In the event that the debtor is a business entity (e.g. a limited liability company), it is also possible to initiate liquidation proceedings against it. The liquidation proceedings are ordered by the competent court against the debtor if the invoice is more than 20 days overdue and the creditor has sent a written payment reminder to the debtor.
However, it is important to note that the court will not order the liquidation of the debtor if the debtor had disputed the debt in writing prior to the creditor’s written payment demand. In such cases, liquidation proceedings are not possible, but there is no obstacle to the above-mentioned payment order proceedings or litigation.
Liquidation proceedings with a temporary asset supervisor
If you, as a creditor, fear that the debtor will dispose of the company’s assets before the liquidation proceedings are concluded, you may, at the same time as filing the application for liquidation or thereafter until the commencement of liquidation, request that the court appoint a provisional asset supervisor to oversee the debtor’s financial management if the subsequent satisfaction of your claim is at risk and you can substantiate the claim with a private document of at least full probative value. The temporary asset administrator monitors the debtor’s activities and reviews the debtor’s financial situation with a view to protecting the interests of creditors. In this context, the provisional asset administrator may inspect the debtor’s books, cash, securities and assets, documents, and bank accounts; may request information from the head of the business entity; and may enter the debtor’s premises and inspect any of the debtor’s assets. The debtor is required to immediately open any locked premises or assets (furniture, other personal property) upon the request of the provisional asset administrator. The provisional asset administrator may disclose the information obtained in this manner only to the court.
Action against the managing director and owner
In the event that there is suspicion that your non-paying partner has removed assets from the debtor company that would secure the satisfaction of the claim, you have the option of initiating the following proceedings against the managing director and owners of the debtor company.
1. Action against executives
During the liquidation proceedings, a creditor may file a lawsuit requesting the court to determine whether those who served as the company’s managers during the three years preceding the commencement of liquidation failed to perform their managerial duties with the creditors’ interests as the primary consideration after the onset of a situation threatening insolvency, and thereby reduced the assets of the debtor company or prevented the full satisfaction of the creditors’ claims. The onset of a situation threatening insolvency is the point in time from which the company’s managers foresaw or could reasonably have foreseen that the business entity would be unable to satisfy the claims against it when due.
2. Action against the owners of the company
In the event of the dissolution of a limited liability company or a corporation without a legal successor, a member who has abused the privilege of limited liability may not invoke such limited liability. Members of a limited liability company who have abused their limited liability or the company’s separate legal personality to the detriment of creditors shall be liable without limitation and jointly and severally (i.e., the full claim may be sought from each individual manager) for the unsatisfied obligations of the dissolved company.
The liability of the members as described above may be established in particular if they disposed of the company’s assets as if they were their own, or reduced the company’s assets for their own benefit or that of others in such a way that they knew, or should have known had they exercised the care generally expected, that the company would thereby be unable to fulfill its obligations to third parties.