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December 22, 2022

Digitization of insolvency proceedings: Fast work processes and high quality even for large-scale proceedings

Mass insolvencies are looming - headlines like this can be found in the media almost daily at the moment.

Inflation, the energy crisis, the Ukraine war, and delivery problems make the threat of a wave of bankruptcies in the economy seem increasingly real. But what does a wave of bankruptcies mean for insolvency administrators and their work? The answers are given below, from the point of view of major insolvencies - whether in self-administration or regular insolvency proceedings. This much is already clear at this point: There are now customized digital solutions that ensure high quality in large insolvency proceedings while significantly reducing the workload. Learn more about the advantages of digitizing insolvency proceedings in this article!

Large-scale proceedings: The challenge increases with the number of creditors

First of all, a definition of the term: In large-scale insolvencies, it is not the total amount of claims that counts, but the number of creditors. Large sums, few creditors - for the insolvency administrator, this is a much smaller challenge than the constellation of small sums, many creditors. If the number of creditors is in the four-digit or even higher range, it is difficult to successfully process such proceedings without digitization and automation of the individual steps. IT-based solutions make a significant contribution in all key phases of insolvency proceedings. If we take a look at the three main areas of creditor management, accounting management and creditors' meetings, this becomes clear.

Digital creditor management speeds up work processes and increases approval rate

When the insolvency administrator takes up his work, he is faced with the immense task of checking and recording the bookkeeping. What does the current set of figures actually show? Who still has what receivables, be they suppliers, customers, employees or other creditors? These are all questions, the answers to which form the basis for efficient creditor management. Preparation is everything in order to be able to submit a valid proposal to each and every one of the creditors, most of whom number in the thousands, including a detailed list of the individual items and the interest accrued. In order to make it as simple as possible for the addressees, the claim notification is structured in such a way that a signature is sufficient to accept the suggested value. The individual claim is calculated just as automatically as the letter is created. And, of course, the printing and mailing of creditor letters can also be outsourced. Good providers of digital solutions usually also take on this work as well as the task of digitally recording, processing and archiving the returns accordingly so that the data is always up to date, retrievable and usable at any time. Just imagine if such work had to be performed thousands of times by employees without technical support. Both the susceptibility to errors and the workload would be many times higher than when digital solutions are used. The empirical values with customized digital solutions speak a clear language: the approval rate of employees for the proposal values is around 99 percent and across all creditors around 90 percent. In addition, the digital or automated tools speed up work processes by a factor of five to ten.

Digital insolvency accounting ensures prompt and proper accounting

It is not uncommon for several years to pass between the start of insolvency proceedings and their termination. Many things change during this period. Creditors' addresses or bank details change. Business operations continue in the meantime. In other words, all changes such as money movements - purchases and sales - have to be maintained accordingly in accounting terms. Sometimes the daily bookings also run into the thousands. It is true that in insolvency law, the simplified recording of purchases and expenditures applies. But these quantities of bookings can only be processed with digital help. Once again, there are two main reasons that clearly speak in favor of an electronic solution: the time required and the quality of the data. Especially since timely and proper posting is also relevant to liability for the insolvency administrator.

Digital preparation of creditors' meetings increases legal certainty

One not insignificant point is often forgotten in insolvency proceedings: the creditors' meeting. Perhaps not as such, but the effort involved is often underestimated. It starts with the selection of the premises. A meeting with a three- or four-digit number of creditors does not fit into every event room. The entry of creditors or their representatives, who often have a large number of creditors, must be precisely recorded for the voting lists. Voting slips must be prepared for the votes at the creditors' meeting, individually according to the respective amount of the claim and the resulting voting rights. There is nothing worse than being challenged afterwards due to formal errors. Digital processing saves time, reduces errors and increases legal certainty.

No false hesitation about digitizing insolvency proceedings

Insolvency proceedings with a large number of creditors are often met by administrators with a certain skepticism about the complexity of the task. In most cases, these fears are unfounded, as there are now customized digital solutions that have a suitable component in all phases of the insolvency process. Full-service providers like STP support and accompany insolvency administrators every step of the way, ensuring fast work processes and high quality. Together, this allows insolvency proceedings of any size to be managed efficiently and successfully.