DANGER - DANGER - DANGER
This is one of the things where it suddenly gets dangerous for the manager as a private person! Make sure to understand this properly and always have it in the back of your head when things are going “meh” you don’t go to hell...
According to §15a of the Insolvency Code (InsO), a company is obliged to file for insolvency if there is a reason for insolvency.
The two reasons for insolvency are:
Running out of cash - Insolvency (§7 InsO) DUH 10% of due obligations cannot be met for a period > 3 weeks
Over-indebtedness (§19 InsO) Balance sheet - a "deficit not covered by equity" appears on a certain date.
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In practice
At the latest in case of payment difficulties or if the balance sheet shows a deficit not covered by equity capital: Consult a lawyer, ASAP!
Afterwards if necessary file for insolvency with the local court...
Otherwise you are doomed! 🧟
According to §64 GmbHG (Liability for reduction of insolvency assets) the managing director is personally liable for all payments made after the state of insolvency has occurred.