In the course of this work, the liability risks to which a reorganization consultant is exposed during reorganization consulting are examined. The focus of the present study is on German medium-sized companies and disregards the legal regulations for corporate groups.
In order to answer the research question "what liability risks does a reorganization consultant expose himself to in the course of a reorganization consultation", the reorganization environment is first explained in detail and the resulting tasks of a consultant are derived. Subsequently, the legislation, primarily the German Civil Code (BGB), the German Commercial Code (HGB) and the German Insolvency Code (InsO), is analysed and relevant case laws are examined and interpreted in the context of the work.
During the examination of the possible liability of the consultant, any potential insolvency challenges against him because of already collected fee claims or because of funds passed on to outside third parties must also be considered. The principles and limits of the liability of restructuring consultants based on case law are presented and explained in this paper.
In addition to the company management, liability risks can also arise for restructuring consultants in the crisis of the company being advised. The obligation to file for insolvency plays a major role here. If the reorganization consultant concludes that there is a reason for filing for insolvency, the corporate representatives must be informed of the legal obligation to file for insolvency.
Table of Contents
1. Introduction
2. Advice in restructuring
2.1 Corporate restructuring
2.2 The role of the adviser
3. Risks and liability
3.1 Scope of duties and basis of claims
3.1.1 Determination of insolvency maturity
3.1.2 General advice – Duty to instruct in the tax consultant mandate
3.1.3 General advice – Obligation of lawyers to instruct on the obligation to file for insolvency
3.2 Claims of the client/debtor and third parties
3.3 Countervailability of the consultancy fee
4. Results
Research Objectives and Key Topics
This work examines the liability risks faced by management consultants during restructuring processes, specifically focusing on German medium-sized enterprises. The primary objective is to clarify the consultant's potential legal exposure in crisis situations and to derive professional guidelines to mitigate these risks while navigating German insolvency legislation.
- Liability risks for restructuring consultants in crisis environments.
- Relevant legal frameworks including BGB, HGB, and the German Insolvency Code (InsO).
- Insolvency assessment standards (IDW S 11, IDW S 6, IDW S 9).
- Protection against insolvency challenges regarding consultancy fee claims.
Excerpt from the Book
3.1 Scope of duties and basis of claims
To determine the scope of duties and the basis of claims within a consulting mandate in the restructuring environment, it is necessary to delimit these according to typical consulting roles and the restructuring instruments just presented. In addition to advising the affected company itself, it is also possible to advise the management, the shareholders, and the participating bank in the restructuring process.
If the consultant is given an explicit audit assignment to determine whether the company is ready for insolvency (IDW S 11), obligations arise from this which represents the framework for possible liability.
In the event of a delayed filing for insolvency caused by the consultancy, the consultant must compensate for the resulting damage (deepening damage). The same case arises if the consultant has been commissioned to provide restructuring advice, such as within the framework of an IDW S 6.
Summary of Chapters
1. Introduction: Defines the research question regarding liability risks for restructuring consultants and outlines the legal basis for the analysis in German medium-sized companies.
2. Advice in restructuring: Explains the types of corporate reorganization and describes the role of external advisors, including specific industry standards like IDW S 11, S 9, and S 6.
3. Risks and liability: Details the scope of professional duties, specific liability scenarios for different consultancy types, and the complexities of third-party claims and fee contestability.
4. Results: Synthesizes recommendations for consultants, emphasizing clear mandate agreements, written documentation, and specific procedures for managing cash transactions during insolvency.
Keywords
Restructuring, Management Consultant, Liability Risks, Insolvency Law, IDW S 6, IDW S 11, German Commercial Code, Insolvency Proceedings, Consultancy Mandate, Deepening Damage, Cash Transactions, Corporate Crisis, Tax Consultant, Legal Advice, Insolvency Avoidance.
Frequently Asked Questions
What is the core focus of this research?
The work investigates the legal and financial liability risks that management consultants face when advising companies that are in or approaching a state of insolvency.
Which sectors are primarily addressed?
The study focuses on German medium-sized companies and covers the advisory field including restructuring consultants, tax advisors, and legal counsel.
What is the primary research goal?
The goal is to determine the liability risks a consultant faces and to provide practical guidance on how to structure mandates to minimize these risks.
Which scientific methodologies are used?
The paper utilizes a legal and normative analysis based on German statutes (BGB, HGB, InsO) and interprets relevant case law to define the limits of liability.
What topics are covered in the main section?
The main part covers corporate restructuring instruments, specific IDW standards (S 6, S 9, S 11), the distinction between client and third-party claims, and the contestability of fees.
What keywords characterize the work?
Key terms include restructuring, liability risks, insolvency law, IDW standards, and consultancy mandates.
How does the IDW S 11 standard affect a consultant's liability?
IDW S 11 provides a framework for assessing insolvency; if a consultant is hired to audit these grounds, they are bound by these standards, and failing to correctly identify insolvency can lead to liability for resulting damage.
What advice does the author give regarding consulting fee payments?
The author recommends keeping payment intervals short (30 days at most) and ensuring that payments are congruent to avoid the risk of fees being contested in insolvency proceedings.
- Quote paper
- Felix-Sebastian Ament (Author), 2020, The Liability of the Management Consultant in Restructuring. Corporate Restructuring, Munich, GRIN Verlag, https://www.grin.com/document/943429
