According to a new CJEU ruling, fines under the General Data Protection Regulation are calculated based on group turnover. Does this also apply to the Digital Services Act and the Artificial Intelligence Act? Furthermore, the German Federal Court of Justice has referred to the CJEU the question of whether a company can seek recourse from responsible managers for corporate fines. In other words, the liability climate is becoming more challenging. This blog post explores these topics.

On a separate note I take licese to add the following: Economically speaking, it is the shareholders who bear the cost of corporate fines. This is inadequate and, in my opinion, violates EU fundamental rights. Increasingly harsher EU obligations also lead to ever more sophisticated, comprehensive compliance management systems, and systematically increase risk awareness and risk aversion in companies without correspondingly fostering the search for opportunities. This entails further high costs for companies and the economy at large and raises the question whether or not such costs are warranted in view of the few “black sheep” and the challenges which we presently face.

The number of D&O claims is rising - but why are more and more managers (including former managers) being targeted? This article provides an exclusive insight into current developments in manager liability: from typical project errors to antitrust violations and the recovery of state aid. With data from over 500 claims and concrete reasons for liability, the analysis shows how quickly a management error can turn into a risk worth millions - and why a good corporate strategy is more important today than ever.

The Wirecard case raises complex liability issues. No less difficult is the terrain of D&O insurance, in which the former Wirecard CEO Markus Braun has already initiated several court proceedings. Of more general interest for D&O insurers, however, is a new, detailed ruling handed down by the Higher Regional Court of Frankfurt on the claim of another Wirecard manager, namely the former head of accounting, who wanted to be reimbursed by the D&O insurer for the costs of his legal defense and for public relations consultants. The Higher Regional Court of Frankfurt dismissed the claim against the insurer because the sum insured had been exhausted, and in its ruling addresses key issues of D&O insurance coverage law, in particular, how insurance sums are to be distributed if they fall short of the total sum of damages Some of the issues dealt with often arise in practice and are neuralgic. The judgment is carefully and broadly reasoned. It is therefore outlined on our blog, even though the OLG has allowed an appeal, meaning that the last word has not yet been spoken.

Claims against managers for reimbursement of payments made to creditors after the company should have filed for insolvency are attractive from the perspective of the illiquidity administrator: Such claims can quickly accumulate into significant amounts and are usually covered by D&O insurance. From time to time, our blog therefore makes legal forays into practical aspects of this liability area. The following, third of these forays - like foray 2 - looks at the concept of illiquidity and takes up the new IDW S 11 standard of the German Institute of Auditors. There, the IDW only allows financial status to be used to calculate insolvency, increases the percentage “coverage gap” on this basis compared to the German Federal Supreme Court (BGH) and warns that a calculation based on the BGH would entail a risk of liability. In contrast, we set in our 2nd foray of 6 October 2024 that the IDW's position is not supported by the procedural context of the BGH rulings to which the IDW refers. What is more, the IDW's position also contradicts the substantive assessments underlying the fundamental rulings of the BGH from 2005 and 2017 regarding illiquidity. To follow IDW S 11 is thus not without risk.

Two new forays on our Blog are dedicated tot the concept of illiquidity. The term is of pivotal importance, and one would think that enough time has passed since 01 January1999, when the German Insolvency Act (Insolvenzordnung [InsO]) came into force, to clarify the details. Indeed, the German Federal Court of Justice (IXth Senate) issued a fundamental ruling on the notion of illiquidity in 2005. According to ruling, illiquidity is determined on the basis of a combination of the static (calculation date related) figures of a status with the dynamic figures (related to the 3 weeks following the calculation date) of a financial plan. Pursuant to recent decisions of the Federal Court of Justice, however, under certain circumstances a series of financial status is sufficient to "prove" illiquidity, a legal tomography so to speak, which is not intended to provide a picture of the financial infarction by means of a dynamic finacial plan, but by a „layer-by-layer“ representation. So does the "proof" change what is to be proven? The question is weighty, since the dynamic 3 week financial plan has substantial impact on the determination of the illiquidity, both in legal and calculatory terms.

Now the new standard IDW S 11 of the Institute of Public Auditors bases its guidance for the calculation of illiquidity on a series of financial status, by the same token increases the relative (in percent) "coverage gap" compared to the calcualtion under the formula of the Federal Court of Justice and even warns that a calculation according to the Federal Court of Justice carries a risk of liability for legal practitioners and advisors. That is not to be followed.