Not every company is meant to live forever. However, time and again even successful companies close down business, without going bankrupt. There may be multiple possible causes. But one thing is always the same when GmbH-companies are concerned: When the shareholders decide to discontinue the business activities of their GmbH and to liquidate their company, they have to appoint a liquidator to wind up the company. One of the most important responsibilities of the liquidator is to satisfy the creditors’ outstanding claims against the GmbH.
No distribution of remaining assets to shareholders before expiry of twelve-month ban
The liquidator of a GmbH may not distribute its assets to the shareholders until the end of one year from the date of announcement of the company’s dissolution in the Federal Gazette and only after having either discharged all debts known to him or deposited the amount for the creditor. The applicable State Law on Deposits (Landeshinterlegungsgesetz) sets out the details on how to deposit such amounts in Germany. Section 73 of the Law Governing German Limited Liability Companies (GmbHG) lays down the rules applicable to the twelve-month ban.
Liquidator is personally liable in case of a breach of the twelve-month ban
If a liquidator, in breach of section 73 GmbHG, has distributed the assets to the shareholders before the end of the twelve-month ban and if the GmbH has already been deregistered from the commercial register, the creditor ignored may assert the claim he originally had against the company directly against the liquidator by way of a claim for damages. The German Federal Supreme Court (Bundesgerichtshof) confirmed this view in its ruling of 13 March 2018.
The court thereby confirmed the rulings of the two previous instances. In fact, it only provides a different reasoning.
WINHELLER advises liquidators and creditors
In practice, this decision means that a creditor can avoid the “time-consuming, costly, and non-economical path” of a subsequent supplementary winding-up process to enforce his rights. Besides, very similar regulations apply to the winding-up of stock corporations.
As liquidators may be held personally liable for breaches of the twelve-month ban, they should always be aware of the applicable legal provisions. Our specialist attorneys for corporate law advise both liquidators and creditors.
Continue reading:
Resignation as Managing Director of a German GmbH
Liability of Managing Directors, Executive Boards and Supervisory Boards
