--- title: "Insolvency check for companies: illiquidity and over-indebtedness | Compound Law" description: "A first assessment under sections 17 and 19 of the German Insolvency Code. Runs entirely in your browser, nothing is transmitted." image: "https://compound.law/assets/images/og-image-en.webp" source: "https://compound.law/en-DE/insolvency-check/" language: "en" --- Tool for managing directors # Insolvency check for companies Find out in a few minutes whether your company may be unable to pay its debts or over-indebted under German law. The check applies the test the Federal Court of Justice uses for illiquidity. Your inputs never leave your browser. We do not transmit or store them, and no session recording runs on this page. Step 1 · Section 17 InsO ## Is there enough cash for everything that is due? Amounts in euros. Estimates are fine for a first assessment, empty fields count as 0. ### Due today Liabilities due 0 Everything payable today, including overdue invoices, salaries, taxes and instalments. ### Available today Bank balances 0 Total of all business accounts Undrawn credit line 0 Only the part you can actually still draw. Cash 0 Cash on hand and reserves available immediately ### Incoming in the next three weeks Operating receipts 0 Customer payments incl. VAT that will reliably arrive Financing receipts 0 Committed loans, shareholder contributions, interest income ### Falling due in the next three weeks Operating liabilities falling due 0 Salaries, social security, payroll tax, rent, materials, insurance falling due Financial liabilities falling due 0 Repayments, interest, taxes incl. VAT. Only payments actually owed, no voluntary withdrawals or planned investments. Other liabilities falling due 0 Anything due by then that is not listed above. Do not count amounts already due today twice. Result **No evaluation yet** Enter your figures on the left and click “Evaluate”. The calculation runs on your device only. How the check calculates For illiquidity, the check follows the case law: it compares all liabilities that are due now or fall due within the next three weeks with the funds available today or reliably coming in during those three weeks. Gap = liabilities due (today + within three weeks) − available funds (today + receipts within three weeks) Gap ratio = gap ÷ liabilities due If a gap of 10 % or more remains after three weeks, the Federal Court of Justice generally assumes illiquidity. A smaller gap generally still indicates solvency, unless it is foreseeable that it will soon reach 10 % (BGH, judgment of 24 May 2005, IX ZR 123/04). That liabilities falling due and called within the three weeks (the so-called Passiva II) must also be counted was decided by the BGH in its judgment of 19 December 2017, II ZR 88/16. If your company has already stopped paying its debts, illiquidity is generally presumed in any case (section 17 (2) sentence 2 InsO). The “thin cover” tier is our own warning threshold: it applies when the reserve is below 10 % of the liabilities due. For orientation only, not legal advice. The check deliberately simplifies and does not replace a liquidity status, an over-indebtedness balance sheet or a review of your case. ## Frequently asked questions Yes. Under section 1 (1) of the German Restructuring Act (StaRUG), the managers of a legal entity must continuously monitor developments that could threaten the company’s survival. If they identify such developments, they must take countermeasures and inform the supervisory body without undue delay. For stock corporations, section 91 (2) of the Stock Corporation Act additionally requires a monitoring system that makes such developments visible early. Restructuring practice usually distinguishes six stages: stakeholder crisis, strategic crisis, product and sales crisis, earnings crisis, liquidity crisis and finally insolvency. The further the crisis has progressed, the less room for manoeuvre and the greater the time pressure. Acting early keeps the most options open. A sound restructuring plan analyses the causes of the crisis, sets out concrete strategic, operational and financial measures and shows convincingly that the business can continue afterwards. It must start from the actual situation of the company. Larger companies often follow the IDW S 6 standard of the German Institute of Public Auditors. Directors who fail to monitor the situation or to take countermeasures may be liable to the company for damages. Once the company is illiquid or over-indebted, directors generally may no longer make payments on its behalf, and they must reimburse the company for prohibited payments (section 15b (1) and (4) InsO). Within the filing period, payments in the ordinary course of business are only permitted as long as management pursues the rescue or the filing with due care (section 15b (2) InsO). Once the deadline has passed without a filing, payments are generally no longer compatible with the care of a prudent and conscientious manager (section 15b (3) InsO). Failing to file for insolvency, or filing late, is also a criminal offence (section 15a (4) InsO). The filing must be made without culpable delay, at the latest three weeks after illiquidity occurs and six weeks after over-indebtedness occurs (section 15a (1) InsO). The periods are tied to the moment the insolvency ground arises, so a company that checks its position late may have much less time left. They are also maximum periods: if it becomes clear that a rescue will not succeed, the filing must be made at once. Not automatically. Agreements that exclude or restrict the insolvency administrator’s right to choose performance under sections 103 et seq. InsO in advance are void (section 119 InsO). On that basis the Federal Court of Justice struck down termination clauses triggered solely by an insolvency filing in energy supply contracts, but upheld the corresponding clause in construction contracts under the VOB/B. It depends on the contract. For the company’s leases, the landlord may not terminate after the filing because of earlier rent arrears or because the company’s finances have worsened (section 112 InsO). Corporations such as a GmbH, UG or AG always go through regular insolvency proceedings. Consumer insolvency proceedings, with their mandatory out-of-court settlement attempt, are reserved for individuals who are not self-employed. Former self-employed persons only qualify if their financial situation is manageable and there are no claims from employment relationships against them (section 304 InsO). The insolvency court publishes the order opening the proceedings (section 30 InsO) on the nationwide portal insolvenzbekanntmachungen.de. Customers, suppliers, banks and credit agencies will therefore usually learn about it. That is why it pays to prepare conversations with key business partners early. No. While insolvency proceedings are running, individual insolvency creditors may not enforce, neither against the insolvency estate nor against the debtor’s other assets (section 89 (1) InsO). Instead, creditors file their claims with the insolvency administrator and are satisfied collectively. ## Rather look at it together? In an initial consultation we put your result into context and discuss which steps make sense now, from liquidity planning to an insolvency filing. Confidential, no preparation needed. [Request a quote](https://compound.law/en-DE/quote/) This check gives a first orientation and is not legal advice. Whether your company is illiquid or over-indebted depends on details that only a review of your documents can settle. ## Structured data ```json [ { "@context": "https://schema.org", "@type": [ "Organization", "LegalService" ], "@id": "https://compound.law/#organization", "name": "Compound Law", "alternateName": "Compound Law — AI Law Firm", "url": "https://compound.law/", "logo": { "@type": "ImageObject", "url": "https://compound.law/press/logos/PNG/Compound_Law_Icon.png", "width": 1024, "height": 1024 }, "image": "https://compound.law/assets/images/og-image.webp", "description": "The AI-native law firm in Berlin for start-ups, mid-sized companies and corporates: commercial and contract law, data protection, the EU AI Act, trademarks, corporate law, and restructuring and insolvency. A lawyer reviews every result, billed at a flat fee.", "foundingDate": "2026", "founder": [ { "@type": "Person", "name": "Marko Bradic", "jobTitle": "CEO", "url": "https://compound.law/en-DE/tech-team/marko-bradic/", "sameAs": [ "https://www.linkedin.com/in/markobradic/" ], "knowsAbout": [ "Product strategy and development", "Scaling technology companies", "FinTech and financial services", "AI-powered product innovation", "Business operations and growth", "Digital transformation" ] }, { "@type": "Person", "name": "Mohit Tilwani", "jobTitle": "CTO", "url": "https://compound.law/en-DE/tech-team/mohit-tilwani/", "sameAs": [ "https://www.linkedin.com/in/mohit-tilwani/" ], "knowsAbout": [ "Engineering leadership and architecture", "Scaling high-traffic systems", "AI and machine learning infrastructure", "FinTech platform development", "Cloud infrastructure and DevOps", "Product engineering" ] }, { "@type": "Person", "name": "Julian Jantze", "jobTitle": "Rechtsanwalt", "url": "https://compound.law/en-DE/lawyers/julian-jantze/", "sameAs": [ "https://www.linkedin.com/in/julian-jantze-957b95158/" ], "knowsAbout": [ "Corporate law and corporate governance for technology companies", "Employment law and HR compliance", "EU AI Act compliance and AI governance", "Employee participation models (VSOP/ESOP)", "Regulatory compliance for tech companies", "Legal operations and Legal Tech implementation" ] } ], "employee": [ { "@type": "Person", "name": "Marko Bradic", "jobTitle": "CEO", "url": "https://compound.law/en-DE/tech-team/marko-bradic/", "sameAs": [ "https://www.linkedin.com/in/markobradic/" ], "knowsAbout": [ "Product strategy and development", "Scaling technology companies", "FinTech and financial services", "AI-powered product innovation", "Business operations and growth", "Digital transformation" ] }, { "@type": "Person", "name": "Mohit Tilwani", "jobTitle": "CTO", "url": "https://compound.law/en-DE/tech-team/mohit-tilwani/", "sameAs": [ "https://www.linkedin.com/in/mohit-tilwani/" ], "knowsAbout": [ "Engineering leadership and architecture", "Scaling high-traffic systems", "AI and machine learning infrastructure", "FinTech platform development", "Cloud infrastructure and DevOps", "Product engineering" ] }, { "@type": "Person", "name": "Julian Jantze", "jobTitle": "Rechtsanwalt", "url": "https://compound.law/en-DE/lawyers/julian-jantze/", "sameAs": [ "https://www.linkedin.com/in/julian-jantze-957b95158/" ], "knowsAbout": [ "Corporate law and corporate governance for technology companies", "Employment law and HR compliance", "EU AI Act compliance and AI governance", "Employee participation models (VSOP/ESOP)", "Regulatory compliance for tech companies", "Legal operations and Legal Tech implementation" ] }, { "@type": "Person", "name": "Marc Schuba", "jobTitle": "Founding Partner, Rechtsanwalt (German attorney)", "url": "https://compound.law/en-DE/lawyers/marc-schuba/", "sameAs": [ "https://www.linkedin.com/in/marcschuba/" ], "knowsAbout": [ "IP and IT law", "SaaS and IT contracts, IT outsourcing", "Software and open-source licensing", "Data protection law (GDPR)", "AI law and the EU AI Act" ] }, { "@type": "Person", "name": "Dr. Markus Dreißigacker", "jobTitle": "Rechtsanwalt", "url": "https://compound.law/en-DE/lawyers/markus-dreissigacker/", "sameAs": [ "https://www.linkedin.com/in/markusdreissigacker" ], "knowsAbout": [ "M&A (Due diligence, post-merger integration, IPO readiness)", "Corporate Law (Governance, board work, restructuring)", "Commercial Law (Customer contracts, supplier agreements, NDAs)", "IP (Trademark management, IP transfer agreements)", "Compliance & ESG (Global compliance programs, human rights, sustainability)", "Data Protection (GDPR strategy, DPO experience, privacy programs)" ] }, { "@type": "Person", "name": "Philipp Brandt", "jobTitle": "Partner, Rechtsanwalt (German attorney), Specialist Lawyer for Intellectual Property Law", "url": "https://compound.law/en-DE/lawyers/philipp-brandt/", "sameAs": [ "https://www.linkedin.com/in/philipp-brandt-81b446a/" ], "knowsAbout": [ "Restructuring and insolvency law (crisis advice for management, protective shield and insolvency plan proceedings, insolvency administration)", "Intellectual property (trademarks, unfair competition, copyright, trade secrets, licence agreements)", "Data protection law (data breaches, regulatory fine proceedings, access and damages claims)", "Distribution and commercial law (distribution agreements, acquisition and sale of industrial plants)" ] } ], "address": { "@type": "PostalAddress", "addressLocality": "Berlin", "addressCountry": "DE" }, "areaServed": [ "Germany", "Austria", "Switzerland", "European Union", "United Kingdom", "United States", "Singapore" ], "availableLanguage": [ "de", "en" ], "serviceType": [ "AI law firm", "AI-native legal services", "legal counsel for start-ups and growth companies", "legal counsel for mid-sized companies and corporates", "Commercial Law", "Corporate Law", "Employment Law", "Regulatory & Compliance", "Intellectual Property", "Insolvency & Restructuring" ], "hasOfferCatalog": { "@type": "OfferCatalog", "name": "Compound Law services", "itemListElement": [ { "@type": "Offer", "itemOffered": { "@type": "Service", "name": "Commercial Contracts", "description": "Battle-tested contracts for your sales process", "serviceType": [ "enterprise contracts", "MSA", "DPA", "sales contracts" ], "areaServed": [ "Germany", "European Union", "United Kingdom", "United States", "Singapore" ] } }, { "@type": "Offer", "itemOffered": { "@type": "Service", "name": "International Employment", "description": "Compliant hiring across borders", "serviceType": [ "international employment", "hiring abroad", "employment contracts" ], "areaServed": [ "Germany", "European Union", "United Kingdom", "United States", "Singapore" ] } }, { "@type": "Offer", "itemOffered": { "@type": "Service", "name": "VSOP/ESOP Setup", "description": "Employee participation that actually works", "serviceType": [ "VSOP", "ESOP", "employee stock options", "equity incentives" ], "areaServed": [ "Germany", "European Union", "United Kingdom", "United States", "Singapore" ] } }, { "@type": "Offer", "itemOffered": { "@type": "Service", "name": "Funding Round Support", "description": "Clean legal for your next raise", "serviceType": [ "funding round", "term sheet", "SHA", "due diligence", "cap table" ], "areaServed": [ "Germany", "European Union", "United Kingdom", "United States", "Singapore" ] } }, { "@type": "Offer", "itemOffered": { "@type": "Service", "name": "Corporate Housekeeping", "description": "Get your legal house in order", "serviceType": [ "corporate governance", "board resolutions", "shareholder register" ], "areaServed": [ "Germany", "European Union", "United Kingdom", "United States", "Singapore" ] } }, { "@type": "Offer", "itemOffered": { "@type": "Service", "name": "Data Protection & Privacy", "description": "GDPR compliance that doesn't slow you down", "serviceType": [ "GDPR", "data protection", "privacy", "DPA", "cookies", "data breach response", "GDPR fines", "Art. 82 GDPR" ], "areaServed": [ "Germany", "European Union", "United Kingdom", "United States", "Singapore" ] } }, { "@type": "Offer", "itemOffered": { "@type": "Service", "name": "AI Act Compliance", "description": "Navigate EU AI regulation", "serviceType": [ "AI Act", "AI compliance", "AI governance", "EU AI regulation" ], "areaServed": [ "Germany", "European Union", "United Kingdom", "United States", "Singapore" ] } }, { "@type": "Offer", "itemOffered": { "@type": "Service", "name": "IP & Competition", "description": "Protect and enforce what you've built", "serviceType": [ "IP protection", "intellectual property", "trademarks", "trademark enforcement", "warning letters", "preliminary injunctions", "unfair competition", "software licensing", "open source compliance" ], "areaServed": [ "Germany", "European Union", "United Kingdom", "United States", "Singapore" ] } }, { "@type": "Offer", "itemOffered": { "@type": "Service", "name": "Fractional General Counsel", "description": "In-house legal without the full-time cost", "serviceType": [ "fractional GC", "fractional general counsel", "outsourced legal", "legal retainer" ], "areaServed": [ "Germany", "European Union", "United Kingdom", "United States", "Singapore" ] } }, { "@type": "Offer", "itemOffered": { "@type": "Service", "name": "FinTech Compliance", "description": "Navigate financial regulation", "serviceType": [ "fintech compliance", "BaFin", "banking regulation", "AML", "KYC" ], "areaServed": [ "Germany", "European Union", "United Kingdom", "United States", "Singapore" ] } }, { "@type": "Offer", "itemOffered": { "@type": "Service", "name": "Legal Retainer", "description": "Predictable legal support when you need it", "serviceType": [ "legal retainer", "legal subscription", "ongoing legal support" ], "areaServed": [ "Germany", "European Union", "United Kingdom", "United States", "Singapore" ] } }, { "@type": "Offer", "itemOffered": { "@type": "Service", "name": "M&A Preparation", "description": "Get ready for acquisition interest", "serviceType": [ "M&A preparation", "acquisition", "due diligence", "exit" ], "areaServed": [ "Germany", "European Union", "United Kingdom", "United States", "Singapore" ] } }, { "@type": "Offer", "itemOffered": { "@type": "Service", "name": "Restructuring & Insolvency", "description": "From the first liquidity check to the restructuring itself", "serviceType": [ "restructuring", "insolvency", "StaRUG", "self-administration", "insolvency plan", "director liability" ], "areaServed": [ "Germany", "European Union", "United Kingdom", "United States", "Singapore" ] } } ] }, "contactPoint": { "@type": "ContactPoint", "contactType": "sales", "email": "contact@compound.law", "availableLanguage": [ "English", "German" ], "areaServed": [ "DE", "AT", "CH", "EU", "GB", "US", "SG" ] }, "email": "contact@compound.law", "sameAs": [ "https://www.linkedin.com/company/compoundlawfirm", "https://x.com/CompoundLawFirm" ], "knowsAbout": [ "Commercial Contracts", "enterprise contracts", "MSA", "DPA", "sales contracts", "International Employment", "international employment", "hiring abroad", "employment contracts", "VSOP/ESOP Setup", "VSOP", "ESOP", "employee stock options", "equity incentives", "Funding Round Support", "funding round", "term sheet", "SHA", "due diligence", "cap table", "Corporate Housekeeping", "corporate governance", "board resolutions", "shareholder register", "Data Protection & Privacy", "GDPR", "data protection", "privacy", "cookies", "data breach response", "GDPR fines", "Art. 82 GDPR", "AI Act Compliance", "AI Act", "AI compliance", "AI governance", "EU AI regulation", "IP & Competition", "IP protection", "intellectual property", "trademarks", "trademark enforcement", "warning letters", "preliminary injunctions", "unfair competition", "software licensing", "open source compliance", "Fractional General Counsel", "fractional GC", "fractional general counsel", "outsourced legal", "legal retainer", "FinTech Compliance", "fintech compliance", "BaFin", "banking regulation", "AML", "KYC", "Legal Retainer", "legal subscription", "ongoing legal support", "M&A Preparation", "M&A preparation", "acquisition", "exit", "Restructuring & Insolvency", "restructuring", "insolvency", "StaRUG", "self-administration", "insolvency plan", "director liability" ] }, { "@context": "https://schema.org", "@type": "BreadcrumbList", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://compound.law/en-DE/" }, { "@type": "ListItem", "position": 2, "name": "Insolvency check", "item": "https://compound.law/en-DE/insolvency-check/" } ] }, { "@context": "https://schema.org", "@type": "FAQPage", "mainEntity": [ { "@type": "Question", "name": "Do managing directors have to spot a crisis early?", "acceptedAnswer": { "@type": "Answer", "text": "Yes. Under section 1 (1) of the German Restructuring Act (StaRUG), the managers of a legal entity must continuously monitor developments that could threaten the company’s survival. If they identify such developments, they must take countermeasures and inform the supervisory body without undue delay. For stock corporations, section 91 (2) of the Stock Corporation Act additionally requires a monitoring system that makes such developments visible early." } }, { "@type": "Question", "name": "What stages does a corporate crisis go through?", "acceptedAnswer": { "@type": "Answer", "text": "Restructuring practice usually distinguishes six stages: stakeholder crisis, strategic crisis, product and sales crisis, earnings crisis, liquidity crisis and finally insolvency. The further the crisis has progressed, the less room for manoeuvre and the greater the time pressure. Acting early keeps the most options open." } }, { "@type": "Question", "name": "What does a restructuring plan need to deliver?", "acceptedAnswer": { "@type": "Answer", "text": "A sound restructuring plan analyses the causes of the crisis, sets out concrete strategic, operational and financial measures and shows convincingly that the business can continue afterwards. It must start from the actual situation of the company. Larger companies often follow the IDW S 6 standard of the German Institute of Public Auditors." } }, { "@type": "Question", "name": "What liability do managing directors face in a crisis?", "acceptedAnswer": { "@type": "Answer", "text": "Directors who fail to monitor the situation or to take countermeasures may be liable to the company for damages. Once the company is illiquid or over-indebted, directors generally may no longer make payments on its behalf, and they must reimburse the company for prohibited payments (section 15b (1) and (4) InsO). Within the filing period, payments in the ordinary course of business are only permitted as long as management pursues the rescue or the filing with due care (section 15b (2) InsO). Once the deadline has passed without a filing, payments are generally no longer compatible with the care of a prudent and conscientious manager (section 15b (3) InsO). Failing to file for insolvency, or filing late, is also a criminal offence (section 15a (4) InsO)." } }, { "@type": "Question", "name": "How long do directors have to file for insolvency?", "acceptedAnswer": { "@type": "Answer", "text": "The filing must be made without culpable delay, at the latest three weeks after illiquidity occurs and six weeks after over-indebtedness occurs (section 15a (1) InsO). The periods are tied to the moment the insolvency ground arises, so a company that checks its position late may have much less time left. They are also maximum periods: if it becomes clear that a rescue will not succeed, the filing must be made at once." } }, { "@type": "Question", "name": "Can a contract partner terminate just because of an insolvency filing?", "acceptedAnswer": { "@type": "Answer", "text": "Not automatically. Agreements that exclude or restrict the insolvency administrator’s right to choose performance under sections 103 et seq. InsO in advance are void (section 119 InsO). On that basis the Federal Court of Justice struck down termination clauses triggered solely by an insolvency filing in energy supply contracts, but upheld the corresponding clause in construction contracts under the VOB/B. It depends on the contract. For the company’s leases, the landlord may not terminate after the filing because of earlier rent arrears or because the company’s finances have worsened (section 112 InsO)." } }, { "@type": "Question", "name": "Do companies go through regular or consumer insolvency proceedings?", "acceptedAnswer": { "@type": "Answer", "text": "Corporations such as a GmbH, UG or AG always go through regular insolvency proceedings. Consumer insolvency proceedings, with their mandatory out-of-court settlement attempt, are reserved for individuals who are not self-employed. Former self-employed persons only qualify if their financial situation is manageable and there are no claims from employment relationships against them (section 304 InsO)." } }, { "@type": "Question", "name": "Who finds out about insolvency proceedings?", "acceptedAnswer": { "@type": "Answer", "text": "The insolvency court publishes the order opening the proceedings (section 30 InsO) on the nationwide portal insolvenzbekanntmachungen.de. Customers, suppliers, banks and credit agencies will therefore usually learn about it. That is why it pays to prepare conversations with key business partners early." } }, { "@type": "Question", "name": "Can creditors still enforce during the proceedings?", "acceptedAnswer": { "@type": "Answer", "text": "No. While insolvency proceedings are running, individual insolvency creditors may not enforce, neither against the insolvency estate nor against the debtor’s other assets (section 89 (1) InsO). Instead, creditors file their claims with the insolvency administrator and are satisfied collectively." } } ] } ] ```