Trihotel

A husband (defendant) and wife were the sole shareholders of A-GmbH, a German limited-liability company (GmbH). The husband was the managing director of A-GmbH and two other companies, J-GmbH, with his mother as the sole shareholder, and W-Hotel-GmbH, with his mother and J-GmbH as the only shareholders. A-GmbH leased a hotel property, Trihotel, but later canceled the lease before its contractual termination date and started a new lease for the hotel with J-GmbH as the leasing party. J-GmbH then executed a service agreement for the management of the hotel with a third party (the manager) (plaintiff). The manager incurred significant losses and terminated the service agreement, leaving the hotel to be managed only by J-GmbH. The manager later filed for bankruptcy, as did A-GmbH. The manager filed a claim asserting that the companies owed the manager substantial amounts and that the husband was personally liable for having drained the companies of their assets. The Rostock Court of Appeal ruled against the husband, holding him personally liable for the company debts because the husband essentially destroyed the debtor companies by inappropriately assigning away the companies’ assets as collateral and terminating the lease without justification. The husband appealed to the Germany Federal Court of Justice. [Editor’s Note: The Germany Federal Court of Justice is Germany’s highest civil and criminal jurisdiction court.]