Knowledge
18 Minute
In brief: A company crisis cannot be solved with fear-driven videos and ready-made rescue packages. The first task is to establish the facts, deadlines and responsibilities. The Budapester helps clarify the situation and bring the right professional partners together. If there may be an inability to pay debts or over-indebtedness, appropriately authorised legal, tax or insolvency professionals must assess the situation without delay.
A crisis needs clarity, not a worst-case narrative
Online offers profit from fear of a crisis. They often start with a dramatic claim: accounts will be frozen, banks will terminate agreements immediately, authorities will seize everything, or only a company in an exotic jurisdiction can save the business. A ready-made solution is then sold before anyone has seen the contracts, figures, corporate structure or deadlines.
This approach puts an entrepreneur at risk. Tight cash flow, a shareholder dispute, a lost customer, a banking issue and a situation that meets legal insolvency criteria are not the same. Treating them as one problem can lead to the wrong priorities and waste valuable time.
What needs to be established first
The first step is an objective assessment. Depending on the situation, this includes:
- current bank balances, payments due and income expected in the short term,
- outstanding taxes, social security contributions, wages and supplier invoices,
- loan, lease, rental and security agreements,
- payment demands, termination notices, enforcement action or official deadlines,
- shareholder resolutions, powers of attorney and existing conflicts,
- ongoing projects, the order book and realistically achievable revenue,
- existing shareholdings, affiliated companies and transfers of funds between them.
These documents do not replace a professional assessment. They make it possible. The Budapester ensures that the people involved can work from an organised record instead of receiving the same incomplete information one after another.
Distinguish cash-flow problems, inability to pay and over-indebtedness
The German Insolvency Code sets out specific definitions and duties for German legal entities. Under section 17 InsO, inability to pay arises where payment obligations falling due cannot be met; ceasing payments is a strong indication. Section 19 InsO governs over-indebtedness of legal entities and also considers the prospects for continuing the business.
If a legal entity becomes unable to pay its debts or over-indebted, section 15a InsO generally requires the responsible governing bodies to file an insolvency application without undue delay. The statutory maximum periods are not a general allowance to wait. A website, a coach or an improvised opinion cannot replace the assessment of whether grounds for insolvency exist and what must be done immediately.
The Budapester is neither a lawyer nor a tax adviser and does not determine whether the legal criteria for insolvency are met. His practical experience does, however, help him recognise when no further time should be spent on general discussions. He establishes direct contact with the relevant professionals.
Early recognition leaves more room to act
Company crises often begin before the first enforcement notice. Warning signs can include:
- Decisions are repeatedly postponed because reliable figures are missing.
- Taxes, social security contributions or wages are increasingly paid late.
- A shareholder blocks resolutions, information or access to bank accounts.
- The bookkeeping is not up to date and nobody can identify the short-term cash requirement.
- Personal and business payments are mixed.
- New loans or advance payments merely fill existing gaps.
- Important customers, banks or suppliers are visibly losing confidence.
Germany’s StaRUG requires directors of limited-liability entities to monitor developments that could threaten the continued existence of the business and to take appropriate countermeasures. Addressing the situation early is therefore not a sign of weakness. It is part of responsible business management.
What can go wrong when resolving a crisis
- The situation is downplayed. Without complete figures, everyone involved makes decisions on an unreliable basis.
- Inappropriate payments take priority. Friendship, family relationships and personal pressure cannot replace a professional assessment.
- Assets are transferred in a rush. Unplanned transactions can have legal, tax or liability consequences.
- Too many people communicate without coordination. The bank, creditors, employees and shareholders receive conflicting statements.
- A new company is intended to conceal the old problem. Forming a company does not replace clarification of existing obligations or lawful restructuring planning.
- Deadlines are missed. Hope is not a crisis plan. Legally significant deadlines need to be identified and monitored immediately.
How The Budapester works during a crisis
- Bring calm to communication: Who needs to be informed immediately, who can be informed later, and who is authorised to make binding statements?
- Bring facts and documents together: Figures, contracts, deadlines and the people involved are organised into a usable record.
- Separate responsibilities: The Budapester coordinates the business process; legal, tax and insolvency questions go to authorised professionals.
- Make the options comparable: Stabilisation, negotiation, structural changes and an orderly closure are treated as distinct options.
- Follow through on implementation: A plan has no value unless someone coordinates deadlines, responses and the next decisions.
When professional advice is needed immediately
If payments falling due can no longer be made in full, there are substantial tax, social security or wage arrears, enforcement action is under way, or the business’s continued operation is in doubt, time should not be spent on generic online solutions. The same applies where personal liability is imminent, criminal-law questions arise or asset transfers remain unexplained.
The Budapester can coordinate the process in these situations but cannot replace the professional assessment. The Resolve a Company Crisis page explains the scope of the service. The Structure Check is available for an organised initial assessment.
Official sources
- Section 17 InsO – inability to pay debts
- Section 19 InsO – over-indebtedness
- Section 15a InsO – duty to file for insolvency
- StaRUG – early crisis recognition and restructuring framework
As of July 2026. This article provides practical guidance, not legal, tax or insolvency advice.
