Delayed insolvency filing: when does a managing director commit an offence?

This is where the practical emphasis lies. § 15a Abs. 1 Satz 1 InsO (Satz means sentence) requires the application to be filed without culpable delay. You may use up the maximum periods in sentence 2 only for as long as serious restructuring efforts with a genuine prospect of success are under way.

The reference point matters just as much. The period begins when the inability to pay or the over-indebtedness sets in, not when it is established, and not on the day an adviser points it out to you. Anyone who starts counting only once the suspicion is already weeks old may have missed the period long ago without noticing.

Under § 15a Abs. 1 Satz 1 InsO the duty to file rests on the members of the body representing the company and on the liquidators, so in the case of a GmbH on the managing director and in the case of an Aktiengesellschaft, the stock corporation, on the management board. Under § 15a Abs. 1 Satz 3 InsO the same applies to the corporate representatives of the partners authorised to represent a partnership with legal capacity in which no personally liable partner is a natural person; that concerns the GmbH und Co. KG in particular.

§ 15a Abs. 3 InsO deserves particular attention. Where a GmbH is without a managing body, every shareholder is also under a duty to file, and in the case of an Aktiengesellschaft or a cooperative every member of the supervisory board. Resigning as managing director therefore does not necessarily end the problem; it can shift it.

That duty does not, however, apply unconditionally. The provision closes with a qualification: it does not apply to the persons named if they have no knowledge of the inability to pay and the over-indebtedness, or of the company being without a managing body. Anyone who might be affected as a shareholder or as a member of a supervisory board should therefore record when they learned what.

Liability arises under § 15a Abs. 4 InsO where a person fails to file the application to open proceedings, or fails to file it in time (number 1), or fails to file it correctly (number 2). For the second of those, the statute contains a restriction that is easily overlooked: under § 15a Abs. 6 InsO the conduct is in that case an offence only if the application has been finally and bindingly rejected as inadmissible. An application containing errors therefore does not lead to criminal liability merely because it contains errors.

Insolvency proceedings put the books on the table. That is why Insolvenzverschleppung rarely stands alone.

§ 283 StGB (the Strafgesetzbuch, the German Criminal Code), Bankrott, provides for imprisonment of up to five years or a fine for certain conduct in a state of over-indebtedness or of imminent or actual inability to pay. § 283 Abs. 2 StGB covers a person who brings about the over-indebtedness or inability to pay through such conduct in the first place. Negligent and reckless variants are covered as well: § 283 Abs. 4 und Abs. 5 StGB provide for imprisonment of up to two years or a fine for those. § 283 Abs. 6 StGB is decisive: the conduct is an offence only if the offender has stopped making payments, or if insolvency proceedings have been opened over their assets, or if the application to open proceedings has been dismissed for want of assets.

In particularly serious cases the range under § 283a StGB is six months to ten years; the statute names as standard examples acting out of a desire for profit and knowingly exposing a large number of people to the risk of losing assets entrusted to them or to economic hardship.

§ 283b StGB concerns the breach of the duty to keep books, with imprisonment of up to two years or a fine, and in certain cases of negligence up to one year. § 283c StGB covers favouring a creditor, that is, giving preference to a single creditor in the knowledge of the inability to pay, likewise with up to two years or a fine. § 283d Abs. 1 StGB concerns favouring a debtor, with up to five years or a fine, and in particularly serious cases under § 283d Abs. 3 StGB six months to ten years. The condition in § 283 Abs. 6 StGB applies accordingly to §§ 283b und 283c StGB.

Two further allegations regularly appear alongside these. The first is § 266a Abs. 1 StGB, withholding employee social security contributions; the provision carries imprisonment of up to five years or a fine, and in particularly serious cases under § 266a Abs. 4 StGB six months to ten years. It also contains, in § 266a Abs. 6 StGB, its own route to freedom from punishment, and that route does not turn on payment alone. At the latest by the time the contributions fall due, or without delay thereafter, the employer must inform the collecting agency in writing of the amount of the withheld contributions and set out why timely payment is not possible although serious efforts have been made to make it. Only where that notification has been given, and the contributions are then paid subsequently within the reasonable period determined by the collecting agency, is the offender not punished to that extent. Paying up afterwards is not enough on its own. Whether those conditions are met in your case has to be examined in detail and is nothing that can be dealt with in passing.

On top of that comes § 370 AO (the Abgabenordnung, the German Fiscal Code), tax evasion, with imprisonment of up to five years or a fine, and in particularly serious cases under § 370 Abs. 3 AO six months to ten years.