Preliminary insolvency administration

Several months can pass between an insolvency petition and the court's opening decision — time in which the debtor's assets could be moved, dissipated, or seized piecemeal by individual creditors without protection. The court therefore orders security measures on request (§ 21 InsO), typically appointing a preliminary insolvency administrator or, in self-administration cases, a preliminary supervisor (vorläufiger Sachwalter).

Two variants are distinguished: 'strong' preliminary administration with a general prohibition on disposal (§ 22(1) InsO) — here the power to dispose of assets passes fully to the preliminary administrator, and the debtor loses control of its assets; and 'weak' preliminary administration with a consent requirement — the debtor remains active but needs the preliminary administrator's consent for material dispositions. The weak variant is standard in restructuring-oriented cases, e.g. ahead of self-administration or protective-shield proceedings.

For buyers, preliminary administration signals that the target has reached crisis point, but the opening decision — and often the earliest point for an asset deal with solid protection against later avoidance — is still pending. Early soundings frequently already run with the preliminary administrator, who shapes the eventual realisation strategy even though final award typically only follows opening.