The liability regime under Section 64 sentence 1 GmbHG and Sections 92 para. 2, 93 para. 3 Nr. 6 AktG for payments made after the company’s insolvency imposes severe personal liability risk on the management of limited liability companies and stock corporations. This does not only apply to the management of German limited liability companies (“GmbH”) and stock corporations (“AG”) but also to companies incorporated under foreign law that have their centre of main interest in Germany, as the European Court of Justice has decided just recently.

Legal background

Under German criminal law, it is illegal for the management not to fulfil tax obligations when due, whereas under German insolvency law a company must treat all creditors equally when the company is illiquid. By paying taxes after the company becomes illiquid, the management would violate this obligation and prefer the state.

The German Government proposes amendments to the German insolvency Act (‘InsO’), which will limit the insolvency administrator’s rescission rights, especially his claims under s. 133 para 1 InsO.

Current Law

Overview

In November 2015, the German legislator passed the Resolution Mechanism Act (Abwicklungsmechanismusgesetz, AbwMechG). The law introduces, among other things, Section 46f (5) et seqq. of the German Banking Act (Kreditwesengesetz, KWG), which requires that claims under certain unsecured debt instruments be subordinated to general senior unsecured obligations in an insolvency proceeding involving a German bank.

On March 3 2015 the Hamburg Local Court (67a IN 400/14) expressly contradicted the Bremen Regional Court's August 14 2011 decision (2 T 435/11) regarding whether vessels are protected from arrest during preliminary insolvency proceedings (for further details please see "Are vessels protected from arrest du

In a judgment dated 26 / 03 / 2015, ref. no. IX ZR 302 / 13, the Federal Court of Justice (BGH) held that a provisional insolvency administrator is personally liable for monies paid into the escrow account in the event of claims of unjust enrichment being made due to the payments having no proper basis in law.

The ruling related to the following situation:

Mit Urteil vom 26. März 2015, AZ IX ZR 302 / 13, entschied der BGH, dass ein vorläufiger Insolvenzver- walter für Zahlungen auf das Voll- rechtstreuhandkonto persönlich haf- tet, wenn Bereicherungsansprüche wegen rechtsgrundloser Zahlungen geltend gemacht werden.

Dieser Entscheidung lag folgender Sachverhalt zu Grunde:

Stillhalten oder Einfordern?

A key objective of the current German coalition government is the reform of the clawback provisions in the German Insolvency Code (Insolvenzordnung – InsO). To address this, the German Federal Ministry of Justice and Consumer Protection recently published a draft bill for discussion. The German government is expected to remain in office until 2017, making it highly likely that this reform will become law, in the course of 2015-2016.

Background and objective of the reform

Minor instalment payments alone – also in the event of late payments – may not be sufficient to trigger knowledge of the debtor’s imminent illiquidity within the meaning of section 133 German Insolvency Act

Overview