Real estate in insolvency administration
From securing the asset in the preliminary proceedings to distributing the proceeds: what insolvency administration has to do with land and buildings, which provisions and deadlines apply, which figures are needed at each stage – and where the expert and the cash flow model come in.
Why real estate places particular demands on insolvency administration
Hardly any asset in the estate ties up as much attention in insolvency administration as a property. It is illiquid, almost always encumbered with land charges, and causes costs from day one: property tax, insurance, service charges, safety obligations, maintenance. Leases continue on the opening of proceedings (§ 108 InsO), secured creditors are entitled to separate satisfaction (§ 49 InsO), and realisation takes time – months through a private sale, often more than a year through a compulsory auction.
For the insolvency administrator that means: every decision about the property – secure it, manage it, release it, sell it, have it auctioned, complete it – is a decision about money and time that has to be justified to the court, the creditors' committee and the creditors' meeting. That is only possible with robust figures, and early ones: the value of the property already determines in the preliminary proceedings whether the costs of the proceedings are covered (§ 26 InsO), and in the schedule of assets which course of action makes sense at all (§ 151 (2) InsO).
This guide places the property along the course of the proceedings. It does not replace legal advice; it shows which tasks arise at which stage and which valuation and planning bases insolvency administration needs for them.
The property in the five stages of insolvency administration
Each stage asks different questions of the property. The answers build on one another – whoever has a sound value indication in the preliminary proceedings saves time at the report meeting and arguments during realisation.
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1
Preliminary proceedings: secure and assess
The preliminary insolvency administrator secures the assets and examines whether they cover the costs of the proceedings (§ 22 (1) sentence 2 no. 3 InsO). For real estate that means: inspect the land register, sort out access and keys, check insurance cover and safety obligations, record rent receipts and property management, stop or redirect running costs. Often the condition of the property is unclear and the debtor does not cooperate.
Tasks- Land register extract, encumbrances in sections II/III, priority notices
- Secure the property, clarify insurance and safety obligations
- Inform tenants, property management and utilities
- Review enforcement measures (§ 21 (2) no. 3 InsO)
Figures needed- Value indication within days, even without an internal inspection
- Cover for the costs of the proceedings: value less encumbrances and costs
- First assessment: manage, release or realise
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2
Opening and taking possession: the schedule of assets
On the opening of proceedings the power of administration and disposal passes to the administrator (§ 80 InsO); they take possession of the estate (§ 148 InsO) and draw up the schedule of assets. For assets whose value depends on continuation or closure, § 151 (2) sentence 2 InsO requires both values – for real estate therefore the going-concern value and the liquidation value. Leases continue (§ 108 InsO); advance dispositions of rent are only effective to a limited extent (§ 110 InsO).
Tasks- Schedule of assets and statement of affairs with robust values
- Value the encumbrances: land charges, usufruct, rights of residence, priority notices (§ 106 InsO)
- Consider release where encumbrances exhaust the value
- Put leases in order: arrears, deposits, service charges
Figures needed- Market value under § 194 BauGB, ImmoWertV
- Liquidation value with reasoned discounts
- Property cash flow on continuation: rents, costs, debt service
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3
Report meeting: continue, close down or plan
At the report meeting the administrator sets out the economic position and the creditors' meeting decides how to proceed (§ 157 InsO). In property-holding companies the property often is the business: whether continuation makes sense depends on the property cash flow. A private sale of land requires the consent of the creditors' committee (§ 160 (2) no. 1 InsO); that consent presupposes that the administrator can weigh the proceeds against the alternatives.
Tasks- Report with options and proceeds forecasts
- Decision papers for the creditors' committee and the creditors' meeting
- Agreement with secured creditors on the realisation route
- For a plan or self-administration solution: figures for §§ 220, 270a InsO
Figures needed- Proceeds forecast for each realisation route (private sale, compulsory auction, holding)
- Going-concern forecast with integrated planning
- Comparative calculation: plan against standard liquidation
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4
Realisation: private sale, compulsory auction or receivership
After the report meeting the administrator realises the assets without delay (§ 159 InsO). For real estate they may themselves pursue the compulsory auction or receivership (§ 165 InsO) – or sell privately, for which they negotiate the release from encumbrances with the secured creditors, usually against a contribution to the estate out of the proceeds. If the secured creditor pursues the auction, the administrator may apply for a temporary stay under the conditions of § 30d ZVG. On the sale of let properties the purchaser has a special right of termination (§ 111 InsO), which bidders price in.
Tasks- Determine the realisation route, agreement with secured creditors
- Bidding process with data room, particulars and valuation report
- Check offers for plausibility, obtain the resolution under § 160 InsO
- Prepare the sale contract, release from encumbrances and distribution of proceeds
Figures needed- Valuation report as bidder information and a basis for negotiation
- Plausibility check of the purchase price, comparison of offers
- Distribution of proceeds by ranking, contribution to the estate, costs
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5
Final account and distribution
At the end there is the rendering of accounts to the court (§ 66 InsO) and the distribution. For real estate that means: the administrator has to show that realisation took place at market terms and that the proceeds were correctly divided between those entitled to separate satisfaction and the estate. A comprehensible valuation report and a documented evaluation of offers are the best protection against objections here.
Tasks- Document proof of realisation and distribution of proceeds
- Answer objections from creditors
- Clarify the tax consequences with the tax adviser
Figures needed- Valuation report and evidence of market terms on file
- Supplementary statement if the court has questions
Private sale, compulsory auction, receivership or release?
Choosing the realisation route is the most important property decision in insolvency administration. It depends on the encumbrances, market conditions, the state of the property, the letting situation and the attitude of the secured creditors – and can only be justified soundly with a proceeds forecast for each route.
| Route | When it makes sense | Advantages | Risks | Figures needed |
|---|---|---|---|---|
| Private sale § 160 (2) no. 1 InsO, release from encumbrances |
Marketable property, cooperative secured creditors, a surplus or a contribution to the estate achievable | Highest proceeds, speed, contribution to the estate negotiable, competitive bidding | Consents required, exclusion of warranty depresses the price, purchaser's right of termination under § 111 InsO | Market value, liquidation value, bidder documents, comparison of offers |
| Compulsory auction § 165 InsO, ZVG |
No agreement with creditors, unclear rights, disputes between co-owners, no cooperation | Orderly procedure, clear ranking, no warranty, value determined by the court | Usually the lowest proceeds, long duration, the 5/10 and 7/10 thresholds apply only at the first hearing, limited pool of bidders | Market value for the court's determination, rights that survive the auction, bid ratios in the sub-market |
| Receivership / cold receivership § 165 InsO, §§ 146 et seq. ZVG or by agreement |
Let property, sale only sensible after vacancy has been reduced or the market has improved | Rental income flows in an orderly way, the property stays managed, time for a better sale | Running costs and liability, a contribution to the estate has to be agreed, ties up the administrator's capacity | Property cash flow, cost contribution, present value comparison of holding against an immediate sale |
| Release from the estate § 35 InsO, case law |
Encumbrances exhaust the value, no prospect of a contribution to the estate, running costs burden the estate | The estate is relieved of costs and liability, the administrator regains capacity | Final, no later access if the market improves, duty to justify the decision to creditors | Market value against encumbrances, cost forecast if retained, documentation of the decision |
In practice: A private sale almost always presupposes an agreement with the secured creditors on release from encumbrances and a contribution to the estate. The basis for that negotiation is the proceeds forecast for each realisation route – whoever can show what a compulsory auction would realistically achieve negotiates the contribution to the estate on equal terms.
Special constellations in insolvency administration
Let properties
Leases continue (§ 108 InsO), advance dispositions of rent are only effective until the end of the current month (§ 110 InsO), and the purchaser obtains a special right of termination (§ 111 InsO). Arrears, deposits and service charge statements are part of the valuation.
Condominium units
Arrears of service charges, special levies and the priority of the owners' association in a compulsory auction (§ 10 (1) no. 2 ZVG) affect the proceeds achievable. Resolutions and reserves have to be checked before realisation.
Developers and projects
Purchasers with a priority notice can demand performance (§ 106 InsO), contractors secure themselves under § 650e BGB, MaBV instalments have been paid. Whether to complete or realise is decided by comparing present values. More on developer insolvency
Property companies and self-administration
For portfolio holders the property is the business. The going-concern forecast (§ 19 (2) InsO), the financial plan (§ 270a InsO) and an insolvency plan with a comparative calculation decide between restructuring and liquidation. To business plan and cash flow
Operational properties
Production, logistics, hotel or care: the value depends on third-party usability and on continuation. In a transfer restructuring the property is often the largest part of the purchase price and has to be valued separately.
Estate insolvency and co-ownership
Inherited properties (§§ 315 et seq. InsO), communities of heirs and fractional ownership call for a partition auction or an agreement. Heritable building rights and rights of residence have to be taken into account as value-reducing.
Safety and public law obligations: On taking possession the administrator assumes the duties of the party responsible for the condition of the property – for example with buildings at risk of collapse, contaminated sites or unsecured building sites. These costs are estate liabilities and belong in every decision about retaining, releasing or realising.
The first 14 days with a property in the estate
- Request land register extracts for all sections, the cadastral map and the register of building encumbrances
- Secure access: keys, property management, tenant contact, alarm and heating systems
- Check insurance cover and secure the premiums (building, liability, vacancy)
- Document safety and protective measures, particularly for vacant properties and building sites
- Redirect rent payments, inform tenants of the administrator's appointment, record arrears
- Review current contracts: property management, energy, maintenance, utilities
- Establish enforcement measures and any auction proceedings under way
- Record priority notices, purchaser contracts, construction contracts and security mortgages
- Commission a value indication: market value, liquidation value, summary of encumbrances
- First course setting: manage, release or realise – justified with figures
What the expert needs – and obtains without you
Gaps are normal in insolvency administration. With the administrator's power of attorney we obtain extracts and files ourselves and mark assumptions openly.
- Land register, cadastral map, building encumbrances (we obtain this)
- Building file, plans, permits (we obtain this)
- Leases, tenant schedule, arrears, deposits
- Service charge and house money statements, reserves
- Energy performance certificate, reports, damage reports
- Financing and security agreements
- For developers: purchaser contracts, construction status, construction contracts
Where valuation and cash flow modelling come into insolvency administration
With us, valuation and planning come from one set of figures. That avoids contradictions between the report, the administrator's report and the plan – and saves time at every stage.
| Stage | The administrator's question | Service | Turnaround time |
|---|---|---|---|
| Preliminary proceedings | Does the property cover the costs of the proceedings? Manage or release? | Value indication / short report | 3–5 business days |
| Schedule of assets | Going-concern and liquidation value under § 151 (2) InsO | Market value report including liquidation value | 10–15 business days after inspection |
| Report meeting | Continue, close down, plan? What does each realisation route achieve? | Property cash flow and proceeds forecast for each route, Going-concern forecast | 2–4 weeks |
| Insolvency plan / self-administration | Does the plan leave creditors better off than a standard liquidation? | Comparative calculation, Financial plan § 270a InsO | 2–3 weeks after the valuation |
| Realisation | Is the offer in line with the market? How are the proceeds distributed? | Bidder documents, plausibility check of offers, second opinion | 5–10 business days |
| Developer insolvency | Complete, or realise in the current state? | Current value, cost to complete, completion business plan | 3–5 weeks |
Frequently asked questions about real estate in insolvency administration
Does the insolvency administrator have to have every property valued?
There is no statutory duty to obtain an expert report, but the schedule of assets has to contain values (§ 151 InsO), realisation has to take place at market terms, and the administrator is liable for breaches of duty (§ 60 InsO). In practice a report is obtained for every property of value or in dispute – as a basis for the creditors' committee, the secured creditors and bidders, and as evidence on file. For low-value properties or where encumbrances exhaust the value, a value indication is often enough to justify a release.
When does it make sense to release the property from the estate?
When the encumbrances exceed the proceeds achievable, no contribution to the estate can be negotiated and the property causes running costs or liability risks. A release is final, so it should rest on a documented value and a cost forecast – otherwise the administrator faces criticism if the market rises. A value indication with a summary of encumbrances is usually sufficient for this.
How large is the contribution to the estate on a private sale?
For real estate the law does not prescribe a fixed cost contribution; the contribution to the estate is agreed with the secured creditors and in practice is often in the low single-digit percentage range of the proceeds, depending on the effort involved and the negotiating position. What matters is the alternative: whoever can show what a compulsory auction would realistically bring the creditor negotiates from a better position.
Can the administrator stop a compulsory auction that is under way?
Under the conditions of § 30d ZVG the insolvency administrator can apply for a temporary stay – for example where the land is needed to continue the business or for an insolvency plan, or where an auction would substantially impede realisation. The application has to be reasoned, normally with continuation or realisation planning that shows the benefit of the stay.
What happens to the leases on a sale out of insolvency?
The purchaser takes over the leases (§ 566 BGB) but obtains a special right of termination under § 111 InsO with the statutory notice period at the earliest possible date – only at the first possible date after the acquisition. Bidders price that right in; for residential property the protective provisions of tenancy law continue to apply. In the report we set out how lease commitments and termination options affect the value.
This guide reflects the position as at September 2026 and is intended for orientation. It does not replace legal advice; the legal assessment in an individual case is a matter for the insolvency administrator, the trustee and the lawyers involved.
Robust figures for every stage of insolvency administration
Tell us the property, the stage of the proceedings and your deadline. Within one business day you receive an assessment of the approach and a fixed price offer.