Markus Braun, former CEO of the insolvent scandalous company Wirecard, has prevailed in court against the company’s manager liability insurers. The Frankfurt Higher Regional Court ruled on Wednesday that the insurers, above all Chubb, must provisionally pay Braun’s legal fees. This concerns civil law claims for damages from Wirecard or the insolvency administrator and other injured parties against Braun, not the criminal allegations of fraud and breach of trust.
The court thus confirmed a decision by the Frankfurt Regional Court of January 18, 2021, against which the insurer Chubb had appealed. Chubb leads the consortium of a number of companies in Wirecard’s manager liability insurance. The insurers Allianz, AIG and ANV are involved. The decision of the court cannot be challenged.
With manager liability insurance or so-called D&O policies, companies protect their board members, supervisory boards and executives from claims for damages after breaches of duty.
After the collapse of Wirecard, Braun has been in custody for around a year. He denies the allegations: Among other things, he is being investigated for falsification of accounts, market manipulation and suspicion of gang fraud.
In addition, Wirecard’s insolvency administrator alone wants more than one million euros from him, and there are also numerous attachment and attachment orders. Braun wants the insurers to reimburse the legal fees for defending against these claims.
In principle, the D&O insurers do not pay if there is an intentional breach of duty. Chubb also relied on expulsion for fraudulent misrepresentation. As a rule, however, this requires a final judgment that establishes the intentional or knowledgeable breach of duty. But such a judgment has not yet been made. This is what the Higher Regional Court has now argued in its decision.
Therefore, the insurers have to pay for defense costs. However, they can try to reclaim money from Braun for legal fees should a court find that he acted willfully.