Germany: Insolvency/Bankruptcy

The German Federal Fiscal Court has ruled on a critical question in insolvency taxation: when a creditor withdraws claims from insolvency proceedings, must the debtor derecognize the corresponding liability and recognize taxable income? This judgment clarifies the threshold required for liability derecognition and establishes important principles for restructuring scenarios.

Pre-insolvency restructurings can fail when individual creditors block viable solutions to negotiate better outcomes. The insolvency plan's cram-down mechanism enables court confirmation despite dissenting votes, provided dissenting groups receive legal protection and aren't unduly disadvantaged. Understanding cram-down logic helps stakeholders assess restructuring options and risks before insolvency occurs.

The creditors' committee serves as a crucial oversight body in German insolvency proceedings, wielding significant monitoring and co-determination powers over the insolvency administrator.

On 28 July 2025, the European Commission launched an in-depth investigation under the Foreign Subsidies Regulation (Regulation (EU) 2022/2560, EU-FSR) to review the proposed acquisition of Covestro AG by Abu Dhabi National Oil Company PJSC.

Die Lage für die deutsche Wirtschaft im Jahr 2025 bleibt herausfordernd. Der ‚Standort Deutschland‘ steht plötzlich wieder in Frage.

With entry into force of the Act on the Stabilization and Restructuring Framework for Enterprises (StaRUG) on January 1, 2021, an independent preventive restructuring framework was established to complement existing insolvency law.

The most important principle of the German insolvency law is the equal treatment of the creditors of the insolvency debtor.

Within German contract law, the principle of being bound by a contract (pacta sunt servanda) (i.e., the obligation to fulfill an agreement) applies. However, in the case of the insolvency of one of the contract parties...

Dismissals due to plant closure may remain effective even if the plant is sold later – the importance of a list of impacted employees ("Namensliste").