Vocabulary

insolvency ................................................................Insolvenz

bankruptcy................................................................Konkurs insolvency procedure ................................................Insolvenzverfahren insolvency opening ...................................................Insolvenzeröffnung to request ..................................................................eröffnen, bitten, ersuchen creditor .....................................................................Gläubiger insolvency law..........................................................Insolvenzrecht legislator...................................................................Gesetzgeber rescue .......................................................................Sanierung free enterprise ...........................................................marktwirtschaftlich debtor ......................................................................Schuldner receivable accounts...................................................Forderungen bailiff........................................................................Gerichtsvollzieher unsuccessful execution..............................................erfolgloser Vollstreckungsversuch delay.........................................................................Verzögerung commit an offence ...................................................sich strafbar machen fine ..........................................................................Geldstrafe prison sentence .........................................................Gefängnisstrafe insolvency court........................................................Insolvenzgericht evaluation .................................................................Beurteilung overburden................................................................Überschuldung liabilities...................................................................Verbindlichkeiten unfavourable.............................................................nachteilig, ungünstig measures...................................................................Maßnahmen provisional offical receiver .......................................vorläufiger Insolvenzverwalter execution ..................................................................Vollstreckung to reject.....................................................................ablehnen to divide....................................................................(Geld) aufteilen, verteilen planned balance sheet ...............................................Planbilanz profit and loss account ..............................................GuV Rechnung plan and liquidity calculation ....................................Plan- Liquiditätsrechnung management consultant.............................................Unternehmensberater decisive ....................................................................entscheidend provisional analysis ..................................................Voranalyse to underestimate........................................................unterschätzten action portfolio .........................................................Handlungsportfolio compensation............................................................Abfindung debt clearing plan......................................................Schuldenbereinigungsplan debtor advisory office ...............................................Schuldenberatungsstellen tax consultant............................................................Steuerberater debt clearing procedure.............................................Schuldenbereinigungsverfahren trustee.......................................................................Treuhänder

II

1.  Introduction 2  3

2.  Insolvency and bankruptcy  3

3.  Course of insolvency  3

3.1.  Who applies for insolvency?  3

3.1.1.  The request by the creditor  4

3.1.2.  The request by the debtor  4

3.2.  Insolvency reasons  5

3.3.  Role of the court 6  7

4.  The ways out of the insolvency  8

4.1.  The rescue  8

4.1.1.  The Process 8  10

5.  What happens to the employees? 10  11

5.1.  The salary  11

5.2.  The dismissal  12

5.3.  The holidays  12

5.4.  New employment  12

6.  The consumer insolvency 13  14

7.  Final conclusion 14  15

  Sources  16

Tables   17

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The first time I heard about the word insolvency was during my interview at Daewoo. The human resource manager asked me “We are in an insolvency, do you know what that means?”. I answered “Yes” but it was a lie. Afterwards I asked my whole family about their experiences with insolvency. Some of them told me they did not know and others answered that insolvency is like bankruptcy. Nowadays I know that this was a wrong consideration. I received that kind of definition again and again when asking to define insolvency. It is also a common consideration, that a company who is in an insolvency is already brake. The public is not get informed although the new insolvency procedure exists since the 1 ^st of January 1999. Only a few people know the differences between insolvency and bankruptcy. This is not amazing because there is a lack of information about this topic. During my search for information about the topic I pushed at boundaries again and again. I found for example only one book about the new insolvency order. However, you get more in the internet. There-fore, this work is based on information taken from the internet.

I am still wondering about this fact because the insolvency openings are increasing nowadays. In the year 2001 the insolvency orders increased by 19 percent in whole Germany. In the first part of this year there is a growth of about 25 percent.

In the following table, I would like to point out the current situation in Germany.

17.600 22.500

table 1 This work will first start with the introduction of insolvency and bankruptcy. Further-more, I would like to explain how to handle the business insolvency. Afterwards, I will

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ees. After these explanations I would like to turn to the consumer insolvency and I will give you a final conclusion. I hope this work will help to clearify the misunder-standings about insolvency.

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The bankruptcy usually meant the end of a business. It was only requested when there was nothing left for the creditors. Consequently many bankruptcies were not opened. Furthermore, there were different ways to handle a bankruptcy in Germany.

Since 1999 the new insolvency law has been valid. This means a standardized procedure for whole Germany. The legislator wanted to design the procedure in a way that rescue and thus the continuation of the businesses are facilitated. Of course a rescue should only be carried out under the provision that it makes sense in a market economy. Otherwise, the enterprise is liquidated. Moreover the new insolvency order sets on an early intervention. This means that businesses who will not be able to pay their debts in the near future can apply for insolvency.

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The insolvency procedure is opened only on request. Both, the creditor and the debtor, are able to place this request.

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