The start of the 2026 fiscal year marks a moment of truth for many companies, as the previous year’s financial statements are finalized and strategic planning for the coming quarters is finalized. This phase often reveals a significant obstacle to operational growth: capital tied up in the form of provisions for uncertain liabilities. Legal disputes are often perceived as unavoidable “background noise” in traditional business management. However, a modern, consensus-based legal strategy transforms these passive burdens into active liquidity.
Dead capital: provisions as a brake on the balance sheet
According to generally accepted accounting principles, in particular Section 249 of the German Commercial Code (HGB), companies are required to set aside provisions for impending losses from pending transactions and uncertain liabilities. Every ongoing legal proceeding forces the finance department to block capital in the amount of the anticipated risk.
This capital is not available to the company for investment, research, or market expansion. It is “dead capital” that weighs on the equity ratio and can have a negative impact on credit ratings. The longer a case lasts in the state courts—and proceedings lasting several years across various instances are not uncommon in commercial law—the longer this burden on the balance sheet remains.
The exemption: consensus as an accounting instrument
The strategic inventory serves as the basis for balance sheet relief. Instead of passively awaiting the outcome of proceedings, the involvement of a state-recognized conciliation body allows for active control of the time frame.
As soon as a legal dispute is settled by a compromise, the reason for the provision no longer applies. The reversal of this provision has an immediate positive effect on the operating result. An abstract amount in dispute is converted back into liquid funds. This transformation is not an accounting trick, but the result of efficient risk minimization. State recognition of the procedure also ensures that the settlement is legally secure and enforceable, which immediately restores economic planning security.
From dispute value to liquidity value: a reassessment
The “amount in dispute” is a legal measure that defines the risk and burdens or ties up liquidity. The strategic advantage of the conciliation procedure lies in massively reducing the time span between these two values.
An example from our practice: Two companies are in dispute over mutual (warranty) claims amounting to €500,000. With proceedings before state courts expected to last three years, this amount (plus legal costs) must be taken into account in the balance sheet for the entire period. If a settlement is reached in the first quarter through structured conciliation proceedings, these funds, less any settlement payment, are immediately returned to cash flow. In a high-interest environment or during periods of necessary investment, the present value of this gained liquidity can far outweigh the nominal outcome of the legal dispute.
Strategic course set in the first quarter
The use of out-of-court dispute resolution is therefore much more than an act of harmony. It is a tough business decision aimed at optimizing the balance sheet structure. Companies that instruct their legal departments and external advisors to consistently review cases for their suitability for out-of-court dispute resolution secure a competitive advantage.
The balance sheet relief provided by legal peace creates the necessary leeway to achieve the goals set for 2026. While the competition remains stuck in procedural dead ends, forward-looking players are already using their freed-up liquidity for the next market move. The focus is shifting away from managing the past to shaping the future.
