Vol 15 (2018) - Issue 2

Article preview

Liability Claims against Managing Directors Pursuant to Sec. 64 Sentence 1 of the German Limited Liability Companies Act

Introduction

German insolvency proceedings aim for the upmost satisfaction of all creditors. This goal can only be achieved through the preservation of the debtor’s (insolvency) estate prior to the initiation of insolvency proceedings. Thus, in order to ensure that the debtor’s (insolvency) estate is maintained, sec. 64 sentence 1 of the German Limited Liability Companies Act ('GmbHG') provides a limited liability company ('GmbH') with the right to make a liability claim against its managing director(s) for payments made after the company has become illiquid (zahlungsunfähig) and/or over-indebted (überschuldet). Such liability claims are often initiated by insolvency administrators against the managing director(s) after the opening of insolvency proceedings and can – in a worst case scenario – result in financial disaster for the former managing director(s).