Board Duties In An Impending Liquidity Crisis

An increasing number of companies are facing solvency issues this autumn, and bankruptcies have been on the rise for some time. The unstable economic cycle forces many companies to assess their options for adjusting operations, for example through change negotiations or debt restructuring.

he company's board of directors plays an integral part in a liquidity crisis. In accordance with the Limited Liability Companies Act, the board must act with due care and promote the interests of the company. A board member who is in violation of the duty of care can be held personally liable for the damages caused to the company, the shareholders or third parties, such as the creditors.

The board must be aware of the company's financial position: The board should actively monitor the state of the company's equity. If a listed company's equity is gone, the board has an obligation to file the loss of the equity with the Trade Register without delay. The board must also monitor