The German Federal Court of Justice (Bundesgerichtshof) recently decided that an insolvency administrator must not rely on the business judgment rule laid down in section 93(1) of the German Companies Act. Section 93(1) provides that a director is not liable to the company if the director reasonably believes that he is well-informed and is acting in the best interests of the company.
The German Federal Court of Justice (Bundesgerichtshof) gave a decision on international jurisdiction that sheds light on the importance of the new presumptions in article 3 of (recast) Regulation (EU) 2015/848.
On 14 November 2018, the Court of Justice of the European Union issued a judgment on jurisdiction for avoidance actions under the previous Insolvency Regulation.
In its decision of 12 February 2009, the Court had already established that the courts of the Member State with jurisdiction to open insolvency proceedings are competent for all the actions directly related to the insolvency.
The German Federal Court of Justice has tightened its grip on company directors again. In a recent judgment on directors’ liability in insolvency situations, the Court clarified the scope of sections 60- 61 of the German Insolvency Act.
In a recent judgment, the German Federal Court of Justice (Bundesgerichtshof) took the opportunity to clarify its position on sec. 17(2) German Insolvency Act (Insolvenzordnung, InsO). According to sec. 17(2) InsO a debtor is deemed insolvent if he is unable to pay his debts as they fall due (Zahlungsunfähigkeit).
In a recent judgment on directors’ liability, the Higher Regional Court of Düsseldorf (Oberlandesgericht Düsseldorf) held that startup companies are not deemed to be overindebted if they are receiving adequate finance from their shareholders or third parties.
Background
In a recent judgment on directors’ liability (Bundesgerichtshof, 18 November 2020, IV ZR 217/19), the German Federal Court of Justice (Bundesgerichtshof) has clarified the scope of D&O insurance coverage, holding that company directors are entitled to its protection.
Background