Liquidation procedures (bunkruptcy) in Germany: history, theory and practice
The article deals with historical, theoretical and practical aspects of the recognition of a debtor as a bankrupt, rules and conditions of the bankruptcy procedures in Germany. Currently insolvency in Germany is regulated by the basic legal document governing the bankruptcy - «Regulation on insolvency» from October 5, 1994 with further amendments. For initiating bankruptcy proceedings one of the following conditions should exist: insolvency (Zahlungsunfahigkeit) (§17 Insolvency Act); threat of insolvency (Drohende Zahlungsunfahigkeit) (§18 Insolvency Act); over-indebtedness (Uberschulding) (§19 Insolvency Act). Insolvency proceeding can be initiated based on request of creditor as well as of debtor. All bankruptcy cases begin with opening of the bankruptcy proceedings. According to the Regulations bankruptcy procedures include: sanation (rehabilitation of the debtor by restoring its solvency); sanation aimed liquidation (reorganization in which all the debtor’s business is transferred to one or more creditors with the purpose of sanation); liquidation of the debtor’s property (in bankruptcy). The following conclusion is made based on the research. German insolvency law (Insolvenzordnung) determines one bankruptcy proceeding (Insolvenzverfahren): the process of bankruptcy - liquidation (bankruptcy proceedings), reorganization (sanation aimed liquidation) or reorganization (rehabilitation process) of the debtor, submission of insolvency elimination plan (Insolvenzplan) to court for approval and extrajudicial truce.