Selling a GmbH with Debt - How Does It Work?
This article explains how to sell a GmbH with debt, how to prepare, and which risks you need to consider.
Selling a GmbH with Debt – How Does It Work?
This article shows how you can sell a GmbH with debt, how to prepare, and which risks you need to consider.
Tags: Selling, GmbH
Selling a GmbH burdened with debt presents a complex challenge for many entrepreneurs but simultaneously offers an alternative to insolvency and a chance for a fresh economic start. In the current economic climate of 2025, the possibilities and legal frameworks for selling an over-indebted GmbH have evolved further. This comprehensive guide illuminates all relevant aspects of the sales process, from legal feasibility and tax consequences to practical strategies for value optimization prior to the sale. With well-founded knowledge and targeted preparation, even a GmbH with debt can be successfully sold, opening new economic opportunities for both sellers and potential buyers.
The Starting Point: What Does a GmbH with Debt Mean?
Definition and Legal Classification of Over-Indebtedness
A GmbH is considered over-indebted when its liabilities exceed its available assets. In this state, the company can no longer fully meet its financial obligations from its own resources. This is a balance sheet over-indebtedness, which must be legally distinguished from insolvency, although both conditions often occur simultaneously. Balance sheet over-indebtedness is reflected in the balance sheet by negative equity—a clear warning signal for managing directors, shareholders, and potential buyers[1].
Causes and Frequency of Corporate Over-Indebtedness
The reasons for a GmbH’s over-indebtedness are diverse, ranging from economic fluctuations and management errors to industry-specific crises. In Germany, numerous companies continuously find themselves in this precarious situation. Small and medium-sized enterprises (SMEs) are particularly affected, as they typically have fewer financial reserves. The COVID-19 pandemic and its economic aftermath have further intensified this issue, pushing many previously healthy companies into distress[1].
Legal Obligations of the Managing Director
Managing directors of an over-indebted GmbH face special duties. They must immediately notify the shareholders of the over-indebtedness and, in the event of imminent insolvency, file for insolvency within the statutory deadline. Delays can lead to personal liability. These legal obligations increase the pressure to act and make selling an attractive option to protect both the company and the managing director’s personal financial existence[1][4].
Fundamental Feasibility: Can a GmbH with Debt Be Sold?
Legal Foundations and Requirements
In principle, selling a GmbH with debt is legally possible and represents a practical alternative to insolvency for many entrepreneurs. However, certain conditions must be met: there must be no arrears in social security contributions, as these can have criminal consequences. Additionally, the GmbH must not yet be insolvent, meaning its liabilities must theoretically still be coverable by its assets. The legal framework for the sale is anchored in the GmbH Act and the Commercial Code and often requires the consent of all shareholders[1].
Limits to the Possibility of Sale
The possibility of a sale reaches its limits when over-indebtedness has already reached a critical level or when insolvency grounds are present. In such cases, the managing director may be obliged to file for insolvency, which significantly complicates or even prevents a regular sale. Ongoing legal disputes, unresolved liability issues, or substantial tax arrears can also complicate or block the sales process[1][4].
The Role of Creditors in the Sales Process
Creditors play a decisive role in the sale of a GmbH with debt. Their consent may be required, especially if securities are involved or if debts are to be restructured as part of the sale. Transparent communication with creditors is therefore essential. In practice, creditors are often cooperative if the sale promises a higher repayment rate than insolvency would. Nevertheless, there is always the risk that individual creditors may block the sales process[1].
Strategic Considerations: Why Sell a GmbH with Debt?
Financial Relief and Personal Protection
Selling a GmbH with debt offers entrepreneurs the opportunity for comprehensive financial relief. Through the sale, shareholders can exit existing financial obligations and minimize personal liability risks. This is particularly relevant if personal guarantees or other securities exist for business loans. Financial relief enables former owners to reorient economically and invest in new projects without the burden of legacy liabilities[1].
Avoidance of Insolvency Proceedings
A significant advantage of selling over insolvency lies in avoiding formal and often lengthy insolvency proceedings. Insolvency processes are not only time- and cost-intensive but often result in a lower satisfaction rate for creditors. Moreover, selling offers the possibility to preserve the company as a whole, whereas insolvency often leads to dismantling. Maintaining business continuity is also in the interest of employees, customers, and suppliers[1][4].
Reputation Protection and Professional Future
Selling a GmbH with debt can also serve to protect personal and professional reputation. Insolvency is often perceived as entrepreneurial failure and can have long-term negative effects on one’s career. Banks and business partners frequently react cautiously to individuals with insolvency history. An orderly sale, on the other hand, can be interpreted as responsible conduct and improve prospects for future entrepreneurial activities. In today’s interconnected business world, reputation protection is a factor not to be underestimated[1].
Sales Options and Strategic Approaches
Complete Sale of GmbH Shares (Share Deal)
The complete sale of all GmbH shares, also known as a share deal, represents the classic form of business transfer. Here, all company shares are transferred to a new owner. The advantage lies in the simplicity of the transaction, as the company remains a legal entity and all contracts, permits, and licenses can generally continue. For the buyer, however, this also means assuming all liabilities. In a GmbH with debt, this often leads to price reductions or special contractual arrangements such as warranty exclusions or indemnity clauses[2].
Partial Sale of Company Shares or Business Units
An alternative strategy is the partial sale of company shares or individual business units. This approach allows viable business areas to be preserved while using the sale proceeds to reduce debt. For many companies, this represents a practical intermediate solution, saving valuable parts of the business while problematic areas are divested or restructured. A partial sale requires careful legal and organizational preparation, especially if business units must be separated[1].
Merger or Strategic Acquisition
Mergers or strategic acquisitions offer another option for GmbHs with debt. Here, the company is merged with or acquired by another market participant. The advantage lies in potential synergies arising from combining both companies. For the buyer, acquiring a GmbH with debt can be attractive if it provides access to customer bases, technologies, patents, or market shares. In such cases, the debt may recede into the background compared to strategic value. However, such a transaction requires particularly comprehensive due diligence and detailed contractual arrangements[1].
Management Buy-Out (MBO) as an Internal Solution
A management buy-out (MBO), where the existing management team acquires the company shares, presents an interesting alternative for GmbHs with debt. The management knows the company and its potential best and can realistically assess the risks of assuming debt. Moreover, an MBO allows for a quick and discreet process since no external buyer search is necessary. The challenge often lies in financing, as managers rarely have sufficient own funds, and borrowing is more difficult for a GmbH with debt. Special MBO financing models or support from private equity investors can help here[1].
Measures to Optimize Value Before the Sale
Debt Consolidation and Refinancing Strategies
Targeted debt consolidation can significantly increase a GmbH’s attractiveness to potential buyers. By combining various liabilities and refinancing them on more favorable terms, monthly burdens can be reduced and the balance sheet structure optimized. In practice, negotiating with existing lenders has proven an effective first step. Many banks are willing to extend terms or adjust interest rates if this increases the likelihood of repaying the principal. Converting short-term liabilities into long-term ones can also improve liquidity and strengthen the negotiating position in sales discussions[1].
Cost Reduction and Operational Efficiency Improvement
Sustainable cost reduction and efficiency improvements in operations signal to potential buyers that the company is viable despite debts. Systematic review of all cost positions, optimization of business processes, and targeted rationalization of unprofitable business areas can improve operating results in the short term. Particularly effective are measures to reduce working capital, such as improved inventory management or optimized receivables management. The resulting release of tied-up capital can be directly used to reduce debt and positively influence balance sheet ratios[1].
Negotiations with Creditors and Debt Settlement
Active negotiations with creditors can lead to significant relief and are an essential part of sales preparation. In many cases, creditors are willing to make concessions if offered a realistic alternative to total write-off in insolvency. Possible negotiation outcomes include deferral agreements, partial debt forgiveness, or conversion of debt into equity. Especially in long-term business relationships, there is often room for negotiation. Open communication with creditors about the current situation and planned sale can increase their willingness to cooperate and lead to constructive solutions[1].
Revenue Optimization and Focus on Core Competencies
In addition to cost reduction, revenue optimization is a crucial lever for increasing value before the sale. Focusing on high-margin products and services as well as identifying and exploiting price increase potential can improve earnings in the short term. At the same time, a clear focus on the company’s core competencies should be maintained to present potential buyers with a coherent business model. Cleaning up the product portfolio by eliminating peripheral lines and securing long-term customer relationships through appropriate contracts increase planning security and thus company value. A well-thought-out marketing strategy can also help boost sales and strengthen the company’s financial foundation[3].
The Sales Process in Detail
Company Analysis and Valuation
The first step in the sales process is a comprehensive company analysis and realistic valuation. This must take into account the special circumstances of a GmbH with debt. While healthy companies often use multiplier methods or income approaches, alternative valuation methods are necessary for over-indebted companies. Here, asset value, existing customer relationships, intangible assets such as patents or brands, and restructuring potential play a larger role. A professional valuation by auditors or specialized consultants creates transparency and forms the basis for realistic price expectations[2].
Identification of Potential Buyers and Initial Contact
Finding suitable buyers for a GmbH with debt requires a targeted strategy. Unlike debt-free companies, specialized investors, competitors with consolidation interests, or restructuring experts are often the relevant parties. They must be approached discreetly and professionally to avoid destabilizing the company. It is crucial to maintain uninterrupted operational business during the sales process to prevent a downward spiral. Preparing a compelling sales prospectus that transparently presents opportunities and risks facilitates contacting potential buyers and accelerates the sales process[2].
Due Diligence Process and Transparency Requirements
The due diligence process poses special demands on all parties involved when dealing with indebted companies. Buyers will scrutinize all financial, legal, and operational aspects intensively to uncover hidden risks. Complete transparency is essential, as problems discovered later can jeopardize the entire sales process. Preparing a virtual or physical data room with all relevant company documents facilitates the review. Critical documents include complete annual financial statements, current business evaluations, a detailed overview of all liabilities, and all essential contracts[2].
Contract Drafting and Legal Safeguards
Contract drafting in the sale of a GmbH with debt requires particular care and legal expertise. Key elements include regulations on debt assumption, liability issues, and warranty exclusions. Purchase price adjustment clauses are often agreed upon, allowing for subsequent corrections if the financial situation differs from assumptions. Escrow accounts or trust arrangements can provide additional security for both parties. Involving specialized lawyers is indispensable at this stage to minimize risks and ensure a legally secure transaction. Notarial certification is mandatory for the effective transfer of shares[2].
Tax and Legal Aspects of the Sale
Tax Treatment of the Capital Gain
The tax treatment of the capital gain from the sale of a GmbH with debt is a complex subject with significant financial implications. Generally, the capital gain—the difference between the sale price and the book value of the shares—is subject to taxation. For individual sellers, Germany’s partial income procedure applies, whereby 40% of the gain is tax-exempt, and 60% is taxed at the personal income tax rate. For corporate sellers, a corporate tax rate of 15% plus solidarity surcharge applies. Various structuring options, such as spreading the capital gain over several years or using exemptions, can optimize the tax burden[2].
Differences Between Share Deal and Asset Deal
Choosing between a share deal and an asset deal is fundamental in selling a GmbH with debt. In a share deal, company shares are transferred, whereas in an asset deal, individual assets are sold. From the seller’s perspective, the share deal often offers tax advantages and simpler execution. However, the buyer assumes all liabilities and latent risks. The asset deal allows the buyer to selectively acquire assets without legacy burdens but often results in higher tax burdens due to the realization of hidden reserves. For an over-indebted GmbH, the asset deal can be more attractive as it enables targeted acquisition of valuable business parts without overall liabilities[2].
Liability Risks and Their Mitigation
Selling a GmbH with debt involves specific liability risks that must be addressed through appropriate contractual provisions. A central risk is the managing director’s personal liability for delayed insolvency filing or payments after insolvency grounds arise. Shareholders can also be held liable under certain circumstances, for example, with equity-replacing loans or piercing the corporate veil. The purchase agreement should therefore include comprehensive indemnity clauses, guarantees, and warranty provisions. Additional protection is offered by warranties & indemnities insurance, which has become affordable for mid-sized transactions in recent years[2].
Corporate Law Requirements and Consent Obligations
Corporate law aspects play a decisive role in selling a GmbH with debt. Depending on the articles of association, share transfers may require the consent of other shareholders. Pre-emption rights or other transfer restrictions can complicate the sales process. Creditor consent may also be necessary, especially if loan agreements contain change-of-control clauses. For larger transactions, antitrust aspects must be considered. Early review of the articles of association and all relevant agreements is therefore essential to ensure a smooth sales process[2].
Practical Execution and Success Strategies
Professional Support for the Sales Process
Successfully selling a GmbH with debt usually requires professional support. Specialized M&A advisors, auditors, tax consultants, and lawyers form an interdisciplinary team capable of competently managing all aspects of the sales process. They have the necessary expertise and experience to handle critical situations and achieve optimal results. Particularly valuable is involving advisors with industry knowledge and a network of potential buyers. Investing in professional advice typically pays off through a higher sale price, faster execution, and reduced renegotiation risks[2][4].
Communication Strategies with Stakeholders
A well-thought-out communication strategy is crucial for successfully selling a GmbH with debt. Employees, customers, suppliers, and other stakeholders should be informed at the right time and in an appropriate manner. Premature or uncoordinated communication can cause uncertainty and reduce company value. A coordinated communication plan defines who receives which information when. It is important to emphasize the positive aspects of the sale, such as securing jobs or improved future prospects through a financially strong investor. Absolute confidentiality in the early sales phase is essential to protect business relationships[2][4].
Negotiation Techniques and Closing Tactics
Negotiating the sale of a GmbH with debt requires particular skill and experience. It is important to approach multiple potential buyers in parallel to create competition and strengthen the negotiating position. Preparing a fallback option, such as an alternative restructuring plan, increases flexibility in critical negotiation phases. When defining deal breakers—non-negotiable points—a realistic assessment of which demands are enforceable given the company’s situation is essential. Transparent disclosure of company debts from the outset prevents later surprises and builds trust. Final contract negotiations should ideally be accompanied by experienced negotiation experts[2][4].
Post-Sale Obligations and Transition Management
After a successful sale, the equally important transition management phase begins. Sellers are often engaged as consultants or managing directors for a defined period to ensure a smooth handover. Contractual arrangements for post-closing cooperation should clearly define tasks, responsibilities, and compensation. Fulfilling post-sale obligations, such as providing documents or assisting with regulatory approvals, must be diligently implemented. Careful knowledge transfer secures valuable know-how and facilitates the buyer’s takeover of operations. Finally, tax and legal aftercare obligations should be contractually fixed[2].
Alternatives to a Complete Sale
Restructuring and Reorganization as an Option
Before pursuing a sale, entrepreneurs should thoroughly consider restructuring and reorganization options. Since 2021, the Corporate Stabilization and Restructuring Act (StaRUG) provides a flexible instrument facilitating out-of-court restructuring. Successful restructuring can significantly enhance the company’s attractiveness for a later sale or even make it unnecessary. Key elements include optimizing operations, renegotiating contracts with suppliers and customers, and restructuring liabilities. Specialized restructuring consultants can professionally support this process and have experience negotiating with creditors[1][4].
Insolvency as a Strategic Alternative
Insolvency should not only be seen as failure but can, under certain circumstances, represent a strategic alternative to selling. Particularly, insolvency plan proceedings or self-administration offer opportunities to restructure the company and benefit from partial debt relief. Advantages of insolvency include a legally regulated structure, the possibility to terminate unfavorable contracts, and protection from individual enforcement measures. However, disadvantages such as reputational damage, loss of control, and potential personal liability risks for managing directors must also be considered. Early consultation with insolvency experts can help determine the best course of action[1][4].
Hybrid Solutions and Creative Models
Between complete sale and insolvency, numerous hybrid solutions exist that can be advantageous depending on the individual company situation. Examples include sales with simultaneous seller participation (vendor participation), earn-out-based sales models, or spinning off valuable business units into a new company (good company/bad company model). Establishing a bridge company that acquires key assets from insolvency can also be a practical solution. These creative models require close coordination among corporate, tax, and insolvency law experts to be implemented legally[1][4].
Partial Sale of Shares and Strategic Partnerships
As an alternative to a complete sale, a partial sale of shares can be considered, where only part of the company shares are transferred. This allows fresh capital inflow while the previous owner remains involved. Strategic partnerships or joint ventures can also improve the financial situation without relinquishing full control. Cooperation with suppliers, customers, or complementary companies can create synergies and strengthen competitive position. Clear contractual arrangements on decision-making authority, profit distribution, and exit scenarios are essential to avoid future conflicts[2].
Conclusion: Opportunities and Risks in Selling a GmbH with Debt
Selling a GmbH with debt is a complex entrepreneurial challenge but offers significant opportunities for all parties when professionally executed. For the seller, a successful sale means relief from financial burdens and personal liability risks as well as the chance for a fresh start. Buyers can benefit from favorable entry conditions and untapped potential if they properly assess and manage risks. Creditors often receive a better satisfaction rate than in insolvency, and employees retain their jobs in a viable environment[1][4].
Successful sale of a GmbH with debt requires careful preparation, realistic expectations, and support from experienced specialists. The

Christopher Heckel
Co-Founder & CTO
Christopher has led the digital transformation of financial solutions for SMEs as CTO of SME financier Creditshelf. viaductus was founded with the goal of helping people achieve their financial goals with technology for corporate acquisitions and sales.
About the author

Christopher Heckel
Co-Founder & CTO