What is insolvency benefit

Insolvency benefit (Insolvenzgeld) is a payment made by the German Federal Employment Agency (Bundesagentur für Arbeit) under Sections 165 et seq. of Book III of the German Social Code (SGB III). It protects employees if their employer becomes illiquid, and at the same time relieves the company.

Key points:

• Insolvency benefit secures wages for up to the last three months before an insolvency event.
• The claim is against the Federal Employment Agency, not against the company.
• Insolvency benefit is financed through a levy paid by all employers. The levy rate is set by law and adjusted regularly.

For employees, this means:
Wages are secured for a limited period, even if the company gets into a crisis.

For companies, this means:
Wages for these three months no longer have to be paid out of scarce liquidity in economic terms. This creates room for the restructuring.

The Worstbrock-Group develops restructuring concepts together with legal counsel, in which insolvency benefit can be an important element in stabilising the company.