Personal liability of the managing directors in the insolvency of a German “GmbH”, also applies to the German “AG”

6. Jan 2018 News

In any insolvency proceedings with its German customer, a supplier or creditor always face the problem that they must accept a discount claim that varies from case to case and must be satisfied with a quota on a regular basis. The liabilities of the supplier is therefore often large. In addition, insolvency proceedings in Germany regularly take several years.

However, our experience representing foreing creditors in German insolvency proceedings shows insolvency-impaired creditors have additional and effective means of remedying the damage; for example, the assertion of personal liability of the managing directors or the board of the insolvent German Company (the so-called “GmbH”, “GmbH & Co”, or “AG”, “AG & Co”, etc.) under German tort law for the damage incurred by the creditor may apply.

Our experience with German corporate insolvencies shows a recurring phenomenon, concerning the order of services from suppliers are finally paid during insolvency, where the German Customer, in accordance with the relatively strict provisions of the German insolvency code, should not have ordered such services. In all these cases, the managing directors of the insolvent German company are personally liable to the injured supplier under German law for the compensation of his insolvency-related default damage.

A corresponding final judgment of the Landgericht München I, summed up by us in summer 2017 (legally binding) with facts and reasons can be downloaded as PDF.

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