Liquidation of a limited liability company (GmbH)

Insolvency can be a way for a company to exit the market – if there is no longer any demand for its business model, for instance. Liquidation of a company, however, is also possible outside insolvency. There can be various reasons for doing this:

The company may be deliberately running down its operations, for example, perhaps because it is realigning its business model or serving new markets and cannot or no longer needs to keep the company. It may also wish to avoid insolvency proceedings for reputational reasons or because of the risks of avoidance.
It is also possible that the company was only ever intended to operate for a limited period.
Or a shareholder may decide – with a heavy heart – to wind up the company because he or she wishes to retire but is unable to find a successor.

While the articles of association can set out possible grounds for dissolution, liquidation or winding up a business is also, depending on the legal form of the company, governed by various laws such as the Limited Liability Companies Act (GmbH-Gesetz, GmbHG) or the Commercial Code (Handelsgesetzbuch, HGB);

Liquidation process

The liquidation process

To liquidate a limited liability company (GmbH) or company in another form, the first step is a shareholder resolution passed by a three-quarters majority. Next, the registration court must enter this dissolution resolution into the commercial register and liquidators must be appointed and registered to wind up the business and dissolve the company. At the end of the liquidation procedure, the company is struck out of the commercial register and the remaining assets, after payment of all creditors, are distributed among the shareholders.

Entry of the liquidation into the commercial register also commences a one-year period, known as the Sperrjahr or “one-year waiting period”, during which distribution of assets to the shareholders is prohibited. This one-year waiting period is intended to allow all creditors to assert outstanding claims against the company. In other words, it protects the creditors.

Managed exit

Managed exit: managing the liquidation

Whatever your reason for wanting or needing to dissolve a limited liability company (GmbH), a limited partnership (KG), limited liability partnership (GmbH & Co. KG) or a stock corporation (AG), we will help you wind up your operations and dissolve the company in an orderly fashion, avoiding a situation in which the company is assetless. This is referred to as a managed exit, meaning an orderly and organised exit from the market by a company for the benefit of all parties.

The first job of Schultze & Braun’s liquidators is to terminate any ongoing business operations in an orderly manner. They also identify liabilities owed to the company’s creditors and satisfy those liabilities to the maximum extent possible. Alongside this, they will also call in all outstanding receivables from third parties – such as customers. Our liquidators represent the company to external parties as authorised signatories and fulfil all statutory requirements, for example by providing regular status reports, which includes preparing the annual financial statements, through to the closing balance sheet at the end of the winding-up process and placing the necessary announcements in the Federal Gazette (Bundesanzeiger) and the commercial register.

In this way, the company’s tangible and intangible assets are gradually converted into liquid funds in conformity with the law. Once all liabilities and costs have been paid, the liquidators pay the sum remaining to the shareholders.

With their experience in insolvency matters, our lawyers, certified public accountants and tax advisors frequently carry out liquidations of this kind. So Schultze & Braun’s liquidators know exactly what to do and where the potential pitfalls of a managed exit lie, so that the company, whether it is a GmbH, a GmbH & Co. KG, a KG or an AG, does not end up assetless during the winding-up period.

Don’t delay – work with us to help you to ensure an orderly market exit.

Contact

Dr Jürgen Erbe, MBA
Attorney at Law in Germany, Certified Specialist in Insolvency and Reorganisation Law

More contact persons

Call +49 621 480264-0 Direct message