D&O insurance offers only limited protection in the event of insolvency

In the event of insolvency, managing directors can be personally liable to the insolvency administrator despite D&O insurance.


Many managing directors believe that they are fully protected by a directors and officers liability insurance (so-called D&O insurance) and do not have to fear recourse to their personal assets. The Düsseldorf Higher Regional Court (Oberlandesgericht (OLG) Düsseldorf) put a clear damper on this view with its ruling of 20.07.2018.

The court decided that the claim of the insolvent company against its former managing director pursuant to § 64 GmbHG is not covered by the scope of the D&O insurance. According to § 64 GmbHG, managing directors are liable to the company for all payments that the company has made, although the insolvency of the company had already occurred due to illiquidity or overindebtedness. If the insolvency application is filed late and payments are still made to creditors in the meantime, the managing director must take responsibility for this.

In the opinion of the court, the managing director cannot, in return, hold himself harmless under his D&O insurance. The OLG has decided that the liability claim under § 64 GmbHG is a „compensation claim of its own kind”, which does not serve the interests of the insolvent company itself, but only the interests of the creditors. However, these interests are not covered by the D&O insurance.

However, something else may apply under certain circumstances if the claim against the managing director can be based not only on § 64 GmbHG but also on other liability principles. In this case the claims may be genuine damage claims which are then also covered by the D&O insurance.

Source: OLG Düsseldorf, Ref: 4 U 93/16

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