The applicable regulations allow for extending liability for public-law obligations to, among others, members of the company’s management board in situations where enforcement against the company’s assets proves wholly or partially ineffective, and at the same time the board member:
- did not file for bankruptcy in due time, or
- no restructuring proceedings were initiated, or
- is at fault for failing to submit such a petition, or
- did not indicate assets of the company from which the debt could have been effectively satisfied to a significant extent.
Rapid actions by authorities against board members
Recently, actions against board members have been exceptionally swift – first, they receive a request to identify the company’s assets, and within two weeks a decision may be issued transferring the company’s liabilities to natural persons, leading to joint and several liability.
Immediate consequences of an administrative decision
Based on this decision, within a week a record of public-law arrears may appear in the land and mortgage register of a property. In the following week, enforcement of private assets may be initiated.
No possibility of restructuring after an administrative decision
After an administrative decision is issued, it is no longer possible to include these liabilities in restructuring proceedings while simultaneously protecting the private assets of the board members. The only option then is a so-called "private arrangement" – which must be fast and financially attractive enough to convince the creditor that it is more beneficial than a property auction.
Last chance: non-standard legal solutions
If that fails, in some cases other, less standard legal solutions may be possible – but they require appropriate preparation and swift action.
Don’t delay the decision – time works against you
Is it necessary to wait until such radical steps are taken to protect your properties? It all depends on when the decision is made. Our team of experts invites you to get in touch!
