The Status of Creditors in Insolvency Proceedings in 2026

Are you dealing with an unpaid invoice or a debtor in insolvency? We can help you with debt collection, filing a claim in insolvency proceedings, and assessing whether further action makes economic sense.

Initiating Insolvency Proceedings

Insolvency proceedings may be initiated either at the request of the debtor or the creditor. However, if the situation involves only an impending (i.e., not existing) bankruptcy, only the debtor may file an insolvency petition. The court will announce this fact by means of a notice of the commencement of insolvency proceedings. For a debtor’s petition, this is generally within 2 hours at the latest; for a petition combined with a petition for debt relief, within 3 business days. For a creditor’s petition, a preliminary assessment may take place prior to publication.

If the debtor is a natural person or legal entity engaged in business, they are required by law to file an insolvency petition as soon as they become aware of their insolvency. Otherwise, they would be liable to creditors for damages.

A petition to initiate insolvency proceedings may be filed with the court once the debtor has obligations to at least two creditors, and those obligations are more than 30 days past due. At the same time, the debtor must be unable to fulfill those obligations.

After the proceedings are initiated, the debtor must subsequently submit to the court a list of assets, liabilities, and income.

Effects of the Commencement of Insolvency Proceedings

Once insolvency proceedings have been initiated, the debtor is protected from potential enforcement actions and may apply to the court for debt relief. No legal proceedings may be brought regarding claims against the debtor if the claim can be filed here.

It is therefore crucial that any creditor file their claims. Creditors must file their claims no later than 2 months after the publication of the insolvency decision in the Insolvency Register.

The debtor may continue to dispose of their assets only to a limited extent; above all, they should not take any action that would reduce their value.

If you are unsure whether your claim has a chance of being satisfied in the insolvency proceedings, or if you need help properly preparing your claim filing, we are here to assist you. When it comes to claims, it is not only the deadlines that matter, but also the precise description of the claim, any ancillary claims, and any security provided. As part of our debt collection service, we will help you assess the next steps, prepare the necessary documentation, and ensure that a formal error does not jeopardize your chances of recovery.

Bankruptcy Ruling

A bankruptcy ruling is the final step in the first phase of insolvency proceedings. The court issues this ruling if it concludes that the debtor is indeed bankrupt.

A significant effect of this decision is that contractual interest, late payment interest, contractual penalties, and similar charges cease to accrue.

An Example from Our Law Practice

We were approached by a business owner whose customer had long failed to pay invoices for services rendered. Shortly thereafter, he discovered that insolvency proceedings had been initiated against the customer. The client was unsure whether it still made sense to pursue the claim, as part of the debt had been past due for several months. We reviewed the insolvency registry, prepared a claim filing including ancillary charges, and verified whether the relevant contractual documentation could be provided. Thanks to our timely action, the client filed his claim properly and did not lose the opportunity to receive at least partial satisfaction.

Forms of Insolvency Resolution

The law provides for three forms of insolvency resolution: reorganization for large enterprises, bankruptcy—in which the debtor’s assets are liquidated and sold—and debt discharge. From the perspective of the possible outcomes of insolvency proceedings, debt discharge is the most attractive option for non-business debtors.

Debt Discharge

Previously, the requirement was to repay at least 30% of their debts within five years at the latest. However, for proceedings initiated on or after October 1, 2024, the conditions for discharge are met in the case of debt relief through a repayment schedule with liquidation of the estate, particularly if the debtor fulfills all material obligations for a period of 3 years following the approval of the debt relief. The debtor is deemed to have fulfilled these obligations if they have achieved the projected satisfaction rate for unsecured creditors, as determined by the insolvency court in its decision approving the debt relief. This rate is therefore assessed on a case-by-case basis, rather than automatically based on a fixed threshold of 30%.

Whether a creditor is secured or unsecured is crucial at this stage, as each has a different legal status.

A secured creditor is a creditor whose claim is secured by assets belonging to the estate, specifically through a lien, a right of retention, a restriction on the transfer of real property, a security transfer of rights, or the assignment of a claim for security (or a similar right under foreign law).

A secured creditor (who has filed their claim in a timely manner) is entitled, as part of the debt relief process, to satisfaction from the proceeds of the liquidation of the collateral (real property, personal property, or, where applicable, assigned claims). As part of the debt relief process, the plan may also specify other methods of satisfaction, such as regular payments from the debtor’s income. The order of satisfaction is determined by the date the security interest arose or the date other security was established, unless the secured creditors agree otherwise in writing.

The decision on the method of debt relief is made at a creditors’ meeting convened by the court. Creditors who have filed their claims are invited to the meeting. They may then vote on whether debt relief will take the form of a repayment schedule or, alternatively, the sale of assets from the estate. The court also takes into account the insolvency administrator’s opinion on the most appropriate method of resolving the bankruptcy.

Bankruptcy

Another option for resolving insolvency is bankruptcy, in which, in the case of a natural person, the joint property of spouses is dissolved and all of the debtor’s assets are liquidated. It is important to note that creditors’ claims are extinguished only to the extent that they were satisfied during the bankruptcy proceedings. To the remaining extent, however, they do not expire.

For the debtor, the most desirable option for resolving their situation is typically debt relief through a repayment schedule. Although this is a long-term and relatively demanding process for the debtor—requiring them, above all, to work and not refuse any feasible opportunity to earn an income— Any additional assets they acquire (such as an inheritance or a lottery win) must be liquidated and used for extraordinary payments beyond the scope of the repayment schedule.

The debtor must also submit a statement of income to the court, the insolvency administrator, and the creditors’ committee. Throughout the process, the debtor must act in such a way as to avoid taking on unmanageable obligations and must not give preferential treatment to any creditor.

A breach of the debtor’s obligations may lead to the revocation of the approved debt relief and a declaration of bankruptcy. Ultimately, the debtor may even propose this at some point. However, this happens only very rarely.

Insolvency Administrator

The insolvency administrator is appointed by the court. His primary task is to manage the estate, seek to satisfy creditors’ claims, and, in the event of bankruptcy, also handle the liquidation of the debtor’s assets.

The liquidation of secured assets listed in the inventory of the estate is carried out by the insolvency administrator in accordance with the instructions of the secured creditor or secured creditors, if their rights to such assets are established.

Termination of Debt Relief

Once the conditions for debt relief have been met, the court may decide to release the debtor from the obligation to pay any outstanding claims included in the debt relief. This discharge may also apply to creditors who did not file their claims in the insolvency proceedings at all or who failed to file them on time. In the case of debt relief through a repayment schedule combined with the liquidation of the estate, the standard assessment period is currently 3 years from the approval of the debt relief. The decisive factor is whether the debtor has fulfilled their essential obligations during this period, particularly whether they have achieved the expected level of satisfaction for unsecured creditors as determined by the court in its decision approving the debt relief.

In the case of secured creditors, no discharge occurs. Their claims are secured by one of the methods mentioned above. Such creditors are satisfied in full from this security.

The debtor is removed from the insolvency registry five years after the decision granting discharge from the remaining debts becomes final.

Summary

Insolvency proceedings are not merely a formal process for creditors that takes place between the debtor, the court, and the insolvency administrator. If a creditor has a claim against a debtor in bankruptcy, the creditor must be proactive from the very beginning. Above all, it is essential to monitor the insolvency registry and file a claim in a timely manner. Missing the deadline can have very serious consequences, as the claim will not be satisfied in the proceedings.

A creditor’s standing varies depending on whether the claim is secured. A secured creditor generally has a stronger position because they can be satisfied from specific assets of the debtor, such as mortgaged real estate. An unsecured creditor, on the other hand, is limited to proportional satisfaction based on the outcome of the insolvency proceedings.

A creditor should also monitor which method of resolving the insolvency the court approves. Different rules apply to bankruptcy, reorganization, and debt relief. In the case of debt relief, following recent changes, it is particularly important whether the debtor fulfills their essential obligations for a specified period and whether they achieve the satisfaction rate determined by the court. An active creditor can thus better protect their rights, respond to actions taken by the debtor and the insolvency administrator, and prevent the unnecessary loss of their claim.