DE: Distribution of profit is contestable under insolvency law

Oct 13, 2021 Benn-Ibler Rechtsanwälte

According to the German Federal Supreme Court, if a (sole) shareholder decides to carry forward an established profit, this may constitute a shareholder loan in economic terms, insofar as, at the time of carrying forward, a distribution of profits was not already inhibited by way of exception due to the creation of an underbalance. A later distribution of a voluntarily carried forward profit is therefore to be regarded as fulfillment of a claim equivalent to a loan, which is subject to insolvency contestation according to Section 135 para 1 no 2 in conjunction with Sec. 39 para 1 no 5 of the Insolvency Code (Insolvenzordnung, InsO).

The insolvency administrator of a limited liability company had filed a claim against its (sole) shareholder for payment of EUR 200,000. Previously, the net profit generated in the 2008 financial year had been carried forward to account and a few months later a resolution was passed by the shareholders to distribute the profit. After payment of the dividend, insolvency proceedings were opened in mid-2010. The insolvency administrator then contested the payment.

In order for a legal act to be subject to a challenge under insolvency law according to Sec. 135 para 1 no 2 InsO, a loan within the meaning of Sec. 39 para 1 no 5 InsO must exist. This is the case if there is a claim for repayment of a shareholder loan or a claim from a legal act which economically corresponds to a company loan. Legal acts which - as in the case of a loan - have a financing function, i.e. capital value is transferred to the company for free use, correspond economically to a shareholder loan.

According to the Federal Supreme Court, a claim equivalent to a loan can be assumed if - as in the present case - the shareholder voluntarily makes liquid funds available to the company through a profit carried forward to new account. From an economic point of view, it makes no difference to the sole shareholder whether a profit generated by the company is first distributed to the shareholder and then made available again as a shareholder loan or whether the profit is carried forward to new account in accordance with Sec. 29 para 2 of the Limited Liability Companies Act (Gesellschaften mit beschränkter Haftung, GmbHG) or is carried forward to new account and then a distribution resolution is passed later.

BGH IX ZR 195/20 (22.07.2021)