Meaning
Statutory regulations in Germany restrict the transfer of funds once a business entity reaches the point of technical insolvency. Directors must evaluate every outgoing transaction to determine if it complies with gmbh gesetz section 64 or if it risks personal liability. Any payment made after the onset of insolvency that a diligent manager would not have made falls under this scrutiny.
Payment Restriction
Financial transfers from the company accounts are largely halted once the criteria for illiquidity are met. This application of gmbh gesetz section 64 prevents the dissipation of assets that belong to the creditors. Authorized payments are restricted to those that are absolutely necessary for the maintenance of business operations.
Insolvency Threshold
The legal duty to file for a court-led restructuring arises when the liabilities of the entity exceed its total assets. Under gmbh gesetz section 64 the evaluation of this threshold includes a detailed forecast of the company ability to survive. Failure to recognize this state results in a breach of statutory duty.
Personal Restitution
Management figures are required to return funds to the insolvency estate if the court finds they authorized illegal disbursements. The claim for gmbh gesetz section 64 is independent of any damage caused and focuses strictly on the amount paid out. Recovery of these funds ensures that the priority of distribution remains equitable for all claimants.
The individual must use private assets to satisfy this requirement if the company is unable to do so.
