Continued existence prognosis / Going concern forecast

The continued existence prognosis for purposes of insolvency law and the commercial going concern forecast have different purposes and are organised differently. The preparation of an integrated business plan is the fundamental requirement for both of them.

Continued existence prognosis: Under § 19 (2) German Insolvency Ordinance (Insolvenzordnung – InsO), statutory representatives are required to submit an insolvency petition as soon as corporate assets no longer cover existing liabilities – unless the continued existence of the company is highly likely under the circumstances.

A prognosis of continued existence under the laws of insolvency must be prepared in order to evaluate the ability to continue as a going concern. This is a liquidity prognosis and must indicate whether the company is able to satisfy its payment obligations which fall due during the current and subsequent financial year or whether insolvency is imminent. A positive opinion may be given if planned cash inflows have a high degree of probability of covering planned cash outflows.

Going concern forecast: Based on the legal presumption of a going concern contained in § 252 (1) sent. 2 German Commercial Code (HGB) (“going concern principle”), it is to be presumed that if a company generates sustainable profits it will be able to access funds without issue, that there is no impending overindebtedness and the company intends to continue as a going concern.

This assumption must be called into question if these criteria are not satisfied or if risks to continued existence are apparent. In such cases, the statutory representatives are required to quantify circumstances expected to occur and their effects in the form of a business plan.

A positive going concern forecast under the commercial code may be provided if the insolvency triggers illiquidity and overindebtedness do not materialise within the planning period (at least 12 months) and illiquidity is likewise not impending.

Our services

  • Preparation of integrated business plans for going concern forecasts and continued existence prognoses comprised of forecast P&L, forecast balance sheet and forecast cash flow statement
  • Preparation of going concern forecasts and continued existence prognoses
  • Plausibility reviews of existing going concern forecasts and continued existence prognoses

Benefits to you

  • Work performed by auditors as well as business and valuation professionals with a wealth of experience
  • On-time delivery of opinions – even in cases where deadlines are short
  • In-depth experience with procedural steps and requirements