Our general contractor filed for insolvency yesterday. We had the acceptance on 11.11.2021, and various defects/unfinished works were identified and recorded during the acceptance. A deadline of 6 weeks for improvement was agreed upon with the construction manager. This expires on 23.12.2021. The final payment of 10%, amounting to €36,000, would be withheld for this purpose.
Now the big problem is that our geothermal drilling is not present, and the heating only runs with the emergency heater rod…. And I would slowly like to award these works myself. The geothermal drilling alone already costs over €20,000.
[...] Officially, I do not know anything about the insolvency yet.
I would appreciate some tips.
I will gladly give you that pleasure, as it could well be your last for quite some time; a "hard winter" awaits you. Where did you even find out about the insolvency?
Call a lawyer who deals with construction law.
If the same law firm also has a construction law specialist, that won’t hurt. However, the lead lawyer should be a specialist in insolvency law. Going up against an insolvency administrator with a construction lawyer is like going to a shootout armed only with a knife. According to a song, it was the devil who made the schnapps. In this sense, I regard insolvency law as proof of existence for a supreme devil.
The presence or well-founded suspicion of insolvency is measured by clear criteria. The managing director of the company suspected of being insolvent is obliged to file a petition to open insolvency proceedings within a three-week period; a delay is considered (also criminal) negligence and causes the managing director (or all managing directors, regardless of internal distribution of duties) to become personally liable. This is highly specialized legal work of the finest kind, and even the best orthopedic surgeon refrains from heart surgery.
The petition to open insolvency proceedings over a company’s assets can be filed (also in parallel) by two parties, namely as a self-petition (by the managing director) or as a third-party petition (by a creditor). Health insurance funds collect the company’s statutory contributions as trustees for all other social funds and are therefore very sensitive when there are disruptions in contribution flows. It is therefore not uncommon for a health insurance fund to be quicker to file the insolvency petition.
The competent insolvency court is usually the local court at the company’s registered office (even if the register court is located elsewhere). Upon receiving a petition, the insolvency court first investigates the validity of the suspicion by sending a questionnaire to the managing director and, if necessary, by appointing an insolvency expert. If the expert must confirm the existence of actual insolvency, he is usually first appointed as provisional insolvency administrator and then runs the company together with the managing director. If, in the further course, insolvency proceedings must be opened, the managing director is forbidden any further disposition, and the insolvency administrator begins to act alone for the company’s assets—
the protection of the liable asset pool unfortunately takes precedence over the company’s purpose and the interests of individual creditors.
As soon as the insolvency administrator becomes the sole master of the "debtor," the creditors enter a tough time on rough seas.
The company’s claims against them remain strict, whereas unfortunately, their claims against the company are regularly devalued. In the calculation example of €20,000 value of mutual claims and a satisfaction quota of 4% (customers are unfortunately quite subordinate creditors), this means: the insolvency administrator will now demand the €20,000 from the customer immediately, but the customer may expect €800 and typically have to wait on average three years. Whether monetary or in-kind claims: the insolvency administrator will initially contest them.
I therefore hope for you that you have obtained a completion bond for the construction project—from the company itself, there is now only slow, reluctant, and laborious availability—mind you: in actual administration.
In provisional administration you have significantly better chances, for example, to agree on substitute performance with the administrator. Things go best for you if the company remains in provisional administration for a long time (this happens when the questions whether it is insolvent and whether it is capable of recovery both answer "yes"). Even better is if the expert’s report already concludes that the insolvency suspicion is unfounded. Even if the managing director himself has expressed the insolvency suspicion, it may turn out to be unfounded (remember: he could have done so out of an abundance of caution in doubt).
Check the online registers for insolvency announcements and the commercial register; the company’s registration number must be on its letterheads. At the local court, the judges usually divide the firms by initial letters. Record officially that you are a creditor with unsatisfied claims as a customer. Contact the (provisional) administrator as soon as he is appointed to this position (see the two mentioned channels for announcements).
