The phone rings or an email arrives in your inbox. Your business partner, contractor, or customer has filed for insolvency.
At first, it often feels like a total loss. Many creditors assume that the outstanding debt is gone forever. In reality, that is often not the case.
Creditors who take the right steps early can significantly improve their chances of recovering at least part of what they are owed. This guide explains what happens next and how to properly register your claim.
At a Glance
- In the second quarter of 2026, 4,996 companies filed for insolvency in Germany, the highest quarterly figure in 21 years.
- Unsecured creditors recover an average of just 3.9% of their registered claims. Creditors who fail to actively protect their rights often recover even less.
- Registering your claim with the insolvency administrator is mandatory. Missing the deadline may exclude you from receiving any distribution from the insolvency estate.
- Creditors have statutory rights to obtain information, vote, and object during the proceedings, yet many never make full use of these rights.
- Creditors with substantial claims may be able to pursue recovery through third party litigation funding without taking on any financial risk themselves.
1. What Happens Once Insolvency Proceedings Begin?
As soon as the insolvency court officially opens insolvency proceedings, the legal framework changes completely for creditors.
From that point onward, you can no longer enforce your claim through the usual legal channels. Any ongoing enforcement measures are suspended, and no new enforcement action may be initiated. If you wish to recover any money, the insolvency proceedings become your only legal avenue.
At the same time, the court appoints an insolvency administrator. The administrator takes control of the debtor’s assets, secures the insolvency estate, and determines how the available assets will be managed and distributed among creditors. Existing contracts may also be terminated or modified where permitted by law.
The same insolvency rules apply equally to all creditors, regardless of when their claims arose.
The insolvency proceedings typically conclude in one of three ways:
- Insolvency plan: The business is either restructured or wound up in an orderly manner, and creditors receive the agreed distribution under the approved insolvency plan.
- Distribution of the insolvency estate: The remaining assets are liquidated and distributed among creditors according to the statutory order of priority.
- Termination due to insufficient assets: The debtor’s assets are insufficient to cover even the costs of the insolvency proceedings. In this case, creditors generally receive no distribution.
Information about insolvency proceedings and court orders is published on the official insolvency announcements portal maintained by the German Federal Office of Justice: insolvenzbekanntmachungen.de.
2. What Rights Do Creditors Have During Insolvency Proceedings?
Creditors are not merely passive observers during insolvency proceedings. German insolvency law grants them a number of important legal rights, although many creditors are unaware of them or fail to exercise them effectively.
- Right to register a claim: You are entitled and required to register your claim in the insolvency schedule if you wish to participate in any distribution from the insolvency estate.
- Right to information: You may request information from the insolvency administrator and inspect the debtor’s accounting records and relevant documentation to the extent necessary to protect your claim.
- Voting rights at the creditors’ meeting: Once your claim has been registered, you may vote on the insolvency plan and participate in key decisions regarding the administration of the proceedings.
- Right to challenge disputed claims: If the insolvency administrator disputes your registered claim, you have the right to bring a declaratory action before the court to establish your claim.
- Right to object to the debtor’s discharge of residual debt: If the debtor has concealed assets, provided false information, or intentionally prejudiced creditors, you may apply to the insolvency court to deny the debtor a discharge of residual debt.
What Special Rights Do Secured Creditors Have?
Creditors who hold security interests such as a pledge, a security transfer of ownership, a land charge, or a retention of title arrangement are generally entitled to a right of separate satisfaction under German insolvency law.
This means that the proceeds generated from the sale or realization of the secured asset are used to satisfy the secured creditor’s claim first. Only after secured claims have been satisfied are the remaining assets distributed among unsecured insolvency creditors.
The practical advantage of holding security can be substantial, as the figures below illustrate.
For a detailed overview of creditors’ rights during insolvency proceedings, the German Chamber of Industry and Commerce (IHK) provides a comprehensive guide for creditors involved in insolvency proceedings.
3. How Do You Register Your Claim in Insolvency Proceedings?
Registering your claim is one of the most important steps in any insolvency proceeding. Only registered claims can be considered when the insolvency estate is distributed.
Although it is generally possible to register a claim after the deadline, doing so may result in additional costs and procedural complications. For that reason, you should submit your claim within the deadline specified in the court’s order opening the insolvency proceedings whenever possible.
Step 1: Identify the Insolvency Administrator
The name and contact details of the appointed insolvency administrator are listed in the court’s order opening the insolvency proceedings. You can also access this information through the official German insolvency announcements portal at insolvenzbekanntmachungen.de.
Step 2: Clearly Specify Your Claim
State the legal basis for your claim together with the full amount owed. The principal amount, accrued interest, and any additional costs should be listed separately and calculated clearly. Incomplete or vague information may result in requests for clarification or parts of the claim being disputed.
Step 3: Attach Supporting Documentation
Include all documents supporting your claim. This may include contracts, invoices, delivery confirmations, payment reminders, or court judgments. The more complete your documentation, the easier it will be for the insolvency administrator to verify your claim.
Step 4: Observe the Filing Deadline
The deadline for registering claims is set by the insolvency court in the order opening the proceedings. Although late registration is generally permitted, it may require an additional examination hearing or a separate written review procedure. Any resulting costs may be charged to the creditor who filed the claim late.
Step 5: Review the Outcome of the Examination
Registered claims are reviewed either during the formal examination hearing or through a written examination procedure. If the insolvency administrator or another creditor disputes your claim, it will not initially be recognised as established. In that situation, you should promptly seek legal advice to determine what steps are necessary to obtain a court determination of your claim.
What Is the Average Insolvency Recovery Rate for Creditors in 2026?
This is the figure most creditors do not want to hear.
The average recovery rate for unsecured creditors in German insolvency proceedings is just 3.9%. In practical terms, a creditor with a claim of €100,000 can expect to recover, on average, less than €4,000.
The actual recovery rate varies significantly from one case to another. It depends on factors such as the value of the debtor’s assets, the number and ranking of creditors, the existence of secured claims, and the overall costs of the insolvency proceedings. While some creditors receive a substantially higher distribution, many recover little or nothing at all.
| Type of Creditor | Priority | Typical Recovery Rate |
|---|---|---|
| Creditors of the insolvency estate Procedural costs and new liabilities |
1 | 100 % |
| Secured creditors Claims backed by security |
2 | 40–80 % |
| Insolvency creditors Unsecured claims |
3 | Average 3.9 % |
| Subordinated creditors | 4 | Usually 0 % |
The difference between secured and unsecured creditors is significant. Creditors who hold a valid security interest are paid first from the proceeds generated by the realization of their collateral. Unsecured creditors, by contrast, are only entitled to receive a share of the insolvency estate that remains after the costs of the proceedings and higher-ranking claims have been satisfied. As a result, the recovery rate for unsecured creditors is often very low in practice.
Source: Federal Statistical Office of Germany (Destatis), completed insolvency proceedings.
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4. What If the Debtor Has No Assets?
If the debtor’s assets are insufficient to cover even the costs of the insolvency proceedings, the court may terminate the proceedings due to insufficient assets. For creditors, this generally means that no distribution will be made from the insolvency estate.
Even in this situation, however, there are important legal questions that should be examined:
- Has the debtor transferred assets to third parties before the insolvency that may be challenged under German insolvency avoidance rules?
- Have the company’s directors or shareholders incurred personal liability by delaying the filing for insolvency?
- Have professional advisers, accountants, tax advisers, or banks contributed to the loss through negligent advice, giving rise to potential claims for damages?
These issues require a careful legal assessment. In some cases, they may give rise to claims against third parties that can be pursued independently of the insolvency proceedings and may ultimately be worth significantly more than any recovery available from the insolvency estate itself.
Litigation Funding for Insolvency Avoidance Claims and Director Liability
Creditors with substantial claims, such as disputed insolvency claims, insolvency avoidance actions, or claims for damages against third parties, often face a difficult decision. While legal action may be available, insolvency-related litigation can take years to resolve. In addition, creditors are generally required to bear the legal costs upfront.
Third-party litigation funding can significantly reduce this financial risk. The litigation funder covers the legal fees, court costs, and, in most cases, the risk of having to pay the opposing party’s costs. In return, the funder receives a pre-agreed share of the proceeds if the claim is successful. If the case is unsuccessful, the claimant generally incurs no litigation costs under the funding agreement.
AEQUIFIN specializes in funding claims arising from insolvency-related disputes, including the enforcement of creditor claims, insolvency avoidance actions, and damages claims against third parties, such as directors whose misconduct has contributed to an insolvency.
Every case is reviewed free of charge and without obligation. Submit your case directly through the platform to find out whether it qualifies for funding. You can also explore an overview of the cases currently being financed by AEQUIFIN.
Sources:
- Unternehmensinsolvenzen 2025: +10,3% zum Vorjahr – Destatis
- Insolvenzrecht für Gläubiger – IHK Würzburg-Schweinfurt
- Forderungsanmeldung im Insolvenzverfahren – CMS Law
- Insolvenzstatistiken Deutschland – Insolvenzindex
- Insolvenzwelle 2026: Aktuelle Zahlen – Factoringcheck
