Insolvenzrechtsreform und dieTheorie der Unternehmensfinanzierung

The newly established German insolvency law has become effective since January 1st,1999. At first, we outline the objectives followed up by the legislator with this insolvency law reform,the general measures taken to these ends, and the degree of practical goal achievement which has beenrealized up to now. Among other things, “illiquidity” and “excessive debt” as alternative conditionsfor insolvency have been redefined. We examine more precisely the welfare-theoretical consequencesof these alterations on the basis of the different functions of debt financing and find that the tightenednotion of debt being not “excessive” improves signaling possibilities while higher requirements re-garding a firm’s liquidity make it more difficult to avoid “unintended” insolvency.