Bad News for Managers of German Companies: Claims against Directors for Payments after Insolvency not covered by D&O-Insurance

24. May 2019

Unfortunately, in practice there are frequent liability claims against directors of German companies for payments made after the company has become insolvent. Due to a new court decision of the Higher Regional Court of Duesseldorf (Az.: 4 U 93/16), it is uncertain whether D&O insurance coverage is available for this sort of claim.

In our practice, this situation may frequently arise regarding German subsidiaries of foreign gruop of companies which are headed by non-German directors who are not fully aware of the German legal rules. Especially in a group context where subsidiaries may be funded by the mother company, an insolvency receiver may ask for compensation by a director personally, in case payments were made for liabilites after the mother compoany had stopped its funding.

Since the liablity of the director of a German company carries a high personal risk, it is highly recommended to negotiate appropriate coverage when contracting a new D&O-insurance. Likewise, it should be negotiated with the insurance company regarding coverage in exisiting policies.

In case of questions, please contact Dr. Oliver Wulff