Corporate liability

Bankruptcy’s Back Door

People line up to withdraw cash from an automated teller machine (ATM) outside a National Bank branch in Iraklio on the island of Crete, Greece June 28, 2015. Greece's Prime Minister Alexis Tsipras on Sunday announced a bank holiday and capital controls after Greeks responded to his surprise call for a referendum on bailout terms by pulling money out of banks. REUTERS/Stefanos Rapanis
Changes to German bankruptcy law could make corporate board members more personally liable for their actions.
  • Why it matters

    Why it matters

    A change in German bankruptcy law would make managing directors and supervisory board members of companies more personally liable for payments made during the interval between factual insolvency and the legal petitioning for bankruptcy.

  • Facts


    • The government agreed to amend insolvency laws to make it much more difficult for liquidators to retrieve money paid to large creditors shortly before insolvency.
    • Under the plan, liquidators could retrieve much less money for bankrupt estates.
    • The German Supreme Court has pushed for more personal liability in the runup to insolvency filings — although legal experts have opposed the interpretation for years.
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The federal government is trying to curb excessive delays in insolvency appeals by limiting the rights of bankruptcy administrators to appeal.

Handelsblatt recently reported on a little-discussed amendment known as “Lex Teldafax” a reference to a discount electricity provider whose downfall was the biggest bankruptcy in German business history. The liquidation of Teldafax also ranks as one of Germany’s longest delayed insolvency filings.

If the plan succeeds, bankruptcy administrators could retrieve much less money on bankrupt estates – money spent before insolvency proceedings began — than they do now.

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