Financial situation of the structural builder is poor - Still build with him?

After told me Would the loan be converted into equity, the company would not be doing so badly today. Overall, I therefore see the development rather positively. You can still negotiate the guarantee.

That sounds simple, but the money comes from the shareholders as a "loan." What you are describing is simply pushing a large amount from private funds into a company. The fact that it is doing better afterwards is a truism. Especially since the required amount far exceeds the company's current assets. If I’m talking nonsense, please correct me, I’m just a mechanical engineer, but I’m happy to learn.

Edit: Can the attachments show how high private withdrawals might have been? Or what is that called in this form of company?

It is a GmbH.
Therefore, there are no private withdrawals, only the managing director’s salary at the managing director level or the distribution to the shareholders.
Due to the lack of published profit and loss statements, the managing director’s salary cannot be seen. (A small GmbH only has to publish the balance sheet, but not the profit and loss statement.)
To my knowledge, a distribution cannot be made if there is negative equity.

It is correct that, strictly legally, the shareholder loan does not represent a contribution. However, since there is a subordination agreement, the loan may only be repaid once the over-indebtedness no longer exists. Therefore, it has a capital-substituting character.
In addition, the loan must bear interest, which means there is interest expense in the GmbH. If it were not a loan but a contribution, the operating result of the GmbH would look better. Conversely, it now represents income from capital assets for the shareholders.
The advantage of the subordinated loan for the two shareholders is simply that it can be repaid later, unlike the capital contribution. However, this can only happen once there is no more over-indebtedness.

Before any objections about over-indebtedness arise here: This is deliberately presented in a simplified manner. Among other things, hidden reserves must also be considered when calculating whether over-indebtedness exists.

Thank you very much Musketier, but that means that the company is not overindebted because of the loans with subordination – right. I admit I once studied business administration – but 1. that was a long time ago and 2. we didn’t deal with such details back then.

From an accounting perspective there is indeed overindebtedness, but not a legal overindebtedness according to the Insolvency Code.

A competitor we rejected made us aware of these financial statements... which we personally also found somewhat questionable...

At first glance, the balance sheet is of course really terrible. As you could see from the reactions here. If the competitor gets wind of this, it can either be meant as good advice for you or he wants to harm his competitor and has a nice instrument at hand.

Whether in this case the advantages of the subordinated loan outweigh the disadvantage of the accounting overindebtedness with scaring off customers, I personally doubt. Maybe the company (now in the construction boom) always has plenty to do anyway and doesn’t feel the disadvantage of customers dropping away at all. This could become problematic when the boom is over and construction companies have to compete for customers again.

It is often impossible to tell whether a company is on the verge of bankruptcy or not. Even companies with top order volumes can file for insolvency and collapse overnight. I just realized this myself. Full order books to the brim and suddenly the boss comes in and says that we are bankrupt. And that, although we always get high bank guarantees for new orders (so we get money in advance).
Reason for all this? There are of course several factors. One factor is actually too much work. The assembly team couldn't keep up, the products arrived later and worse than agreed, which on the one hand caused penalties and even more technician hours on site for commissioning. Because the technicians were used elsewhere, fewer people were available to produce the other products. We borrowed several Polish teams to take over assembly in the plant. But none of them spoke German, only our apprentice could speak Polish, and that was when the communication problems began. In the end, the Polish workers brought at most 50% efficiency but 200% cost compared to one of our technicians. Over hundreds to thousands of hours, that naturally cost a lot, until eventually a large project was not paid and a supplier notified a 2-month delay, whereupon the second customer for a large project did not pay a huge invoice. And suddenly the money was gone, the banks wouldn't lend any more, the boss didn't have enough own funds, because due to the steady growth of the last 2-3 years, the reserves simply no longer matched the order situation.
And just like that, you're bankrupt, even though in May there was already enough work for everyone until Christmas... (over 20 permanent full-time employees).