Manager liability: OLG Frankfurt shatters D&O insurance cover in insolvency proceedings

Frankfurt judges establish prima facie evidence for breaches of payment prohibitions and jeopardize an established insurance practice.

Revolutionary reversal of the burden of proof in insolvency law

The Higher Regional Court of Frankfurt (judgment of 05.03.2025, case no. 7 U 134/23 ) transforms the D&O insurance landscape with a radical reinterpretation of Section 15b InsO. The decision establishes automatic prima facie evidence of a knowing breach of duty in the event of prohibited payments after insolvency maturity. According to established case law, the exclusion of insurance cover in the event of "knowing deviation from the law" requires a substantiated presentation of specific circumstances. The Frankfurt court eliminates this requirement: every payment after insolvency maturity constitutes per se proof of intentional action.

System of the prohibition of payment under insolvency law

§ Section 15b (1) InsO prohibits directors from making payments from company assets in the event of insolvency or over-indebtedness. Violations give rise to claims for reimbursement regardless of intent or negligence. In practice, insolvency administrators regularly pursue these claims via D&O insurance policies, as managing directors typically do not have sufficient private assets to compensate for damages. The decision of the Higher Regional Court of Frankfurt fundamentally undermines this established practice.

Paradigm shift in the presentation of evidence

The case law on cardinal obligations previously allowed for prima facie evidence in the event of substantiated allegations of specific breaches of duty. The OLG Frankfurt universalizes this mechanism: payments in breach of the prohibition automatically trigger the presumption of knowing action. This construction reverses the burden of proof: Insurers no longer have to prove knowing action, but insolvency administrators have to prove ignorance of the insolvency maturity - practically impossible.

Drastic implications for creditor protection

The change in case law poses a structural threat to the creditor protection system. In the case of insurance exclusions and impecunious managing directors, economically exploitable claims are completely eliminated. §Section 15b InsO would be degraded to a toothless standard. Insolvency administrators would lose their sharpest sword for mass enrichment, which would have an existential impact on remuneration structures, particularly for smaller insolvency estates.

Industry-wide criticism and legal policy concerns

The decision provoked unanimous rejection from academics and practitioners. The assumed knowledge of insolvency maturity without corresponding evidence and the undermining of contractually agreed insurance cover through rules of evidence are criticized. In terms of legal policy, there is a threat of the creditor protection regime being eroded: D&O insurance policies were explicitly designed to cover insolvency-specific liability risks. This core function would be eliminated by merely shifting the burden of proof.

Revision procedures and practical recommendations

An appeal against the ruling has been lodged with the BGH. Practitioners are optimistic about a cassation, especially as the BGH recently confirmed D&O protection under Section 64 GmbHG. There are specific recommendations for practitioners: Insolvency administrators should wait and see, insurers should avoid premature refusals of cover and managing directors should increase the intensity of documentation and advice.