Meaning
German insolvency law frameworks establish structured financial forecasting standards to determine whether distressed corporations can legally avoid mandatory bankruptcy filing. Statutory Fortführungsprognose criteria require management to demonstrate both positive operational viability and verified liquidity coverage over a rolling twelve-month planning horizon. The legal assessment governs corporate board duties during financial distress and prevents delayed insolvency filings.
The requirement ceases to apply once liquid assets confirm long-term solvency or formal insolvency proceedings begin.
Solvency Evaluation
Rigorous cash flow modeling proves whether an entity maintains sufficient liquid assets to meet maturing obligations. Liquidity plans must integrate detailed supplier payment schedules and debt service requirements without assuming uncommitted financing. Satisfying Fortführungsprognose criteria requires documented confirmation that cash reserves remain positive throughout the forecast period.
Relying on speculative investment inflows invalidates insolvency defense strategies and exposes directors to personal liability.
Operational Turnaround
Restructuring plans must demonstrate concrete cost reductions and operational improvements. Management must identify loss-making divisions and unviable supply contracts slated for termination. Applying Fortführungsprognose criteria forces executive boards to negotiate binding standstill agreements with key financial creditors before submitting legal forecasts.
Unrealistic revenue recovery projections fail statutory audits, triggering mandatory insolvency filings.
Audit Standard
Certified public accountants evaluate financial plans against IDW S6 standards established by the German Institute of Public Auditors. Independent auditors review underlying market assumptions and restructuring timelines. Meeting Fortführungsprognose criteria provides legal protection against wrongful trading claims during corporate turnarounds.
