Insolvency Labor Law

Questions in the field of insolvency employment law regularly arise for shareholders in self-administration proceedings and, of course, for insolvency administrators. Especially for companies that intend to acquire an insolvent business, insolvency labor law plays a key role. In addition to the extent of any liability for employee claims, it is also necessary to review the extent to which the company will be profitable with the given number of employees and, if not, which actions can be taken.

Achieving the restructuring goal

As a subject touching on several fields of law, insolvency labor law offers various possibilities to quickly achieve the restructuring goal, including in relation to personnel issues.

First and foremost, the lacking links between the various legal sources and, above all, in the highly dynamic timing of the processes tend to have a major impact on providing up-to-the-minute legal advice. In times of crisis, it is not uncommon for insolvent companies, or at least parts thereof, to be sold overnight. The actions under labor law in self-administration, in insolvency, and in acquisitions from insolvency administrators must always observe the requirement of legally compliant implementation of commercial specifications and target figures. All too often, the conflict of objectives with employee interests is unavoidable. Particularly in companies with a large number of employees, it represents a challenge for advisers to meet these requirements that should not be underestimated. In addition, we are convinced that the quality of advisory services is primarily determined by expertise and experience.

Our advice in insolvency labor law

The Task Force bundles our relevant experience in insolvency labor law across all of our offices, allowing us to design and advise quickly, competently, independently, and flexibly in times of crisis. We represent shareholders’ interests in self-administration just as efficiently as the interests of insolvency administrators and buyers of insolvent companies. Where required, we also protect the interests of creditors in personnel restructuring during the crisis, including by means of targeted evaluation on behalf of the (provisional) creditors’ committee. The regular exchange of information on current developments in jurisdiction ensures that our advice to clients is reliable and competent at all times. We aim to identify our clients’ problems at an early stage and to find the best possible solutions, even under tight time constraints.

The focus of our design and advisory fields in insolvency labor law includes:

• insolvency money and insolvency money pre-financing,
• termination of employment relationships during the crisis, including collective redundancy procedures,
• corporate transactions/transfer of business (Section 613a Civil Code),
• negotiations with the works council and change of business in the event of insolvency,
• contract drafting, especially during the continuation of operations,
• transfer company,
• employee claims prior to and after initiating insolvency proceedings (liability of assets involved in the insolvency proceedings/of the new owner of the business in the event of corporate acquisitions).

In addition, we collaborate closely with the lawyers and tax advisors in our Restructuring Practice Group and draw on the expertise of the lawyers in our Occupational Pension Scheme Task Force for special issues relating to company pensions in times of crisis.