Bankruptcy Due to Lack of Organization: Companies Without a Valid Domicile Are at Risk of Court-ordered Dissolution
When a company is incorporated, a domicile must be entered in the commercial register in addition to the legal seat.
The domicile is the address at which the company can be reached and to which post can be delivered. The domicile must be in the political municipality in which the company has its legal seat.
Own offices or c/o address
If the company has neither rented offices nor its own business premises, the domicile may also be maintained in the form of a "c/o address" with a domicile holder. In this case, a corresponding declaration of the domicile holder must be submitted to the commercial register.
The tasks to be performed by the domicile holder shall be contractually agreed between the company and the domicile holder. This usually involves administrative work such as mail processing and telephone service, the receipt of court documents and the storage of business-related documents.
If the domicile holder moves away from the registered address or cancels the company's domicile, a new domicile must be entered in the commercial register. If the domicile holder breaches its contractual obligations towards the company, this may give rise to a liability to pay damages. However, the consequences under company law of the lack of domicile affect the company directly.
Lack of domicile as an organizational defect
If post can no longer be delivered to the registered address or if the domicile holder cancels the company's domicile without registering a new domicile, this constitutes an organizational defect. If the organizational defect is not remedied within the applicable set time limit, this ultimately leads to the court-ordered dissolution of the company.
Although the lack of domicile is an administrative defect and there is no requirement concerning the company being overindebted or insolvent, the court-ordered dissolution ultimately results in the company's bankruptcy. Existing assets are sold to cover procedural costs and creditors' claims and the company is deleted from the commercial register.
Extension and restoration of deadlines
If current deadlines for remedying an organizational defect cannot be met or have already expired without compliance by the company, an extension or restoration of the deadline may be requested. For this purpose, a substantiated request must be submitted to the competent commerical register office or court.
The requirements for the restoration of an expired deadline are stricter compared to the extension. The defaulting party must explain why it was not possible to meet the deadline and why it is not at fault or, at most negligent to a minor extent for missing it.
The request must be submitted within ten days of the reason for the delay ceasing to exist. In most cases, an imminent bankruptcy can still be prevented by restoring the deadline if the company concerned did not become aware of the organizational defect or only became aware of it late, for example because the domicile holder breached its contractual obligations.