OGH on a Managing Director’s Liability for Unenforceable Claims

Apr 23, 2026 Benn-Ibler Rechtsanwälte

The Austrian Supreme Court (Oberster Gerichtshof, hereinafter OGH) considered if a managing director should be responsible for the legal and court costs that an indirect shareholder faced while trying to enforce a loan because of a late insolvency filing.

In the case at hand, the claimant, a local authority, held an indirect shareholding in the borrowing entity. In September 2002, the local authority provided the company with an interest-free bridging loan of EUR 70,000. By December 2002, the company had entered insolvency. Despite this, repayment of the loan was deferred, and collection efforts were not pursued for an extended period.

The claimant initiated legal proceedings against the company in 2019 to recover the outstanding loan. During the course of these proceedings, insolvency measures were commenced. Subsequently, the claimant pursued damages totaling approximately EUR 9,400 from the managing director to compensate for costs arising from both the loan recovery and insolvency actions. The claimant contended that the managing director should have filed for insolvency no later than early 2003, asserting that earlier action would have prevented the subsequent legal expenses.

The defendant asserted that the loan constituted a shareholder loan, intended as a substitute for equity capital. Accordingly, repayment was deferred until the company had achieved sustainable restructuring. As this condition was never met, the claim remained unenforceable as of 2019.

The OGH initially determined that the managing director failed to fulfill his obligation to file for insolvency in a timely manner, as required by Section 69 of the Austrian Insolvency Act (Insolvenzordnung, hereinafter IO). The company had been insolvent since at least December 2002, and the managing director was required to initiate insolvency proceedings within 60 days.

The OGH specified that legal expenses are encompassed by the protective provisions of Section 69 of the IO solely when incurred to pursue an existing and enforceable claim. Costs associated with claims that are unjustified or unenforceable fall outside the scope of this protection.

In this instance, the OGH determined that the loan constituted equity substitution and ruled that the claimant should be regarded as equivalent to a direct shareholder. Additionally, the claimant had been aware of the company’s deteriorating financial condition and insolvency no later than December 2002. By opting to defer payment and maintain their claim, the loan was turned into an equity-substituting instrument.

Since the company had not previously undertaken a sustainable restructuring, a repayment ban remained in effect. Consequently, even in 2019, the claimant would have been unable to enforce their claim successfully in court. The legal expenses were attributable not to the delayed submission of the insolvency petition, but rather to the claimant pursuing a claim that was legally unenforceable.

As a result, the managing director bore no responsibility for the costs associated with the loan or insolvency proceedings, nor was there evidence of abuse of process.

OGH 6 Ob 237/24g (24 February 2026)