Breaches of law arising from delayed filing for insolvency account, by case numbers, for the bulk of executive liability claims. At the same time, the number of insolvencies is rising again. The number of court decisions dealing with D&O liability issues or with questions of coverage by D&O insurers is also increasing. For that reason, we periodically make legal forays on our blog into practical aspects of delayed insolvency filings. The following blog contribution addresses the Federal Court of Justice (BGH) judgment of 2014, which made it easier for D&O insurers in coverage litigation to invoke the defence of knowledge where the insured managing director has breached an elemental professional duty (a cardinal duty). The Frankfurt Higher Regional Court (OLG Frankfurt) deepened and extended this case law in three decisions from 2025 concerning breaches of the duty to file for insolvency and the prohibition on payments once insolvency has arisen. The “cardinal-duty case law” inevitably increases the difficulty of the questions insolvency practitioners must confront when pursuing liability claims against managing directors with a view to attain D&O coverage. These difficulties also point to a deeper structural flaw in D&O insurance and its typical knowledge exclusion. This Survey 6 presents the OLG Frankfurt decisions against that background. It opposes a methodologically unfortunate lateral shift in the questions that are at the core of the matter. Once again the finding of US Supreme Court Justice Oliver Wendell Holmes of 1904 holds true: Hard cases make bad law.

Legal violations related to to delayed insolvency filings represent the most frequent basis for managerial liability claims. At the same time, the number of insolvency proceedings is once again on the rise. For this reason, our blog from time to time makes legal forays into practical aspects of delayed insolvency filing matters that may carry significant weight in court proceedings or settlement negotiations. The following post is the fifth in this series. It addresses a decision of the German Federal Supreme Court, pursuant to which managers remain liable for delayed insolvency filing even after end of their office and for contracts with new creditors. This is a substantial extension of liability and also has an impact on D&O insurance.

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.

Manager liability cases can give rise to questions regarding D&O insurance cover (see the blog post from 26.03.2024, https://www.reutercomplianceblog.com/artikel/leitpfosten-des-lg-frankfurt-zu-brennpunkten-von-manager-haftung-bussgeldregress-und-d-o-versicherung/). Two recent decisions of the Higher Regional Court of Cologne and the Higher Regional Court of Schleswig address such questions. They mainly deal with (i) the definition of an "insured event", (ii) the consequences of an assignment of coverage claims from the insured manager to the policyholder, i.e. the injured company, (iii) the proof of exclusion of coverage in the event of a "knowing breach of duty" and (iv) the consequences of breaches of duty and seting aside by the insurer of the policy. Such issues frequently arise in D&O liability practice. They harbor legal pitfalls. This article outlines the two decisions.

A recent decision of the Regional Court of Frankfurt sets guide posts on key issues of manager liability, recourse for fines and D&O insurance. It addresses issues (1) regarding the admissibility of the advance coverage proceedings by declaratory action of the insured manager against the insurer (vorweggenommene Deckungsklage), (2) regarding the admissibility of D&O insurances against recourse for corporate fines and (3) regarding the conditions under which the typical exclusion of coverage (carve out) due to "knowing" breaches of duty applies. All three areas are important in practice. Furthermore,. the legislator is also getting involved in the discussion on recourse for corporate fines against managers in connection with the planned implementation of the EU's NIS 2 Directive. This post is to outline anc comment the decision.