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.
For a GmbH and other limited liability companiee there are minimum equity requirements instead.
For corporations there's an entire process but in simple terms the company is handed over to an externally appointed handler who tries to generate liquidity by selling off all assets and contacting all debtors and creditors. The company might recover through the process (e.g. by finding an investor) but legally the corporation is frozen and substituted by a separate corporation that only exists to resolve its bankruptcy. If the corporation no longer has any assets, it can also be fast-tracked for being dissolved.
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.
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.
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)
You’re insinuating that due to the bureaucracy Germany is somehow better at this; it is not, it’s just more inefficient.