Major changes in the liability of statutory representatives from 1 January 2018

If the company’s capital is less than EUR 6,500 – watch out! 1 January 2018 will introduce major changes to a debtor’s obligation to file for insolvency.

If a creditor of a limited liability company suffers loss because the statutory representative, for example the managing director of the company, was late in filing for insolvency, then the liability of the statutory representative will be not only up to EUR 12,500, as is now the case, but unlimited. The law already operates with the legal fiction that a petition for insolvency should be filed within 30 days from the moment the debtor, with the care of a prudent businessman, should have become aware of over-indebtedness. Under the new regulation, a petition for insolvency is also not filed timely, if:

• no insolvency proceedings were opened against the debtor due to a lack of assets or if insolvency proceedings were terminated for this reason, i.e. the company’s capital is less than EUR 6,500, or
• if enforcement proceedings against the debtor were terminated due to a lack of assets.

If a debtor fails to file for insolvency on time, the creditor’s loss will be the extent to which their claim was not satisfied in the insolvency proceedings!

A statutory representative may be exempt from such liability under certain conditions, but has to act.

In practice, starting from 1 January, if a debtor legal entity fails to pay a debt and enforcement proceedings are unsuccessful due to the debtor’s lack of assets, the creditor can start to enforce its claims against the statutory representative or liquidator of the legal entity. If the statutory representative of a debtor legal entity files for insolvency but the company’s funds are less than EUR 6,500, the creditor can still start to enforce its claims directly against the statutory representative.

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