What happens if the client is insolvent and there are outstanding payments; for example, a fee has yet to be paid?
If a company declares bankruptcy, it must first be determined whether insolvency proceedings can be initiated. If this is not the case, one must assume that the fee is lost. If insolvency proceedings are indeed initiated, a debt-reduction schedule can be negotiated with the liquidator, which specifies what percentage of their open claims each creditor will receive. If no such plan is implemented and the company is sold, the sales proceeds will ideally be higher than the costs of the insolvency proceedings. If this is the case, the remainder can be distributed among the creditors based on a fixed percentage. In many cases, however, this is not economical.
In this context, it is important to note that if a company has filed for bankruptcy, it is considered insolvent and can no longer settle invoices. Even reminders or complaints will no longer be effective in such cases. If the company does pay individual creditors despite this, the liquidator can reclaim the money.
The German Insolvency Code is available here.
Handout by Martin Fritz for the workshop 'Abgemacht! Verträge und andere Vereinbarungen', organised by IG Bildende Kunst Vienna,April 6, 2016.
Handout as pdf in German language.
If artists or creatives are tasked with calculating a price for a performance or work, they are often left to consider the matter alone. Having to balance one’s own requirements and the assumptions of the client makes it hard to make an offer for one’s own work.
The Ratgeber Selbstständige published by mediafon GmbH (in German language), for example, provides some useful pointers on how to deal with these questions.
In Germany, there are a number of intra-industry publications that provide some hints as well as a basis for argumentation as to what constitutes an appropriate fee in a certain situation.