The German Federal Court of Justice has tightened its grip on company directors again. In a recent judgment on directors’ liability in insolvency situations, the Court clarified the scope of sections 60- 61 of the German Insolvency Act.
In regular insolvency proceedings, the debtor’s right to manage and transfer his property is vested in the insolvency administrator who has the duty to satisfy the different groups of creditors as far as possible. The administrator has the power to take possession of the property and is entitled to sell or dispose of it as may seem to him expedient. If the administrator acts in breach of his duty he can become liable to all parties of the insolvency proceedings on basis of sections 60-61.
