.
What a breach means
Filing late or not at all is a criminal offence under section 15a(4) InsO: imprisonment of up to three years or a fine. On top of that comes civil liability of the managing directors for payments made after insolvency maturity, and liability for unpaid social security contributions under section 266a of the German Criminal Code. These risks attach to the individuals personally, not to the company.
The window before the duty arises
As long as the company is merely imminently illiquid, the preventive restructuring framework remains open and a plan can be imposed on dissenting creditors by majority vote. Where lenders are to finance a consensual restructuring instead, they will normally require a restructuring opinion under IDW S 6. Both routes close once one of the grounds above has arisen.
What the finance function contributes
The duty cannot be met unless somebody is doing the arithmetic continuously. Three things belong in place:
- a rolling 13-week cash flow forecast that makes the onset of illiquidity visible early,
- a liquidity status or liquidity balance sheet for the section 17 InsO test as soon as things get tight,
- a documented going-concern forecast over twelve months as soon as balance-sheet over-indebtedness is on the table.
The documentation is not an end in itself. It is the evidence that management reached a defensible assessment at the relevant point in time – and therefore the most effective protection against a later accusation of delayed filing. Who produces it at short notice is described under Interim CFO.
This entry is an overview, not legal advice. Every assessment depends on the individual case and belongs in the hands of a law firm specialised in insolvency law – in good time, not afterwards.