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What is the difference between insolvency and liquidation, and why does North Data only show the status “in Liquidation (i.L.)” instead of “in Insolvency (i.I.)”?

Insolvency and liquidation are closely related but not the same. Insolvency is a legal process, while liquidation is the legal consequence for many companies under German law.

Insolvency refers to a legal process initiated when a company becomes unable to meet its financial obligations or is over-indebted. Insolvency proceedings aim either to:

  • restructure the company (continuation), or

  • wind it down in an orderly manner (asset liquidation).

The opening of insolvency proceedings is a court decision and is published in the commercial register.

Liquidation is the dissolution and winding-up of a company. This involves:

  • ending ongoing operations

  • liquidating assets

  • paying creditors

  • eventually removing the company from the register

A key legal rule is:

§ 60 (1) No. 4 Sentence 1 GmbHG

A GmbH is dissolved upon the opening of insolvency proceedings.

Because of this, a GmbH is regarded as dissolved (aufgelöst) and thus in liquidation as soon as insolvency proceedings begin.

Why does North Data show “i.L.” and not “i.I.”?

North Data applies the suffix “i.L.” (in Liquidation) for the following reasons:

  1. Dissolution is the legal consequence of insolvency.
    Once insolvency proceedings are opened, the company is considered dissolved and therefore in liquidation.

  2. “i.L.” is the legally recognized and commonly used designation.
    It is derived from the GmbHG and established commercial practice.

  3. “i.I.” (in Insolvency) is not a standardized legal suffix.
    It is not consistently used in law or practice, making “i.L.” the more accurate and reliable indicator.

North Data therefore uses the dissolution/liquidation status as the default unless official continuation is documented. Seeing ‘i.L.’ does not necessarily mean the company is already closed — it means it is in the process of being wound up.

Can a company become active again after insolvency?

Yes — but only under strict legal conditions:

  • the insolvency proceedings are discontinued, or

  • an insolvency plan provides for continuation, and

  • the shareholders pass a resolution to continue the company.

You can read more articles about Company Data here.