Only very few directors of corporate enterprises are aware of the liability risks which result from taking over the management of a limited liability company (GmbH).
Corporate insolvency has personal consequences primarily for the directors but, in many cases, also for the shareholders of a limited liability company. In practice limited liability companies are only equipped with capital by the banks if the directors/shareholders act as guarantors; this guarantee becomes due.
Furthermore, in almost every insolvency there is a risk of a claim being filed by the administrator on the basis of directors’ liability. The decisive factor for avoiding personal liability and being able to defend such claims in the event that they are made, is being able to assess when a company is insolvent and the question of reduction of the insolvency estate.
With sufficient preparation and competent advice, significant personal consequences can be prevented. In practice many directors are not sufficiently prepared.