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I now have a German GmbH and had a UK Ltd in the past for 10 years. Definitely there is more seriousness/trustworthiness to a GmbH. I am not sure there are "co

I now have a German GmbH and had a UK Ltd in the past for 10 years. Definitely there is more seriousness/trustworthiness to a GmbH. I am not sure there are "countless" scams in the UK, but yes, in 10 years of commercial operation did come across a few oddities. Example - a customer (UK Ltd) who declared bankruptcy owing us a money and then then next day founded a new Ltd company and tried to act like he didn't owe us the money because it was a new entity. See https://en.wikipedia.org/wiki/Pre-packaged_insolvency https://en.wikipedia.org/wiki/Pre-packaged_insolvency I have not come across this kind of thing in Germany.

rrr_oh_man 2y ago
> I have not come across this kind of thing in Germany. Oh, it does exist :)
- freyfogle 2y ago
  Obviously there is fraud everywhere. Still, I have a higher level of basic trust when dealing with a GmbH than someone who created their Ltd Co 3 hours ago. It's just a sign they are a more serious/stable business counter party to deal with.
- RamblingCTO 2y ago
  Yeah! Especially rampant is reusing names of closed GmbHs, reopening them, sending out invoices and stuff like that. Or spamming newly created GmbHs with phantasy invoices. Or the scam that's called Abmahnung by lawyers. There's plenty in Germany, so don't be fooled.
ProjectArcturis 2y ago
> a customer (UK Ltd) who declared bankruptcy owing us a money and then then next day founded a new Ltd company and tried to act like he didn't owe us the money because it was a new entity. That is... how bankruptcy works? He literally didn't owe you money anymore. Obviously you shouldn't extend his new company credit, but extinguishing old debts is the exact purpose of bankruptcy.
- theshrike79 2y ago
  I think the idea here is that you can't just "declare bankruptcy" in Germany, it's a Process with checks and balances.
  - denotational 2y ago
    It’s a process in the UK too, abuse of which could lead to the courts imposing sanctions ranging from barring the directors from company directorship all the way to piercing the corporate veil and holding directors liable for the company’s debts. Corporate insolvency requires an “insolvency practitioner” to be appointed by the directors; this is a regulated profession, and this ensures that the company is wound up according to the regulations and statutes. You cannot just “declare bankruptcy” in the UK either.
  - redrove 2y ago
    Your comment is a bit tongue in cheek: it’s a process with checks and balances everywhere in the developed world, and scams aren’t common at all. You’re insinuating that due to the bureaucracy Germany is somehow better at this; it is not, it’s just more inefficient.
  - throw__away7391 2y ago
    The US concept of bankruptcy is basically unimaginable in most (all?) of Europe. There's an old movie, The Edukators, where one of the protagonist is effectively broke and working a low wage job but has spent years already and has many years more left to pay off a debt she incurred by accidentally crashing into an expensive car without insurance. This situation is basically impossible in the US where the term "uncollectible" is used to describe such debts.
    - Valodim 2y ago
      I don't know about other countries, but in Germany there is Privatinsolvenz which is a personal bankruptcy that would resolve this exact scenario. Of course it would first be covered by mandatory insurance you have to have when driving a car (if you're not legally allowed to drive a car, well, you're on your own)
denotational 2y ago
How does the involvement of a notary at the time of formation reduce the risk of the company going bankrupt? Is the notary able to model creditworthiness (i.e. they’re acting as a rating agency), or do they just sniff out “undesirables” by some ad hoc, unregulated process involving their personal judgement, or is it something else entirely?
csomar 2y ago
> Example - a customer (UK Ltd) who declared bankruptcy owing us a money and then then next day founded a new Ltd company and tried to act like he didn't owe us the money because it was a new entity. Depends. This can be illegal and he is personally liable for the amount. That being said, he might have done things by the book and his previous venture is bankrupted.

rrr_oh_man 2y ago

> I have not come across this kind of thing in Germany. Oh, it does exist :)

freyfogle 2y ago
Obviously there is fraud everywhere. Still, I have a higher level of basic trust when dealing with a GmbH than someone who created their Ltd Co 3 hours ago. It's just a sign they are a more serious/stable business counter party to deal with.
RamblingCTO 2y ago
Yeah! Especially rampant is reusing names of closed GmbHs, reopening them, sending out invoices and stuff like that. Or spamming newly created GmbHs with phantasy invoices. Or the scam that's called Abmahnung by lawyers. There's plenty in Germany, so don't be fooled.

ProjectArcturis 2y ago

> a customer (UK Ltd) who declared bankruptcy owing us a money and then then next day founded a new Ltd company and tried to act like he didn't owe us the money because it was a new entity. That is... how bankruptcy works? He literally didn't owe you money anymore. Obviously you shouldn't extend his new company credit, but extinguishing old debts is the exact purpose of bankruptcy.

theshrike79 2y ago
I think the idea here is that you can't just "declare bankruptcy" in Germany, it's a Process with checks and balances.
- denotational 2y ago
  It’s a process in the UK too, abuse of which could lead to the courts imposing sanctions ranging from barring the directors from company directorship all the way to piercing the corporate veil and holding directors liable for the company’s debts. Corporate insolvency requires an “insolvency practitioner” to be appointed by the directors; this is a regulated profession, and this ensures that the company is wound up according to the regulations and statutes. You cannot just “declare bankruptcy” in the UK either.
- redrove 2y ago
  Your comment is a bit tongue in cheek: it’s a process with checks and balances everywhere in the developed world, and scams aren’t common at all. You’re insinuating that due to the bureaucracy Germany is somehow better at this; it is not, it’s just more inefficient.
- throw__away7391 2y ago
  The US concept of bankruptcy is basically unimaginable in most (all?) of Europe. There's an old movie, The Edukators, where one of the protagonist is effectively broke and working a low wage job but has spent years already and has many years more left to pay off a debt she incurred by accidentally crashing into an expensive car without insurance. This situation is basically impossible in the US where the term "uncollectible" is used to describe such debts.
  - Valodim 2y ago
    I don't know about other countries, but in Germany there is Privatinsolvenz which is a personal bankruptcy that would resolve this exact scenario. Of course it would first be covered by mandatory insurance you have to have when driving a car (if you're not legally allowed to drive a car, well, you're on your own)

denotational 2y ago

How does the involvement of a notary at the time of formation reduce the risk of the company going bankrupt? Is the notary able to model creditworthiness (i.e. they’re acting as a rating agency), or do they just sniff out “undesirables” by some ad hoc, unregulated process involving their personal judgement, or is it something else entirely?

csomar 2y ago

> Example - a customer (UK Ltd) who declared bankruptcy owing us a money and then then next day founded a new Ltd company and tried to act like he didn't owe us the money because it was a new entity. Depends. This can be illegal and he is personally liable for the amount. That being said, he might have done things by the book and his previous venture is bankrupted.