Estate insufficiency (§ 208 InsO)

If the administrator determines — whether at opening or later in the case — that the estate no longer suffices to fully satisfy the preferential estate liabilities (Masseverbindlichkeiten, § 55 InsO), they must notify the insolvency court without delay under § 208 InsO. The court publishes this „notice of estate insufficiency”; ordinary insolvency creditors then know they can no longer expect any quota for the foreseeable future.

The notice reorders payments under § 209 InsO: first, the costs of the proceeding are settled; next, „new estate liabilities” incurred after the notice — typically ongoing operating costs the administrator needs to keep the business running; only after that, and usually only pro rata, come „old estate liabilities” incurred before the notice (such as outstanding wages or supplier claims from before).

For buyers, estate insufficiency is a serious warning sign: an administrator who has already filed the notice takes on new obligations only very cautiously, since they become personally liable if they misjudge the estate. A going-concern sale remains possible afterwards, but keeping the business running through to closing often depends on the buyer advancing working capital or securing supplies directly — simply waiting further weakens both sides' negotiating position.