As weeks of rescue talks between creditors and shareholders came to nothing, KirchMedia – the flagship broadcast rights unit of German media giant Kirch Gruppe – filed for insolvency on Monday, the largest corporate collapse in the nation’s post-war history.

In a particularly black day for media tycoon Leo Kirch, another section of his fiefdom swiftly followed suit, with the revelation that the struggling KirchPayTV unit is also filing for insolvency under its own administration.

Moreover, the media mogul was replaced as head of KirchMedia by a management team appointed by creditor banks. These new bosses will work to restructure the unit alongside a court-nominated administrator.

Unaffected by the filing are Kirch’s stakes in Formula One motor racing and newspaper giant Axel Springer, both held by other companies in the Kirch Gruppe, while television rights for the 2002 and 2006 soccer World Cup finals have been shifted to Swiss division KirchSport.

The collapse of KirchMedia in recent months has prompted fears in Germany of a foreign takeover. Indeed, Rupert Murdoch’s NewsCorp and Silvio Berlusconi’s Mediaset – both minority investors in the rights unit – were set to expand their stakes under failed rescue plans, and may still do so in the restructured company. Other potential investors include AOL Time Warner and Viacom.

However, insolvency adviser and newly appointed co-chief executive Wolfgang van Betteray is insistent that the group’s prime assets will not be sold off. “Let me make very clear our goal is to prevent a carve-up of KirchMedia,” he declared. At the heart of the restructured division is expected to be its majority stake in broadcasting giant ProSiebenSat.1.

Under German law, around €900 million ($789m; £551m) in put options (which give investors the right to sell a fixed number of shares at a fixed price at a given time) agreed by KirchMedia are now no longer valid, while multimillion-euro licensing deals with Hollywood studios also become void.

The task ahead is considerable: van Betteray estimated that a “four digit million euro amount” is needed to keep KirchMedia operating. However, there may be more headaches to come. Taurus Holding, the holding company for the Kirch empire, is also expected to file for bankruptcy in the near future.

Data sourced from: The Wall Street Journal Online; The Times (London); Financial Times; additional content by WARC staff