Eigenverwaltung (Debtor-in-Possession): the deal mode buyers need to understand

Eigenverwaltung under §270 German Insolvency Code (InsO) is the German term for „debtor in possession” — the debtor keeps control of its assets instead of losing it to an insolvency administrator. Instead of an administrator, a supervisor (Sachwalter) is appointed to oversee management without replacing it.

The proceeding must be requested by the debtor and ordered by the insolvency court. Requirements: no circumstances disadvantageous to creditors, a credible restructuring perspective, clean prior conduct. In practice: management must have a solid reputation and produce a viable going-concern forecast.

The SanInsFoG reform (2021) made Eigenverwaltung substantially more attractive. It is now the standard mode for large corporates, mid-market companies with sound management and crises with operational substance.

In a regular insolvency the administrator speaks for the debtor. He is a neutral asset trustee, not a seller. Negotiations are formal, distant, often auction-structured. In Eigenverwaltung you talk directly to the CEO or CFO, who knows the business, wrote the restructuring plan and has an interest in closing the deal — not just extracting the highest price.

In practice: faster decisions, more honest answers to due-diligence questions, more willingness to discuss creative deal structures (earn-outs, roll-overs, management participations). The supervisor must consent — but he is a controller, not a negotiator.

The price for this: more complexity in legal documentation. Supervisor, creditors' meeting, creditors' committee all become stakeholders. A dedicated restructuring lawyer on the buyer side is non-negotiable.

The key distinction for timing: In preliminary Eigenverwaltung (§270a InsO, often combined with the protective shield §270b) the proceeding has not been opened yet. The debtor has three months to file a restructuring plan. Deals in this phase are delicate — legal positions aren't final, and the proceeding can still flip to regular insolvency.

After opened Eigenverwaltung (§270 InsO post opening decision) the situation is clear: the proceeding is running, the supervisor is appointed, the business is secured. This is the golden window for structured takeovers — typically the first 3–6 months after opening.

If you make an offer in the preliminary phase, the purchase agreement must be conditional on opening + supervisor consent. Without that clause the contract is barely enforceable if the case flips to regular insolvency.

The debtor (management): operational counterpart, knows the business. Can make commitments but must always loop back to the supervisor.

The (preliminary) supervisor: not the negotiator, but the sign-off. Must be convinced the deal benefits creditors. Nothing signs without his approval.

The creditors' committee (if appointed): represents the major creditors. Certain deal sizes require its consent.

The creditors' assembly: must consent to a restructuring plan when the deal is part of it. Less relevant for pure asset deals, central in insolvency-plan proceedings.

The CRO (Chief Restructuring Officer): in many larger cases a specialised restructuring executive is added beside management. Effectively your main deal-phase counterpart.

Day 0–7: Insolvency filing with debtor-in-possession request. Preliminary supervisor appointed. §9 InsO publication. For you as buyer: first signal detection, usually through the insolvency gazette or our alert system.

Day 7–30: Contact with the debtor, short NDA, first meeting. Commercial-register + Federal Gazette + web analysis completed. First price indication.

Day 30–90: Detailed due diligence under tight time constraints (not comparable to normal M&A timelines). Negotiation of key terms with CRO or management. Structure alignment with supervisor.

Day 90–150: Opening of Eigenverwaltung (if not yet effected). Final negotiation of the Asset Purchase Agreement. Creditors' committee consent.

Day 150–180: Closing. Business transfer. Takeover.

For comparison: a normal mid-market M&A deal takes 6–12 months. In Eigenverwaltung 4–6 months are realistic — if the buyer is well-prepared.

Going-concern value instead of liquidation value: The Eigenverwaltung debtor wants to preserve the business as a whole. The regular-insolvency administrator maximises proceeds — even if that means break-up. If you signal continuation intent you have a structural advantage in Eigenverwaltung.

Better information supply: Directly from management, with an incentive for honesty (management often stays on board). In regular insolvency you only get the data room the administrator assembled — rarely complete.

More creative deal structures: debt roll-over, seller loan, earn-outs — all negotiable. In regular insolvency the administrator wants cash at closing.

Shorter time-to-signing: because operational continuity was not broken, the deal can be structured in weeks — instead of the months of break-up preparation.

Management conflict of interest: the management negotiating the deal is the same management that led the company into the process. Positions can be emotional or tactical. Deals often collapse because the debtor has unrealistic price expectations („my life's work”).

Concealment risk: rare, but real. Management might withhold information that would lower the price. Mitigate through: independent advisors, complete data room, independent valuation opinion.

Revocation of the request: the court can lift Eigenverwaltung if creditors would suffer. Your purchase contract must address this scenario.

Creditors' committee blockade: if one or two large creditors oppose, the deal is dead — regardless of how aligned debtor and buyer are. Early sounding is essential.

Register extract + last annual report pulled from the Federal Gazette — for a rough view of revenue, result, employees.

§9 announcement read — case number noted, supervisor identified.

Web presence analysed: Trustpilot, Wayback, current press mentions. Is the business still operationally active?

Buyer profile defined: what do you want (brand? inventory? staff?), at what price range, with what financing?

Legal counsel engaged: insolvency lawyer + corporate lawyer in one firm. Cost: ~EUR 5–15k to signing on smaller deals.

Tax counsel: clarify VAT treatment (§1 (1a) UStG), potentially on-site advice.

First contact with CRO or management. Not a 100-question list at kickoff — relationship building before data exchange.