Two new forays on our Blog are dedicated tot the concept of illiquidity. The term is of pivotal importance, and one would think that enough time has passed since 01 January1999, when the German Insolvency Act (Insolvenzordnung [InsO]) came into force, to clarify the details. Indeed, the German Federal Court of Justice (IXth Senate) issued a fundamental ruling on the notion of illiquidity in 2005. According to ruling, illiquidity is determined on the basis of a combination of the static (calculation date related) figures of a status with the dynamic figures (related to the 3 weeks following the calculation date) of a financial plan. Pursuant to recent decisions of the Federal Court of Justice, however, under certain circumstances a series of financial status is sufficient to "prove" illiquidity, a legal tomography so to speak, which is not intended to provide a picture of the financial infarction by means of a dynamic finacial plan, but by a „layer-by-layer“ representation. So does the "proof" change what is to be proven? The question is weighty, since the dynamic 3 week financial plan has substantial impact on the determination of the illiquidity, both in legal and calculatory terms.

Now the new standard IDW S 11 of the Institute of Public Auditors bases its guidance for the calculation of illiquidity on a series of financial status, by the same token increases the relative (in percent) "coverage gap" compared to the calcualtion under the formula of the Federal Court of Justice and even warns that a calculation according to the Federal Court of Justice carries a risk of liability for legal practitioners and advisors. That is not to be followed.

Legal violations in the event of delay in filing for insolvency consitute, as reagrds case numners, an important area of manager liability practive. In principle, the law makes managers liable for all payments made by the company once it has become insolvent. When asserting such claims, however, a whole series of substantive and procedural hurdles must be overcome, which are not only the subject of many court decisions, but are also included in settlement negotiations. The legislator amended the matter some time ago. At the same time, the number of insolvencies is currently on the rise again. All of this leads us to expect more disputes of this kind. For this reason, from time to time our blog will take a look at practical aspects of section 15b InsO that may be of significance in court and in settlement discussions. The following article is the first of these forays.

If fines are imposed on companies for illicit conduct, the question arises as to whether the companies can seek recourse against the responsible managers. The question is controversial. However, the higher fines become, the more important the question becomes. Because of their exorbitant amount, it is in particular fines for violations of European and national antitrust law which fuel the debate. Two very recent - contradictory - rulings of the Dortmund Regional Court and the Düsseldorf Higher Regional Court, as well as the German lawmaker, are giving new impulses to the discussion.

The article sums up the new decisions and draws the consequences for practice. As long as the issue has not been decided by the court of last instance, supervisory bodies have to decide on the assertion of claims. They cannot refrain from asserting the claims solely on the grounds that recourse is not legally possible. Furthermore, they must also observe the rules on the statute of limitations that the Dortmund Regional Court and Düsseldorf Higher Regional Court have drawn up on the commencement and the end of the limitation period. Furthermore, the question of how the situation stands under EU law remains open. Last but not least, the draft amendments to the new German BISG also gives new impetus. In the end, the question must be asked as to whether the overall system of corporate fines is not suffering from a systemic flaw.

On June 1, 2023, the EU Parliament adopted a joint position on the draft Corporate Sustainability Due Diligence Directive (CSDDD). The CSDDD is to become a further central pillar of the regulatory building for "Corporate Social Responsibility" (CSR) and "Environment/Social/Governance" (ESG) that the EU is currently establishing. The following will first provide an overview of the regulations. The regulations significantly expand and sharpen the concept of "sustainability" and harness accounting and company law tools. The legislative purpose is to guide investment, transform the entire EU economy, hold companies accountable to this end, and give third parties means to enforce the relevant obligations. The rules impose high costs and other burdens on companies. In many cases, however, the rules are neither necessary nor suitable for the protection of the climate, the environment and human rights; this applies in particular to the rules addressing governance issues. This brings into focus the principle of proportionality, which sets limits for legislators at the EU and national levels. Companies should insist in the upcoming political process that proportionality is maintained. This does not only apply to the CSDDD, but also to the Corporate Sustainability Reporting Directive (CSRD) and its implementation.