What criminal law risks are there in the event of insolvency?
Every insolvency of a legal entity (e.g. UG, GmbH, AG) is reported to the public prosecutor's office by the insolvency court on the basis of the order for notifications in civil matters. The public prosecutor's office examines the facts as part of a standardized test program for indications of criminal offenses related to the insolvency, such as delaying insolvency (§ 15a InsO, § 283 StGB), failure to pay social security contributions (§ 266a StGB), bankruptcy (§ 283 StGB), favoring creditors (§ 283 c StGB) or other offenses such as fraud and breach of trust (§§ 263, 266 StGB). In addition, reports of suspicion or criminal charges are often submitted to the public prosecutor's office by insolvency administrators, creditors or health insurance companies.
In our experience, it is very difficult for managing directors to comply with all legal requirements in the run-up to insolvency.
In other words: As a rule, an investigation is to be expected.
What can you do in advance to avoid criminal risks?
Proactive and prudent action is the key to taking the right steps in time in the event of a crisis and protecting yourself from criminal risks.
The most important thing is probably to file for insolvency in good time: the insolvency application must be filed no later than three weeks after insolvency or excessive indebtedness occurs. If there are signs of a crisis, legal advice should be sought in good time to check whether you are obliged to file for insolvency.
It is therefore necessary to take economic difficulties seriously and not to rely on the principle of "hope" that the situation will improve. Private assets are often invested in the company in order to save it. However, this does not usually eliminate the excessive indebtedness. Rather, it is necessary to continuously monitor the company's financial situation through detailed and up-to-date accounting.
Euphemistic statements about the company's economic situation regularly lead to accusations of fraud and criminal charges from those affected.
What is often overlooked: In a company crisis, social security contributions are always a priority and must be paid in full and on time! Even a late payment is punishable under German law.
When is a managing director personally liable?
Basically, civil liability (piercing the corporate veil) for claims against the company always threatens if the managing director is exposed to criminal charges. Even the legal form of a GmbH does not protect in this case.
Violation of the obligation to file for insolvency can lead to personal liability for liabilities incurred during the delay in filing for insolvency. Examples include liability for non-payment of social security contributions/taxes, embezzlement of company assets or payment for goods delivered during the crisis (fraud).
Unpleasant side aspect: Claims arising from unlawful acts cannot be eliminated through private insolvency proceedings. They remain even afterwards.
What to do in a crisis?
If you are experiencing financial difficulties or uncertainty, you should seek legal and business advice early on. We will help you to minimize legal and financial risks.
If an investigation is already underway against you, we will contact the public prosecutor or police at an early stage and represent your interests professionally. Doing nothing is not an alternative.
