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Personal liability of the managing director in case of insolvency delay

Company law

Personal liability of the managing director in case of insolvency delay

An institution unknown to Italian law is the liability from delay in insolvency applicable in Germany if the managing director does not immediately file for insolvency with the court when the company is threatened with over-indebtedness or insolvency. As the BGH ruled on 27 July 2021 (II ZR 164/20), the managing director is also personally liable to creditors of the company who still initiate legal proceedings against the company in the mistaken belief that the company is solvent. In Germany, court costs and opposing lawyers' fees can represent considerable damage, which in this case must be reimbursed by the managing director from his own coffers.