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Repayment of a shareholder loan can potentially be contested by the insolvency administrator even if the amount circuitously ends up in the company’s account again.
Payments made in the face of looming insolvency may be contested by the insolvency administrator on the basis that the payment places other creditors at a disadvantage. We at the commercial law firm MTR Rechtsanwälte note that even if the money ends up with the company again via third parties, this does not automatically resolve the issue of creditor fraud, as is clear from a recent ruling of the Bundesgerichtshof (BGH), Germany’s Federal Supreme Court.
In a ruling from May 2, 2019, the BGH held that creditor fraud resulting from the repayment of a shareholder loan is not resolved just because the amount ultimately returns to the company (Az.: IX ZR 67/18).
In the case in question, the defendant was the managing director of a GmbH that had since become insolvent. He was also the sole limited partner of the GmbH’s parent company. He loaned the GmbH 100,000 euros, which the company repaid shortly thereafter. The managing director used the money to pay his limited partner capital contribution in the amount of 100,000 euros to the parent company. The latter then promptly effected a loss compensation payment for the benefit of the GmbH.
Although the 100,000 euros had ended up in the GmbH’s account again, the insolvency administrator nevertheless demanded that the amount be repaid by the managing director. While the claim was dismissed by the courts of lower instance, it was ultimately successful before the BGH.
The BGH ruled that the prerequisites for contesting the debtor’s actions in insolvency proceedings were present, since the repayment of the shareholder loan placed other creditors of the GmbH at a disadvantage. The Court noted that while this can, in theory, be subsequently resolved, that did not happen here, even though the amount ended up back in the hands of the GmbH.
According to the BGH, resolving this form of creditor fraud requires the company to return the appropriated asset and that the creditors may have access to it. In the instant case, however, the sum was used by the managing director to discharge his obligation to the parent company and by the latter, in turn, to discharge its obligation in the form of liability for covering losses vis-à-vis the subsidiary GmbH. The Court therefore concluded that repayment of the original shareholder loan had not been effected.
When faced with looming insolvency, it is necessary to make prudent financial plans in order to navigate the company back to safe waters. Lawyers experienced in the field of company law can serve as expert advisors.