What does over-indebtedness mean?
Over-indebtedness exists if the debtor’s assets no longer cover its existing liabilities, unless it is predominantly likely in the circumstances that the company will continue to operate over the next twelve months (Section 19 (2) of the German Insolvency Code). The assessment is therefore carried out in two steps: first the going concern forecast, and only if this is negative, a statement of over-indebtedness that compares the assets at liquidation values with the liabilities. Over-indebtedness in the commercial balance sheet alone is not yet a ground for insolvency.
