The Liability of managing directors and board members in a crisis comprises, in particular, liability for delayed filing for insolvency and liability in connection with bankruptcy offenses. As managing director or board member of a company, you are obliged to perform your management duties with the “diligence of a prudent and conscientious businessman” (§ 43 GmbHG, § 93 AktG). The comparison with an average managing director who makes decisions on the basis of adequate information serves as the benchmark for fulfilling your duties.
Relevant guidelines include the provisions of the articles of association, any adopted bylaws, binding instructions of the shareholders’ meeting, and general statutory regulations that must always be taken into account. Should the expertise of a management committee in certain areas be insufficient, the management is expected to seek expert advice from third parties, for example in the areas of taxes and law. If the management fails to fulfill its duties, it is liable to compensate the company for damages. Liability may also be possible in cases of third-party harm caused by the management’s actions.
Managing directors are personally liable for the company’s taxes that were not duly paid and for withheld employee social security contributions. The personal liability of managing directors is in principle unlimited and can reach proportions that threaten their very livelihood. However, there are ways to limit liability contractually or to take out directors’ and officers’ liability insurance, so-called D&O insurance, which covers certain risks.
Stricter liability conditions in times of economic crisis
In economic crises of corporations (AG, GmbH and GmbH & Co. KG), the liability of management is particularly high. Management must always keep an eye on the company’s financial and liquidity situation in order to be able to react to a crisis at an early stage. At the latest when the company becomes insolvent, over-indebted or illiquid, management is obliged to take appropriate countermeasures within the statutory periods of 3 or 6 weeks, respectively, or to file for insolvency.
If the insolvency petition is filed late, the managing director is liable for all payments he made after the company became insolvent that reduced the creditors’ prospects of satisfaction. The insolvency administrator asserts the claim on behalf of the creditors. In addition, the public prosecutor’s office examines and prosecutes delayed filing for insolvency as a so-called bankruptcy offense. In addition to civil liability, delayed filing for insolvency can therefore also result in criminal penalties.
Our services for managing directors and board members:
- Proper management and leadership: We support you in fulfilling your duties as managing director or board member (both in and outside a crisis).
- Liability of managing directors, board members and corporate bodies: We advise you on liability and possible risks in your position.
- Delayed filing for insolvency and liability: We inform you about liability for delayed filing for insolvency and for payments made after the onset of insolvency, and about possible defensive measures.
- Damage to existing and new creditors: We explain the different types of creditor damage to you.
- Insolvency, illiquidity and over-indebtedness: We help you assess your company’s status with regard to insolvency and over-indebtedness.
- Annual financial statements, balance sheets, over-indebtedness status and liquidity status: We support you in the preparation and analysis of annual financial statements and balance sheets.
- Civil law, insolvency administrators, bankruptcy offenses, criminal law and the public prosecution service: We advise you on the legal aspects and possible consequences of insolvency proceedings and bankruptcy offenses.
Our goal is to support you as managing director or board member in fulfilling your duties and avoiding liability risks. We stand by you with our expertise and experience to give you security and clarity in your leadership role.
