A debtor or insolvent company always has the option of taking over administration itself and managing and disposing of its assets on its own. A preliminary custodian is appointed to assist, even in insolvency with self-administration (known in Germany as Eigenverwaltung). The custodian's job in insolvency with self-administration is oversight.

How insolvency with self-administration works

Insolvency with self-administration lets the debtor keep managing and disposing of, for example, their real estate on their own.
The custodian keeps a watchful eye on the debtor's actions and conduct.
In their own insolvency proceedings, the debtor becomes their own insolvency administrator, of course only in conjunction with a watchful custodian. The insolvency estate is guarded equally by two parties: the insolvency administrator and the supervising custodian. The debtor is thus the insolvency administrator in their own case. This type of insolvency occurs more often with companies that can be restructured, and it makes the insolvency proceedings easier for them. Insolvent companies keep their freedom of decision over their entire insolvency estate. As a result, this form of insolvency has secured a firm place in court insolvency proceedings. The entrepreneurial
know-how is not lost during insolvency and restructuring, provided the company has not already failed beforehand under its management. In that case, every good intention of restructuring the company becomes a problem.

Insolvency with self-administration

The debtor must apply for self-administration with the insolvency court themselves

The insolvency court only approves self-administration if it causes no disadvantages for the creditor. When the debtor applies, the court must not foresee any disadvantages for the creditor from self-administration, otherwise the court could reject the application for those reasons. If the insolvency court finds no disadvantages for the creditor from the debtor's self-administration, the creditor must agree. Even with self-administration, to get the company back on solid ground it is important to get expert advice from an experienced, independent insolvency administrator or restructuring expert who advises the insolvent company on financial matters.
When a debtor files for personal insolvency with self-administration at the insolvency court, they have first consulted a debt counseling service, where the total debt is reviewed to see whether it is even possible to apply for insolvency proceedings as a private individual. If the debt counselor gives their blessing after reviewing the debts, the debtor can submit the application for private insolvency proceedings to the insolvency court and wait to see whether the court approves the proceedings. Independently of that, the debt counselor must write to all of the debtor's creditors and all of them must agree to the insolvency proceedings, otherwise there will be problems. If even one creditor votes against it, the competent insolvency court rejects the insolvency application. We hope that never happens to an honest debtor.