Provision of the liability contribution by satisfaction of creditors

Limited partners can make their liability contribution by satisfying company creditors. In the event of insolvency, they are thus released from the limited partner's personal liability in the amount of the claim of the creditor they have satisfied.

Background

The limited partner of an insolvent limited liability (Kommanditgesellschaft “KG”) company was sued for payment of 197,500 EUR. The plaintiff was the insolvency administrator of the KG. Prior to the opening of insolvency proceedings, the defendant had satisfied creditors of the insolvent KG in the amount of about 300,000 EUR. Partly, in the amount of approx. 250,000 EUR, this was done after the liability amount was entered in the commercial register. The insolvency administrator nevertheless asserted claims against the limited partner on the basis of deposits not made.

The decision of the Federal Court of Justice (“BGH”)

Contrary to the previous instances, the BGH assumed that the defendant was released from his liability as a limited partner in accordance with section 171, para. 1, para. 2, section 172, para. 4 of the German Commercial Code (HGB) by payments to the company creditors. While the defendant may not raise any objections against the plaintiff as insolvency administrator which he is entitled to raise only against individual creditors, he could, however, raise such objections against all creditors who are beneficiaries of section 171, para. 2 HGB. Such an objection is that, after the external liability became effective by registration in the commercial register, he satisfied creditors of the partnership in the amount of his liability. According to consistent jurisprudence, a limited partner can satisfy creditors of the company before insolvency proceedings are instituted and thus, in the amount of the nominal value of the repaid corporate debt, be released from his liability in accordance with section 171, para. 1 HGB also in relation to the other creditors. The exemption from liability would also apply in the amount of the nominal value of the repaid claim if the creditor's claim had no longer been recoverable and the asset transferred to the company's assets was therefore lower. In addition, the Federal Supreme Court makes it clear that the defendant is also entitled to set off his claim for reimbursement in accordance with section 110 HGB (German Commercial Code) after the commencement of insolvency proceedings, provided that he has not been released from his external liability directly by the satisfaction of the company creditors. Contrary to the view of the previous instances, the nominal amount of the repaid company debt is to be taken into account here.

Annotation

With the decision of the BGH, the risk for limited partners to be called upon several times for the performance of the liability contribution in times of crisis is reduced. If a limited partner satisfies creditors of the company, he is released from his limited partner's liability in this respect. The BGH further strengthens this position by clarifying that if the limited partner is entitled to a claim for reimbursement in accordance with section 110 HGB (German Commercial Code), this arises in the amount of the nominal amount of the repaid corporate debt and is not merely to be based on the objective value of the claim.

On the other side, company creditors who obtain satisfaction of their claims in such a way during the period relevant to the challenge must fear that the insolvency administrator will recover the payment by way of rescission and thus benefit proportionately all company creditors.