Asset Deal vs Share Deal in insolvency: the buyer's decision guide

In insolvency practically all transactions are asset deals. The insolvent company remains with its legacy liabilities and stays with creditors; the buyer takes individual assets (brand, inventory, domain, contracts, staff) — without the debts.

Share deals are the exception. They occur practically only in insolvency-plan proceedings — when the company is to be continued through debt restructuring and shares are transferred to an investor as part of the plan. Without an insolvency plan there is no sensible share-deal route.

If you're reading this in a hurry: assume asset deal. Consider share deal only if an insolvency plan is explicitly on the table.

The buyer signs an Asset Purchase Agreement (APA) with the insolvency administrator or — in Eigenverwaltung — with the debtor with the supervisor's consent. The contract's subject matter is an explicit list of assets.

Typically transferred: inventory, brands, domains, customer contracts (if contractually assignable), supplier contracts (with consent), lease contracts (with consent), machinery, IT systems, IP rights. If the business is taken over: employees under §613a BGB.

Typically NOT transferred: bank debt, trade payables from pre-insolvency, tax debt, social-security debt, litigation exposure, contingent liabilities from legacy contracts, pension obligations (§9 BetrAVG can change this).

The insolvent company remains the debtor of all liabilities until it is wound up in the insolvency proceeding and finally deleted.

The buyer acquires shares of the insolvent company — usually as part of an insolvency plan under §217 et seq. InsO. The plan simultaneously reorganises debt: creditors get a quota and waive the rest. The buyer receives a „de-debted” company.

Advantages: corporate continuity is preserved. Licences, concessions, domain registrations, bank accounts, personal customer data (GDPR-critical) — all stay with the same legal entity. No fresh contracts with thousands of customers.

Disadvantages: extremely complex and slow (insolvency plan needs creditor majorities + court confirmation, 6–12 months realistic). Tax risks (loss carry-forward §8c KStG!), unknown legacy risks surface.

In practice: share deals appear in medium-to-large cases with substantial going-concern value where the legal entity is essential — software companies with license contracts, regulated industries (pharma, finance), brands with long-standing customer contracts.

Take asset deal if: You want to acquire a brand or product line, the company is small to medium, ongoing contracts are largely terminable or transferable with consent, time matters.

Consider share deal (insolvency plan) if: The company has specific non-transferable licences (banking, pharma, broadcasting), legacy customer contracts are valuable AND cannot be reinitiated, a substantial loss carry-forward is tax-usable (careful §8c KStG on share transfers over 50 %!), the creditor structure is manageable and winnable for an insolvency plan.

Never share deal if: You want only pure assets (brand, inventory, machinery) — then you take on unnecessary legacy risks. You don't have a specialised team that can lead the insolvency-plan process. The buyer needs to be operational quickly after closing — the insolvency-plan process takes 6–12 months.

Asset deal: Generally subject to VAT (standard 19 %). Exception: transfer of business as a going concern per §1 (1a) UStG — if a „living business” is transferred as a whole, the transaction is non-taxable. Requirement: buyer's continuation intent, transfer of essential business assets, no material change of activity.

Real-estate transfer tax: only if real estate is included — atypical for insolvency deals but relevant when present.

Depreciation reset: The buyer can depreciate assets at market price. Since insolvency assets often trade below book, this creates an attractive depreciation base.

Share deal: No VAT. Real-estate transfer tax normally does not apply (exception: §1 (3) GrEStG at 90 %+ transfers when the company holds real estate). Loss carry-forward is fully wiped on transfers exceeding 50 % (§8c (1) KStG) — unless §8d KStG (continuation-linked loss carry-forward) applies.

Critical: the structure MUST be settled with the tax advisor before signing. Retroactive corrections are practically impossible.

§613a BGB (business transfer): If you acquire a „business” or „business part” — not just individual assets — all employment relationships transfer automatically. Employees retain all rights (salary, commitments, holiday). Objection possible, but only within a deadline. Practically: if you need staff, they transfer — that's usually wanted. If not (e.g. only the brand), you must structure very cleanly.

§25 HGB (business-name continuation): Anyone continuing a business under the old name is liable for legacy business debts. Classic insolvency pitfall! Fix: either change the name, or agree a liability exclusion in the APA + publish it in the commercial register.

§75 AO (business taxes): The business acquirer is liable for certain business taxes (VAT, wage tax). Exception: acquisition from insolvency estate — §75 AO does not apply when acquiring from the administrator. Major advantage of insolvency timing!

Environmental legacy liability: In industrial acquisitions: soil contamination, legacy pollution. The new owner is liable under public law (BBodSchG). Always site assessment before signing.

Product liability: For legacy products of the insolvent debtor the buyer is generally NOT liable (manufacturer status stays with the debtor). Exception: if you create confusion risk (same brand, same communication), the situation may differ.

Asset deal in insolvency: Contact to closing typically 3–6 months. Very fast deals (during preliminary measures, pre-opening): 6–10 weeks. Complex corporate structures or real estate: 6–9 months.

Share deal via insolvency plan: 6–12 months normal, can stretch to 18 months. The plan must be accepted by the creditors' assembly (head majority + amount majority), then confirmed by the court. Appeals possible.

Time is money: on an operational business with a six-figure monthly loss rate, the time disadvantage of the share deal quickly adds up to a low-to-mid seven-figure amount.

The regular-insolvency administrator strongly prefers asset deals. He can monetise assets quickly, distribute proceeds, close the proceeding. A share deal requires an insolvency plan, which is many times more work for the administrator — usually without better compensation.

In Eigenverwaltung it's different. The debtor often thinks about continuation, reputation, corporate survival. Insolvency plans with share-deal elements are much more common. If you pursue a share deal in Eigenverwaltung you have decent chances.

In both cases: the proposal must be financially attractive to creditors. A share-deal offer must at minimum match the value creditors would receive from asset monetisation — plus a premium for the extra complexity.

Which assets are essential for you? (brand, inventory, staff, customer contracts, licences, real estate)

Are essential assets only transferable with the legal entity? (concessions, personal customer data, legacy contracts without change-of-control clauses)

How important is time? (loss rate of the running business, competitive situation)

Is the creditor structure manageable? (5 large creditors vs 500 small ones)

Is an insolvency plan already in preparation? (if yes: share-deal route far more likely)

Tax situation of the acquirer: can you use loss carry-forwards? (§8d KStG continuation possible?)

If you answer 2 out of 6 questions with „yes, for share deal”, the structure question deserves an in-depth discussion with the lawyer. Otherwise: asset deal is the way.