Clifford Chance

Three-week payment period permitted for crisis-ridden limited liability company (ILO article 17-06-2011)

28 February 2012

Under German insolvency law, the managing directors of a crisis-shaken limited liability company are obliged to file for the opening of insolvency proceedings within three weeks of an insolvency event (ie, either over-indebtedness or illiquidity) occuring. If insolvency reasons are given, the managing directors are, in principle, personally liable in relation to the company for any payments which they make out of the company's assets during that three-week period and beyond. Moreover, managing directors who intentionally violate their duty to file for the opening of insolvency proceedings may also be exposed to liability with regards to third-party creditors (in addition to criminal liability, which might also apply).

 

 

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