Under German law, licensed IP rights fall into the insolvency estate.

The insolvency administrator (or, in case of debtor-in-possession proceedings, the management of the debtor) is in a position to decide on the fate of the license based on the right to choose whether the contractual relationship should be fulfilled or terminated. If the insolvency administrator choses fulfillment, the obligations under the license have to be fulfilled by both parties. If the administrator refuses performance, the licensee will only have a damage claim in the rank of an unsecured insolvency claim.

There is one exception; where a license agreement has been "fully performed" by both parties according to German insolvency law, the trustee cannot decide whether the contractual relationship should continue to be fulfilled. However, the assessment of whether the license agreement is therefore insolvency-proof depends on the circumstances of each case.