What is a bankruptcy opening procedure?
Before the opening of insolvency proceedings, the application will be examined by the insolvency court.
Financial difficulties can occur in business as well as private individuals. If money can no longer be covered and debts can no longer be paid, insolvency is often the only way to be able to free itself from these burdens. But few can imagine how such a bankruptcy proceeding- bankruptcyhq.com.
When exactly does the opening of an insolvency proceeding take place and is this the beginning of the actual procedure or an independent area of the whole? In everyday life, fewer people are dealing with these questions or how insolvency proceedings are proceeding.
In principle, such a method is composed of two parts. On the one hand, the opening of insolvency proceedings takes place. On the other hand, then only the actual insolvency proceedings. A distinction must also be made between natural persons ( private bankruptcy ) and legal persons ( corporate insolvency ). In the case of private insolvency, the two parts of the procedure are followed by the period of good behavior until a so-called residual debt exemption is possible.
Bankruptcy can be applied for by the debtor or a creditor. If an application for the opening of insolvency proceedings is filed with the competent district court (insolvency court), it first checks whether there are any legally valid reasons or the condition for the opening of insolvency proceedings.
When will insolvency proceedings be opened?
The application for the opening of insolvency proceedings initially alleges that there are legal grounds justifying insolvency. The following requirements may be considered legal reasons :
- (Threatening) insolvency of natural persons §§ 17, 18 Insolvenzordnung (InsO)
- (Threatening) inability to pay and over-indebtedness with legal persons §§ 17,18,19 InsO
A person is insolvent if payment obligations can no longer be provided. Following an application for bankruptcy, it is examined whether this is the case with the debtor. If the legal reasons are given, the insolvency is opened. The period for the exam may vary in length depending on the individual case . This time between filing for bankruptcy and opening is known as bankruptcy opening.
What happens when bankruptcy is opened?
As described, the conditions for opening insolvency are examined in the opening proceedings. The debtors must, therefore, be insolvent according to §§ 11, 12 InsO. If the claim has been made by a creditor, the creditor must be able to substantiate his claims and have a legal interest in opening a bankruptcy.
In insolvency proceedings, the duration until the opening cannot be determined on a flat-rate basis.
If the claim of the creditor is complied with, the insolvency court must hear the debtor in order to clarify whether the opening of insolvency proceedings can take place. The debtor is according to § 20 paras. 1 InsO obliged to provide all necessary information and to provide any necessary information to the court. Also, therefore, in a bankruptcy opening the duration cannot be set at a flat rate.
During the procedure to insolvency, the insolvency court must take all possible measures to prevent a negative change of the debtor. This includes, for example, appointing a provisional insolvency administrator, prohibiting disposition, or allowing dispositions only with the consent of the liquidator, or specifying the insolvency proceedings by means of notices. In the case of bankruptcy, a notice can be posted online, posted or in the Official Journal. If the reasons fall away, a publication can be withdrawn even after the opening of insolvency proceedings. Likewise, payment of the debtor after an insolvency opening can negate the previously existing reasons.
If the insolvency court decides that the petition for insolvency is admissible, the actual bankruptcy proceedings will be opened and bankruptcy proceedings will begin. The opening is done by an opening decision according to §§ 27, 5 Abs. 3 InsO.