Mass liability

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A mass liability is a liability that, in the event of insolvency , is serviced in full from the assets before other liabilities. Mostly these are liabilities that arose after the insolvency occurred. The creditor of a mass liability is called the mass creditor .

background

The concept of mass liability is necessary because, in order to continue business and carry out insolvency proceedings , new liabilities usually have to be entered into. No creditor would be willing to do so if he was treated as equal to other bankruptcy creditors and his claims were then only partially (or not at all) satisfied, as is customary in insolvency proceedings. Such liabilities are therefore referred to as mass liabilities, so that the “new” creditors take precedence over other bankruptcy creditors.

Types of bulk liabilities

The mass liabilities include ( § 53 Insolvency Code (InsO)):

  • the costs of the bankruptcy proceedings
  • the other mass liabilities ( Section 55 InsO):
    • Liabilities that are created by the actions of the insolvency administrator (i.e. that arise only during the insolvency)
    • Liabilities from mutual contracts, the fulfillment of which the insolvency administrator chooses (according to § 103 InsO he has a right to choose in existing contracts) or the fulfillment of which must take place for the time after the opening of insolvency proceedings
    • Liabilities from an unjust enrichment of the crowd.
  • Liabilities from rental and lease agreements of the debtor for immovable objects or rooms as well as from employment relationships of the debtor ( Section 108 Paragraph 1 Clause 1 InsO; however, the regularly used mass release option for housing leases of the debtor in Section 109 Para. 1 p. 2 InsO)

Only after the mass liabilities have been satisfied will the other liabilities be serviced according to quotas from the remaining mass.

example

Company A is insolvent. After the disposal of all assets, the mass is € 200,000. The creditors have claims totaling € 2,000,000. The costs of the proceedings are € 20,000, the insolvency administrator has used deliveries and services for € 80,000. After deducting the mass liabilities of € 100,000, € 100,000 remains for distribution, and each creditor would receive a quota of 5%.

The costs were not calculated in real terms.