Insolvency Advice Filing for insolvency is not something to be trifled with, and in cases of massive corporate crisis, insolvency is sometimes unavoidable. However, we do not see insolvency proceedings as the end of the company, but as a real chance for a sustainable reorganisation. The decisive factor is proper preparation and professional implementation.
Whereas in so-called regular proceedings a court-appointed insolvency administrator takes the reins, in an insolvency in self-administration (§ 270 a InsO) the management remains at the helm. In this case, the management is assisted by a so-called custodian (“Sachwalter”) appointed by the court to oversee the proceedings. There is even more leeway for the management in the so-called protective shield proceedings (§ 270 b InsO), in which the administrator can also be selected by the management.
One Square supports the management and the shareholders throughout the entire self-administration proceedings :
- Examination of the obligation to file for insolvency and avoidance of possible liability risks for shareholders and managing directors
- Identification of options for action to avoid insolvency Preparation of liquidity and corporate plans
- Support and advice in self-administration/protective shield proceedings
- Preservation of the legal entity Pre-insolvency advice
In pre-insolvency advice, we support you in analysing the current situation of the company from the perspective of the obligation to file for insolvency. The insolvency code recognises the obligation to file for insolvency and the right to file for insolvency, from which different procedural paths are derived:
Obligation to file for insolvency
- Inability to pay debts as they fall due according to § 17 InsO
- Over-indebtedness according to § 19 InsO
Right to file for insolvency
- Imminent insolvency according to § 18 InsO
In the case of “only” imminent insolvency, there is the option of entering the so-called protective shield. However, this requires a corresponding expert opinion. If the company cannot pay its debts as they fall due, protective shield proceedings are no longer possible. In this case, however, it is possible to apply to the court for the continuation of the company in the context of self-administration.
In both cases, the opportunity arises to restructure the company in insolvency and to secure its sustainable continuation. In particular, insolvency in self-administration or protective shield proceedings are well suited to restructuring the liabilities side, ie adjusting the liabilities to the company’s debt capacity and allow implementation of necessary operational measures in a simplified process. This applies in particular to the carve out of loss-making divisions or necessary capacity adjustments.
Self-administration offers management the opportunity to restructure the company independently in insolvency. The Insolvency Code distinguishes between two legal forms:
- Self-administration pursuant to Section 270a InsO
The debtor or the company is continued independently by the management, i.e. the management itself performs the function of the insolvency administrator under the supervision of a trustee. This is intended to preserve the know-how of the management, contacts with suppliers and customers and continuity in the operational management of the company and to ensure a long-term positive continuation of the company.
2. Protective shield proceedings pursuant to Section 270b InsO
In protective shield proceedings, the company is also continued by the management. However, the basic prerequisite for applying for protective shield proceedings is that there is only a threat of insolvency pursuant to Section 18 InsO. The aim of the protective shield is to draw up an insolvency plan with the aim of preserving the company or legal entity. This means, for example, that important lease agreements or other supply contracts can be saved from termination and preserved.
One Square supports you in all tasks arising in self-administration, ie in the preparation as well as in the continuation of operations, in particular in
the preparation of the insolvency application and the preparation of the certificate for self-administration in the context of the protective shield proceedings according to § 270b InsO
- Selection of the administrator and the creditors’ committee
- Organisation and communication with the insolvency court, custodian, other service providers and customers
- Preparation of liquidity planning and integrated corporate planning for the insolvency plan
- Support in the continuation of business operations
- Implementation of special insolvency and business management processes (preparation of annual financial statements, assumption of accounting under insolvency law, continuation and/or production agreements, etc.)
- Assumption of communication with suppliers, creditors and customers
One Square supports you not only in an advisory capacity, but also in the executive body as a board member, managing director or general representative and directly assumes corresponding responsibility for observing insolvency law specifics in the continuation of operations. In this way, we relieve you of the burden of operational continuation of operations, implementation of the necessary insolvency law processes and communication with all parties involved.
IIS – Integrated Insolvency Services
For quantitative support and to assist the investor process, we have developed an integrated service concept for insolvency proceedings IIS – Integrated Insolvency Services – and implemented it successfully in many cases. We combine liquidity and business planning as well as company valuation with the M&A process in a one-stop service package and establish a single person responsible for all numbers and the M&A process. The advantages are obvious:
Congruent basis of figures and transparency at all times for the entire process
Stable basis of numbers consistent with liquidity planning for the M&A process and a possible insolvency plan
Accelerated processes thanks to faster equipment of data rooms and significantly shorter response times in due diligence
Professional support thanks to integrated reporting systems
Considerable relief for internal company resources, especially in controlling and management
Close integration and reduced coordination effort with the insolvency administration
For this, we offer an integrated remuneration model that significantly reduces advisory costs through the synergies of the individual processes and significantly relieves insolvency and bankruptcy costs.
Our services in detail:
- Insolvency-specific advice to the management
- Setting up of direct liquidity planning (13-week incl. order commitment and value screen; if necessary with complete reorganisation on the basis of updated production / purchasing & sales planning)
- Budgeting and scenario planning of potential restructuring paths.
- Negotiations with suppliers to reduce prepayments and “extortion payments”
- Negotiations with customers to reduce payment terms
- Establishment and management of an insolvency-proof approval system for orders and payments with corresponding recommendations for the insolvency administration
- Establishment of a direct P&L & balance sheet forecast based on liquidity planning
- Establishment of a value screen to show the actual value development taking into account inventories, partially finished and finished products
- Regular reporting to the administrator / insolvency administrator and the creditors’ committee