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Due to the long-standing real estate boom in Germany, the current economic downturn in the real estate and construction industry is enormous. Construction projects remain unfinished and insolvency applications are piling up. It is therefore worth taking a closer look at the legal and economic impact of this development.
It is not an easy time for the real estate industry in Germany at the moment. High interest rates, increased energy and material costs, overregulation and a shortage of skilled labour — to name just the most important factors — have a major impact. Numerous real estate companies have filed for insolvency in recent months. Prominent examples are the insolvency applications filed by Development Partner, Centrum, Euroboden, Gerchgroup, Omega, Signa, Schoofs Immobilien and One Group. It can be assumed that this trend will continue.
This development poses considerable challenges for all parties involved — but especially for financing banks. In the last 15 years of upswing in the sector, a great deal of expertise has been lost at both business and legal level. This article intends to provide a summary of the main (legal) pitfalls in connection with the insolvency of a real estate company from the perspective of a financing bank (including a focus on the currently frequently encountered situation of an unfinished and unleased property).
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