Current case law: Possible coverage gap in D&O insurance policies in the event of breach of the "payment ban" in the event of insolvency
In its judgment of 20 July 2018 (Case No. I-4 U 93/16), the OLG Düsseldorf determined that the claim against a managing director for compensation of payments made after the insolvency did not constitute a "claim for damages in the sense of insurance law" pursuant to § 64 GmbHG. The consequence of this is that in many D&O policies with standard insurance conditions, the liability of the managing director under § 64 GmbHG is not covered by the insurance cover and there is therefore a considerable coverage gap. The judgment has not yet become final. The Higher Regional Court of Düsseldorf has not admitted the appeal; an appeal for non-admission to the Federal Supreme Court is currently pending.
As early as 2016, the OLG Celle had also assumed - albeit only within the framework of a summary examination in a cost decision (decision of 1.4.2016-8 W 20/16) - that the claim under § 64 GmbHG was not a liability claim covered by the D&O insurance.
Although it does not appear unlikely that the Federal Court of Justice will again deal with the matter, as the case is likely to have fundamental significance (§ 543 (2) no. 1 ZPO) contrary to the opinion of the court, it is also assumed that the claim arising from § 64 GmbHG is not covered by the D&O insurance. For the time being, however, it remains open whether there is insurance coverage for liability cases in accordance with § 64 GmbHG in the case of standard D&O insurance policies, which do not contain an explicit provision in this respect. Whether this also applies with regard to the corresponding provisions in stock corporation law (§§ 93 para. 3 no. 6, 92 para. 2 sentence 1 AktG) is open.
The risk of being prosecuted in the event of insolvency in accordance with § 64 GmbHG is one of the central liability risks of managing directors. The same applies to the management boards of stock corporations pursuant to § 93 (3) no. 6 in conjunction with § 92 (2) sentence 1 AktG. The liability for prohibited payments after insolvency can also be extended to members of the supervisory board via § 116 AktG.
As a precautionary measure, we therefore advise companies and board members to review the applicable D&O insurance cover with the aim of requiring clarification from the D&O insurer, if necessary, that cover also exists in the event of liability pursuant to § 64 GmbHG or § 93 Para. 3 No. 6 in conjunction with § 92 Para. 2 Sentence 1 AktG.
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The payment prohibition pursuant to § 64 GmbHG/92 Para. 2 AktG as a significant managerial risk
If a corporation has a reason for opening insolvency proceedings, i.e. either insolvency (Section 17 InsO) or over-indebtedness (Section 19 InsO), the management body of the company is obliged to ensure that the company does not make any further payments (Section 64 GmbHG, Section 92 Para. 2 AktG) in order to prevent the insolvency assets from being eroded. Instead, the insolvency application must be filed without delay (section 15a InsO). If, nevertheless, payments are made after the insolvency has occurred, these must in principle be replaced by the managing directors or members of the management board of the assets involved in the insolvency proceedings. Pursuant to Sections 116, 93 (3) No. 6, 92 (2) AktG, Supervisory Board members may also be called upon to reimburse prohibited payments if they have culpably breached their supervisory and supervisory duties by failing to require the Management Board to refrain from making such payments.
In practice, it often happens that a reason for opening insolvency proceedings that actually exists is overlooked by the managing directors. Apart from the punishability of a delayed filing for insolvency, claims for damages by the insolvency administrator or possibly by creditors, the managing directors or members of the executive board are threatened with personal liability under § 64 GmbHG or § 93 Para. 3 No. 6 in conjunction with § 92 Para. 2 Sentence 1 AktG. The liability according to these regulations presupposes in principle a fault of the managing director. However, this usually already exists if the insolvency maturity of the company could have been recognised with the help of experts, if necessary. A large proportion of D&O insurance cases therefore also concern the use of executive bodies in connection with insolvency. Claims arising from § 64 GmbHG or § 93 Para. 3 No. 6 AktG are regularly of particular importance in these cases.
The consequences of violations of the payment ban are regularly serious for managers - especially if the insolvency maturity is not recognized over a longer period of several weeks. Liability does not presuppose that the company suffers a loss as a result of the payments. In fact, the managing directors are liable in principle for compensation of all payments made in full after the insolvency has occurred, unless the payments were in the well-understood interest of the creditors. Considerations received on the basis of the payments may only be taken into account to a limited extent if a liquid realisable asset is received in direct connection with the payment of the assets. This is not the case, for example, if payment is made on an invoice claim that has already existed for some time. Payments received on a debit bank account of the company are also payments in this sense because they are made on the debtor's loan liability to the bank. For these reasons, the claim to replacement of prohibited payments after insolvency quickly adds up to astronomical heights.
§ 64 GmbHG - no claim for damages in the sense of common D&O clauses?
There is therefore a considerable coverage gap in the D&O insurance cover if, according to the Higher Regional Court of Düsseldorf and the Higher Regional Court of Celle, no insurance cover is to be provided within the framework of D&O standard conditions in the event of a claim being made against managing directors under § 64 GmbHG.
The OLG Düsseldorf bases its decision on the fact that, according to the insurance conditions underlying the case in question, insurance cover existed only if the insured person was sued for pecuniary loss due to a breach of duty. However, § 64 GmbHG is not a claim for damages within the meaning of these insurance conditions. Rather, it was - in accordance with the established case law of the BGH (which, however, does not refer to insurance law) - a "compensation claim of its own kind". This is because the payments made do not typically cause any damage to the company. As a rule, claims would be repaid by the payments and thus not reduce the company's assets. Nor is it the purpose of § 64 GmbHG to compensate for damage to the company. Rather, the provision protects the assets involved in insolvency proceedings and thus serves the interests of the company's creditors. Therefore the requirement from ? 64 GmbHG cannot be understood as a requirement for compensation in the insurance-legal sense, as it is presupposed in the insurance conditions described above. This probably also corresponds to the approach of the OLG Celle, which, however, was content in its reasoning with the reference to corresponding explanations in the legal literature.
Whether the conclusions of the OLG Düsseldorf are also transferable to claims from §§ 93 para. 3 no. 6, 92 para. 2 sentence 1 AktG is not quite clear. On the one hand, these provisions under stock corporation law have the same direction of protection as § 64 GmbHG. On the other hand, the arguments of the OLG Düsseldorf do not necessarily fit to this norm; because § 93 Paragraph 3 No. 6 AktG, unlike § 64 GmbHG, is clearly designed as a provision for damages.
Pay attention to exact wording in the insurance contract
The D&O insurance conditions on which the decisions of the OLG Düsseldorf and the OLG Celle are based correspond to a customary standard. If one follows the decision of the OLG Düsseldorf, there is a considerable coverage gap with these insurances, because in the event of insolvency, board members cannot claim any insurance cover from § 64 GmbHG (and possibly also from §§ 93 para. 3 no. 6, 92 para. 2 sentence 1 AktG). In this case, insurance cover would only exist if a claim under § 64 GmbHG were expressly included in the insurance cover or if the standard wording was extended. More recent D&O Conditional Terms often already contain such clauses.
We therefore recommend that all companies and board members examine the terms and conditions of existing D&O insurance contracts to determine whether insurance cover exists for claims for payments after insolvency maturity has occurred. If this is not the case or is doubtful, you should contact your broker or insurance company and, if necessary, agree a clarifying amendment to the contract in writing. Also with new contracts to be locked should be naturally paid attention to the fact that requirements from § 64 GmbHG and/or § 93 exp. 3 No. 6 AktG are considered in the contract. However, due to the debate already initiated by the Celle Higher Regional Court, this should now be standard for new D&O insurance policies.