Insolvency Maturity in Germany: The Deadlines Every Managing Director Must Know

The short answer

Four periods govern the point at which a difficult situation becomes a legal duty under German law:

On top of that comes the threshold the courts developed for illiquidity itself: a liquidity gap of ten percent or more of total liabilities due, which cannot be closed within three weeks.

The sentence that matters most in practice appears in no statute: the clock runs from the objective onset of the ground for insolvency, not from the day someone notices it. Looking late does not buy time – it costs it.

This article frames the deadlines from the finance function's point of view. It is not legal advice; assessing an individual case belongs with a specialised law firm.

Illiquidity: the ten percent threshold

Under section 17(2) InsO, a company is illiquid when it cannot meet its payment obligations as they fall due. What that means in practice was developed by the Federal Court of Justice, principally in its judgment of 24 May 2005 (IX ZR 123/04):

• If the liquidity gap is less than ten percent of total liabilities due, there is as a rule only a temporary payment lag.
• If it is ten percent or more and cannot be closed within three weeks, illiquidity is regularly to be assumed – unless it is near certain that the gap will shortly be closed in full and creditors can reasonably be expected to wait.

The court confirmed this line in 2017 (II ZR 88/16) and in 2022 added a more workable method (II ZR 112/21): instead of a full liquidity balance sheet, it is sufficient to draw up a liquidity status on three reference dates within a three-week period – available funds against liabilities due. Threshold and period were left unchanged.

For practice this means the question “are we illiquid?” can be answered by arithmetic. It calls for a schedule, not an opinion – and a company that cannot produce one within hours has a data problem, not a legal one.

Over-indebtedness: two stages, twelve months

Over-indebtedness under section 19 InsO has two stages. First stage: assets no longer cover liabilities. Second stage: even so, there is no over-indebtedness in the legal sense if continuation over the next twelve months is more likely than not – the going-concern forecast.

“More likely than not” means more than 50 percent, but it has to be established positively. A forecast resting on hoped-for financing that has not been committed does not carry.

The crisis rules have expired

Between 9 November 2022 and 31 December 2023, the SanInsKG temporarily shortened the forecast horizon to four months and extended the filing deadline for over-indebtedness to eight weeks. Neither applies any more. Since 1 January 2024 it is twelve months and six weeks again. Anyone still working to the crisis figures – and it happens – is assuming room that does not exist.

Imminent illiquidity: the StaRUG window

Section 18 InsO knows a third state: imminent illiquidity. It exists where the company will probably not be able to meet its existing payment obligations when they fall due; the forecast horizon is as a rule 24 months.

This state is not a duty but an opportunity. It is the sole condition of access to the StaRUG, under which a restructuring plan can be imposed on individual blocking creditors with a three-quarters majority per creditor class – without insolvency proceedings, without publicity, with management still in office.

That yields the real message of this article. Between “it is getting tight” and “it is too late” lies a window of up to 24 months in which the options are widest. Once illiquidity or over-indebtedness occurs, it closes. Using that window requires knowing you are inside it – and only planning tells you that.

The duty that applies beforehand

Section 1 StaRUG obliges the managing directors of limited-liability companies to monitor developments that could jeopardise the company's existence on an ongoing basis, to take countermeasures once they identify them, and to report to the supervisory bodies without undue delay. The duty applies regardless of any crisis and binds every GmbH managing director and every management board member.

In practice it requires an early-warning system. That need not be elaborate: a rolling cash forecast, an integrated annual plan and defined thresholds at which somebody is informed are enough for most mid-sized companies.

What the finance function has to deliver

None of these deadlines can be assessed without numbers. Four building blocks are enough, and all of them are unspectacular:

1. A 13-week cash flow forecast, rolled forward weekly and built directly from payment flows. It shows illiquidity coming with time to act.
2. A liquidity status on demand. Available funds against liabilities due, at any reference date. That is the calculation section 17 InsO calls for.
3. An integrated plan over twelve to 24 months. P&L, balance sheet and cash linked – the basis both for the going-concern forecast and for assessing imminent illiquidity.
4. Documentation. Who assessed what, when, on what basis. In a dispute it is the difference between a defensible decision and the accusation that management should have known.

Frequently asked questions

How long may you wait before filing for insolvency?

At most three weeks after illiquidity arises and at most six weeks after over-indebtedness arises (section 15a(1) InsO). These are maximum periods, not grace periods: the law requires a filing without culpable delay. Once it is clear a restructuring will not succeed, the filing is due immediately.

When do the deadlines start?

From the objective onset of the ground for insolvency, not from management's knowledge of it. Noticing late means having correspondingly less time – and carrying the risk regardless.

What size of liquidity gap constitutes illiquidity?

Under the case law of the Federal Court of Justice, a gap of ten percent or more of total liabilities due that cannot be closed within three weeks. Below that there is as a rule only a temporary payment lag.

How long is the forecast horizon for over-indebtedness?

Twelve months (section 19(2) InsO). The temporary reduction to four months under the SanInsKG expired on 31 December 2023; since 1 January 2024 the twelve-month horizon applies again.

What is the difference between illiquidity and imminent illiquidity?

Illiquidity is a present state and triggers the duty to file. Imminent illiquidity is a forecast over as a rule 24 months and triggers no duty; it opens options instead – above all access to the StaRUG.

Do any pandemic-era special rules still apply?

No. The SanInsKG special rules – an eight-week filing deadline for over-indebtedness and a four-month forecast horizon – expired on 31 December 2023. Regular law has applied since 1 January 2024, and the federal government stated in 2025 that it plans no change.

Read on

• Duty to file for insolvency – who it binds and what a breach means.
• Going-concern forecast – horizon, standard and the distinction from the commercial-law assumption.
• StaRUG – instruments, majorities and the window.
• Finance in a restructuring – what has to happen in the first six weeks.
• Interim management for your finance function – available within 24 hours.

Sources and status

Duty to file and deadlines: section 15a InsO. Illiquidity: section 17 InsO; Federal Court of Justice, judgment of 24.05.2005 – IX ZR 123/04; judgment of 19.12.2017 – II ZR 88/16; judgment of 28.06.2022 – II ZR 112/21. Imminent illiquidity: section 18 InsO. Over-indebtedness and forecast horizon: section 19 InsO. Early crisis detection and the restructuring framework: sections 1, 25, 26, 29 and 53 StaRUG. Expiry of the SanInsKG special rules on 31.12.2023. As of September 2026. This article is an overview, not legal advice. Every assessment depends on the individual case and belongs, before any decision, with a law firm specialised in insolvency and restructuring law.