Protective shield procedures for companies

Even if it is often misrepresented in articles and the media: the protective shield procedure is already an insolvency procedure.


What is the protective shield procedure for companies?


The protective shield procedure represents a special form of insolvency under self-administration in Germany, which is regulated in Section 270b of the Insolvency Code (InsO). This procedure was introduced to give companies that are in financial difficulties but not yet insolvent a chance to restructure.

Summary - Protective shield proceedings for companies in 2023 / 2024

    Prerequisites for the protective shield procedureImportance for a companyProcedure of the protective shield procedureAdvantages and disadvantages of the protective shield procedureRole of the creditorsRole of the insolvency moneyConsequences of the protective shield procedure for company employeesConsequences for suppliers

Requirements for the protective shield procedure:

The requirements for the protective shield procedure are set out in § 270b InsO and include:


  • Drohende Zahlungsunfähigkeit oder Überschuldung sind Voraussetzung: Das Unternehmen darf noch nicht zahlungsunfähig sein, sondern es muss lediglich eine drohende Zahlungsunfähigkeit oder Überschuldung vorliegen.
  • Sanierungsfähigkeit: Es muss eine Aussicht darauf bestehen, dass das Unternehmen saniert werden kann. Dies muss durch ein von einem in Insolvenzsachen erfahrenen Steuerberater, Wirtschaftsprüfer oder Rechtsanwalt erstelltes Gutachten bestätigt werden.
  • Antrag auf Eigenverwaltung: Das Unternehmen muss einen Antrag auf Eigenverwaltung stellen.


ToDo-Liste als Sicherheit

Significance for a company: The protective shield procedure offers a company various advantages:


Restructuring period:
As part of the protective shield procedure, the company has three months to draw up an insolvency plan. During this time, the company can continue to operate and attempt to reorganize itself.Self-administration: The company remains largely self-controlled and can continue to conduct its business in self-administration while it is under the "protective shield" of the Insolvency Code.Protection from enforcement measures: During of the protective shield procedure, the company is protected from enforcement measures by its creditors. Preservation of the company: By creating and implementing an insolvency plan, the company can often be preserved and continued instead of being broken up. The protective shield procedure offers the company time and protection to reorganize itself and rehabilitate while continuing to operate.

Procedure of the protective shield procedure:

Preparation and application: The company prepares the application for the opening of protective shield proceedings together with a consultant experienced in insolvency matters (e.g. a lawyer). An essential part of this application is a report prepared by an independent expert, which confirms that the company is not yet insolvent, but that there is a risk of insolvency or over-indebtedness and that restructuring is possible.


Judicial review: The competent insolvency court reviews the application and the expert opinion. If it considers the application to be admissible, it orders the provisional protective shield procedure.


Reorganization phase: During the protective shield procedure, which lasts a maximum of three months, the company remains under self-administration and draws up an insolvency plan to reorganize the company. During this period, the company is protected from enforcement actions.


Bestätigung und Durchführung des Insolvenzplans: Der Insolvenzplan wird den Gläubigern zur Abstimmung vorgelegt. Wenn der Plan von den Gläubigern und vom Insolvenzgericht bestätigt wird, wird er umgesetzt.

Advantages and disadvantages of the protective shield procedure and the processes

Zahnräder greifen ineinander

Advantages of the protective shield procedure:

    During the process, the company remains largely under the control of the previous management. The company receives protection from enforcement measures and gains time to draw up an insolvency plan. The continuation of the company is encouraged, which is often more advantageous than breaking up the company.

Disadvantages of the protective shield procedure:

    The process requires careful preparation and can be expensive. The company must be able to continue to cover its ongoing costs during the process. The process can affect the confidence of customers, suppliers and employees in the company.

Role of creditors:

    The creditors play an important role in the protective shield proceedings. You must approve the bankruptcy plan presented by the company. If the creditors reject the plan, the process can fail.

Role of the bankruptcy money:

Insolvency money is a benefit from the Federal Employment Agency, which serves to secure the wages and salaries of employees for the last three months before the opening of insolvency proceedings. This can help to relieve the company's liquidity during the protective shield proceedings.

Consequences of the protective shield procedure for employees of the company

Zufriedener Mitarbeiter am digitalen Arbeitsplatz

1. Securing the job is the aim of the procedure:

If the procedure is successful and the company can be restructured in time, this can help to secure jobs.


2. Insolvency money supports employees:

For the time immediately after the application for insolvency proceedings, the wages and salaries of the employees are secured by the so-called insolvency money. This is paid by the Federal Employment Agency and covers the salaries of the last three months before the opening of the insolvency proceedings.


3. Changes in working conditions and employment:

This can include, for example, salary cuts, changes in working hours or restructuring. Such changes are usually the subject of negotiations between management, the works council and, where appropriate, the trade unions.

In einigen Fällen kann ein Schutzschirmverfahren leider auch zu einem Stellenabbau führen, wenn dies zur Sanierung des Unternehmens notwendig ist.


Consequences for suppliers:

The consequences of the protective shield procedure for a company's suppliers can vary and depend heavily on the individual situation of the company and the success of the procedure.


  1. Uncertainty about payments: Suppliers may fear that the company will not be able to pay their outstanding invoices. In general, however, the liabilities that arise during the proceedings (so-called preferred debts) usually have to be settled in full. Continuation of the business relationship: The company can continue to do business under the protective umbrella. This means that suppliers can continue to receive orders and deliver goods, which can help the business relationship to continue. Adjustment of terms and conditions: As part of the protective shield proceedings and the associated restructuring, the company could try to renegotiate terms and conditions with its suppliers. This could include, for example, price reductions, extended payment terms or other adjustments.Possible risk for future business: A protective shield procedure can affect suppliers' confidence in the financial stability of the company. Delivery
Icon Telefon

Get professional advice from a Debt & Insolvency Advisor with over 10 years of experience.

0711 16036757
Share by: