Is your company sufficiently protected if a customer from Germany is no longer able to pay for the goods delivered or services provided? For companies, this question often arises only in the context of an imminent threat of payment default by their customers. Often underestimated is the significant risk that payments already received can be reclaimed by the insolvency administrator in the event of the subsequent insolvency of the German business partner– even across borders.

Overall, the economic situation indicates that the number of corporate insolvencies in Germany will remain on a high level in 2026. This development does not only affect the German market. Since German companies are frequently involved in international supply and service relationships, insolvencies are most likely to directly affect their foreign business partners.

As insolvency figures are rising, the law of insolvency contestation is becoming increasingly important, also at an international level. Insolvency administrators are systematically reviewing payments and other transactions made in the months and years prior to the filing for insolvency and are increasingly asserting insolvency contestation claims against creditors, including those based abroad. The consequences are significant repayment claims and legal disputes before German courts.

Supplier credits (exchange of goods and services for payment terms of more than 30 days), which are frequently used in practice, are also particularly risky. What serves to maintain a long-standing business relationship from a sales perspective can prove to be a significant disadvantage under insolvency law.

Legal background: The purpose of insolvency contestation law is to reverse disadvantages to all creditors that arose as a result of certain transactions by a debtor prior to the opening of insolvency proceedings. The relevant provisions can be found in Sections 129 et seq. of the German Insolvency Code. As a general rule, payments made within 30 days in exchange for an equivalent consideration can only be contested in very limited cases. Otherwise, however, the following applies: The shorter the period between payment receipt by the creditor and the debtor’s filing for insolvency proceedings, and the stronger the indications that the customer was already insolvent (in the legal sense) at the time of payment, the higher the repayment risk. Companies in financial distressed situations often decide in the short-term to satisfy certain creditors, especially certain suppliers to maintain supply chains. However, for the payment recipients it can be challenging to ascertain whether their German business partner is in a legally relevant financial crisis, especially for those based abroad. Therefore, it is all the more important to establish clear internal processes, train sales and receivables management teams and conduct early legal assessment of payment and suspicious indications. This applies also to international supply and service relationships.

Eventually, German insolvency contestation law is always applicable when insolvency proceedings are opened against the assets of a company based in Germany. Within Europe, Regulation (EU) 2015/848 of the European Parliament and of the Council of 20 May 2015, on insolvency proceedings, generally regulates the applicability of insolvency law provisions at the company’s registered office, while also determining which transactions are void, contestable or relatively ineffective because they disadvantage the body of creditors. Furthermore, the courts of the Member State within the territory of which insolvency proceedings have been opened, shall have jurisdiction for any action which derives directly from the insolvency proceedings. This explicitly includes insolvency contestation actions. Consequently, foreign companies may face repayment claims that can be asserted in German courts.

Therefore, all companies with German business relationships are well advised to regularly and critically review their payment terms including the actual payments of their German customers with regard to insolvency contestation risks. Early preventive advice is just as crucial as a coordinated procedural defense strategy in the event of a contestation case. It is precisely in these cases that the benefit of an international law firm network such as unyer becomes apparent.