When your boss calls you into a meeting and mentions the word “Insolvenz” (insolvency), your stomach drops. This isn’t a normal termination. This is financial freefall. And in Germany, the rules change dramatically when your employer can’t pay their bills. Recent headlines, from the AE-Group automotive supplier collapse affecting 480 workers in Thuringia to the Feneberg supermarket chain crisis impacting 3,000 employees, show this scenario is increasingly common. Here’s what actually happens, what you’re entitled to, and the costly mistakes that could leave you with nothing.
The First 48 Hours: Critical Actions Before Paperwork Arrives
The moment you hear “insolvency”, the clock starts ticking, even without written confirmation. Many employees make the fatal error of waiting for official documents. Don’t.
Register as job-seeking immediately at the Arbeitsagentur (Employment Agency). German law allows you to declare yourself “arbeitssuchend” (job-seeking) the instant you have concrete knowledge of impending insolvency. This triggers two protections: it shortens any potential Sperrfrist (waiting period) for unemployment benefits, and it positions you for Insolvenzgeld (insolvency benefit) claims. As one legal expert notes, the Arbeitsagentur will likely ask which Amtsgericht (District Court) is handling the case and who the Insolvenzverwalter (insolvency administrator) is, information you should gather immediately.
Document everything. If your employer admits they cannot pay next month’s salary, record the date, time, and who said it. This oral statement legally marks the start of the insolvency period for your personal claims. Without this documentation, you could lose weeks of entitled benefits.
Freeze voluntary contributions. If you have a Betriebsrente (company pension) or similar voluntary plans, contact the provider to make them beitragsfrei (contribution-free) immediately. Otherwise, you risk “Querverrechnung” (cross-calculation) where missed salary payments cancel out your pension contributions, and that money vanishes permanently.
Insolvenzgeld: Your Three-Month Financial Lifeline
Here’s the good news: German labor law provides a robust safety net. The Bundesagentur für Arbeit (Federal Employment Agency) pays Insolvenzgeld for up to three months, retroactively covering unpaid wages before the official insolvency filing.
How it works: If your employer stops paying salaries in January but files for insolvency in March, you can claim Insolvenzgeld for January, February, and March. The amount equals your net salary, capped at the social security contribution ceiling (currently around €7,550 gross monthly in West Germany).
The application trap: You must apply for Insolvenzgeld at the Arbeitsagentur. This is separate from unemployment benefits. Many employees confuse these systems and miss critical deadlines. Apply the moment you suspect non-payment, do not wait for confirmation.
Duration matters: The three-month limit is strict. For the 5,500 employees at Revo Hospitality, this protection runs through March 2026. After that, standard unemployment benefits (Arbeitslosengeld I) kick in, provided you’ve met the 12-month contribution requirement.
The Transfergesellschaft Trapdoor: Bridge or Dead End?
Large insolvencies often create a Transfergesellschaft (transfer company), as seen with AE-Group’s 476 affected workers. This entity employs you for six months at 80% of your net salary while you search for new work. Sounds generous? The reality is mixed.
The mechanics: Your old employment relationship ends, and you transfer to this special purpose company. You receive Bewerbungstraining (application training), coaching, and continued income. For AE-Group employees, 13 coaches helped with qualifications, from Lkw-Fahrer (truck driver) certifications to German language courses.
The catch: Six months passes quickly. Jörg Baum, project leader for AE-Group’s Transfergesellschaft, admitted: “Aufgrund der Arbeitsmarktlage in Thüringen, das will ich nicht beschönigen: Es ist nicht einfach. Eher schwierig.” (Due to the job market situation in Thuringia, I won’t sugarcoat it: It’s not easy. Rather difficult.) Roughly 50 employees left within two weeks of 2026, either finding jobs or entering “ruhende Arbeitsverhältnisse” (dormant employment relationships) to test new positions.
The risk: Accepting a Transfergesellschaft offer can waive certain claims. Read the fine print. Some agreements include clauses that limit your ability to challenge the termination later.
Why That “Generous” Severance Offer Could Bankrupt You
Here’s where desperation meets danger. When insolvency looms, your employer might propose an Aufhebungsvertrag (termination agreement) with Abfindung (severance), perhaps €12,000 for 11 years of service, as one Reddit user’s girlfriend was offered. This seems like a lifeline. It’s actually a legal minefield.
The insolvency administrator’s power: Under §§ 129 ff. InsO (Insolvency Code), the Insolvenzverwalter can challenge payments made shortly before insolvency filing through Insolvenzanfechtung (insolvency contestation). If you receive a €12,000 severance payment in January and the company files in February, the administrator can demand that money back, years later.
The knowledge test: Anfechtung succeeds if you knew or should have known about the company’s insolvency when receiving payment. Since your boss already told you they can’t pay salaries, you have constructive knowledge. That severance becomes a liability, not an asset.
The better path: Let the company terminate you betriebsbedingt (for operational reasons) due to insolvency. This gives you full access to Insolvenzgeld, unemployment benefits with reduced waiting periods, and protection from clawback. Never sign an Aufhebungsvertrag during insolvency proceedings unless a lawyer specializing in Insolvenzrecht (insolvency law) reviews it.
The Anfechtung Timebomb: When the Administrator Comes Knocking
Insolvenzanfechtung isn’t theoretical. It’s a standard tool administrators use to maximize the Insolvenzmasse (insolvency estate) for creditors. Typical targets include:
- Unusual payments: Any payment that deviates from normal salary schedules
- Security grants: If your employer gave you special guarantees recently
- Direct payments: Invoices or expenses paid outside normal payroll
The three-month lookback: Payments made within three months of the insolvency filing face automatic scrutiny. If you received a bonus, severance, or even expense reimbursements during this window, document their routine nature meticulously.
The ten-year horror: For payments to “nahestehende Personen” (related parties), administrators can look back ten years. If you’re family or have a close personal relationship with management, virtually any payment becomes vulnerable.
Reality Check: Job Market Prospects After Mass Insolvencies
The AE-Group case reveals brutal market realities. While the Arbeitsagentur Eisenach organized job fairs with 40 companies, many positions required geographic relocation or retraining. A mid-50s worker summed it up: “Wer will mich da für zehn Monate einstellen? Ich habe schon abgeschlossen mit dem Berufsleben.” (Who wants to hire me for ten months? I’ve already closed the chapter on my career.)
Sector matters: Automotive suppliers face structural decline. Hotel workers from Revo Hospitality may find opportunities as tourism recovers, but management positions are scarce. Retail workers from Feneberg might transition to other Edeka branches, but at reduced wages.
Location is critical: Thuringia’s job market struggles. Bavaria’s is stronger. Your prospects depend heavily on regional economic health and your willingness to relocate.
Age and qualifications: The Arbeitsagentur admits that while Fachkräftemangel (skilled worker shortage) persists in some areas, mass layoffs from insolvencies now compete with traditional shortages. Workers over 50 face systemic discrimination, regardless of qualifications.
Your Action Plan: Step-by-Step Survival Guide
Day 1-2: Emergency Mode
- Register arbeitssuchend at Arbeitsagentur (online or in person)
- Contact health insurance, your coverage continues, but confirm status
- Document oral insolvency statements from management
- Freeze voluntary contributions (pension, VWL)
- Download three months of pay stubs, you’ll need them for Insolvenzgeld
Week 1: Financial Protection
- File Insolvenzgeld application at Arbeitsagentur
- Identify the Insolvenzverwalter through your local Amtsgericht
- Join worker committees if forming, collective action helps
- Review your contract for special clauses about insolvency
- Assess personal savings, building an emergency fund for job loss becomes critical here
Month 1: Strategic Decisions
- Reject Aufhebungsvertrag offers without legal review
- Attend Transfergesellschaft info sessions but read terms carefully
- Activate professional network, most new jobs come through contacts
- Consider Weiterbildung (further training) funded by Arbeitsagentur
- Calculate your real income needs, unemployment benefits pay 60-67% of net salary
Month 2-3: Transition
- Accept that Insolvenzgeld ends after three months
- Switch to Arbeitslosengeld I if eligible (12 months contributions required)
- Evaluate Transfergesellschaft offer if still available, sometimes it’s the only option
- Consider geographic flexibility, regional mobility opens opportunities
- Monitor Anfechtung risks, if you received unusual payments, prepare documentation
The Bottom Line: Preparation Beats Panic
Insolvency isn’t personal, but its consequences are. The German system provides substantial protections, Insolvenzgeld, Transfergesellschaften, and retraining support, but only if you navigate the bureaucracy correctly. The biggest mistake is waiting for official paperwork while your rights expire.
Financial literacy matters. Understanding these mechanisms before crisis hits transforms a potential disaster into a manageable transition. Unfortunately, importance of emergency savings before investing is a lesson many learn too late. With economic uncertainty rising and insolvencies increasing across automotive, retail, and hospitality sectors, this knowledge isn’t just useful, it’s essential job security.
The AE-Group employee who found a new contract at the first job fair had one advantage: he acted immediately. The colleague who waited for written confirmation lost two weeks of Insolvenzgeld eligibility. In insolvency, hesitation costs real money. Move fast, document everything, and never sign anything without understanding the Insolvenzanfechtung risk. Your future self will thank you.
