Differentiations of insolvency
Temporary bottleneck.
Of course, a temporary bottleneck doesn’t necessarily mean that a limited liability company is facing immediate insolvency. Quite the opposite. Most companies have experienced such a financial bottleneck before. There can be various reasons for this: A major customer unexpectedly turns away. The weather is uncooperative during a seasonal business. Or the company itself is waiting for payments from debtors. In this case, however, one can assume that reserves have been set aside, or that cash is flowing again after a dry spell.
Imminent insolvency.
Dissolving a GmbH is not only a lengthy process, but also expensive. Therefore, careful consideration should be given to whether the company can still be saved, perhaps through a sale to a solvent investor. If dissolution is unavoidable, in some cases it is possible to dissolve the GmbH without liquidation and a lock-up period. To do so, an application for official deletion must be filed with the local court. This requires that no assets are available.
Definitive insolvency
If the company is undisputedly insolvent, i.e. it cannot meet active payment demands, a GmbH is considered insolvent.
