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Liability of the shareholders for the costs of insolvency proceedings

The shareholders of a civil law partnership (GbR) are personally liable for the costs of insolvency proceedings opened against the assets of the partnership. This was decided by the Federal Court of Justice ("BGH").

Facts of the case

The ruling of the BGH is based on the following facts: The civil law partnership ("GbR"), which later became insolvent, operated as a real estate fund. In 1992, the GbR acquired a shopping and commercial center for this purpose. The purchase was financed by extensive bank loans. After the GbR stopped repaying the loans, the bank terminated all loans in August 2011. At the same time, the bank filed for insolvency for the GbR. The plaintiff insolvency administrator now demanded payment of the costs of the insolvency proceedings from the defendant, among other things. He based his complaint on the fact that the defendant is a shareholder in the GbR and as such is personally liable for all of the GbR's liabilities. The higher regional court dismissed the action. The insolvency administrator pursued his claim for payment with the revision.

The judgment of the BGH of November 21, 2023 (Ref. II ZR 69/22)

The BGH overturned the judgment of the higher regional court and referred the case back for a new hearing and decision. The BGH ruled that the defendant was liable for the costs of the GbR's insolvency proceedings. The previous instance had still denied the personal liability of the shareholders as they had no influence on the costs of the proceedings. The BGH took a different view. This is because the shareholders can influence the occurrence of the grounds for opening insolvency proceedings and thus the incurrence of the costs of the insolvency proceedings.

Practical note

In principle, the shareholders of a GbR - just like the shareholders of a general partnership ("OHG") and the general shareholders of a limited partnership (KG) - are personally and fully liable for the liabilities of the company. There are only exceptions to this in rare cases. For example, retired shareholders are only liable for the company's old liabilities in accordance with Section 160 of the German Commercial Code ("HGB") (old version) - now Section 137 HGB following the new corporate law that came into force on January 1, 2024 - and only for a maximum period of five years; this is primarily due to the fact that they cannot influence the further development of the company after their departure. However, as the BGH ruled, this assessment cannot be applied to insolvency proceedings of the company and the question of bearing the costs in insolvency proceedings.

The insolvency debtor is generally responsible for the costs of the insolvency proceedings (in particular court costs and the remuneration of the insolvency administrator). In the case of an insolvent GmbH, the costs of the proceedings are taken from the insolvency estate with priority, i.e. before the satisfaction of all other creditors of the company. In the case of a GbR, this is not mandatory as long as there are solvent shareholders who the insolvency administrator can claim against. This further protects the company's creditors, as the assets available for distribution are not reduced as a result of the priority settlement of the costs of the proceedings.

The decision of the BGH underlines the risks that can be associated with participation in a GbR - or other partnerships (e.g. a general partnership or for the personally liable partners of a limited partnership) - and emphasizes the need to be aware of the possible financial consequences. In particular, potential shareholders of a GbR should be aware that they may be personally liable for the costs of the insolvency proceedings in the event of the company's insolvency. This can have considerable financial implications and should be taken into account when deciding for or against participation in a GbR or the specific choice of legal form.

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