Insolvency: Financial distress of a company

Insolvency occurs when a company is no longer able to fulfil its payment obligations as they fall due and is therefore unable to pay its debts to creditors. This situation requires legal action aimed at fairly distributing the available assets among the creditors or restructuring the company to ensure business continuity. Insolvency poses a serious challenge for start-ups, but sometimes also offers the opportunity for reassessment and strategic reorientation under the protective mechanisms of insolvency law.