The bank’s processing fee as a liability trap for the managing director

Companies that paid a term-independent processing fee to the bank when concluding corporate loans can claim it back. This is a consequence of a BHG ruling from July 2017.

For GmbH managing directors, this actually positive news has a horse's foot: If the company's claim becomes time-barred because it has not been asserted, personal liability is imminent. Anyone who manages a limited liability company that has paid processing fees to the bank in recent years should therefore have repayment claims and liability issues clarified by a lawyer as quickly as possible.

A loan processing fee is illegal – even for business loans

Many loan agreements used to include a term-independent processing fee in the terms and conditions that the borrower had to pay. (Instead of "processing fee" or "handling fee," terms such as "credit fee" or "structuring fee" were also readily used.) This has already been the end for consumer loans since 2014: At that time, the supreme court ruled that banks may not charge consumers such processing fees.

However, it remained unclear whether this prohibition also applied to corporate loans. The case law of the highest courts was initially inconsistent and unhelpful. In July 2017, however, the Federal Court of Justice clarified that banks may not charge a loan processing fee even for corporate loans (BGH, ruling dated 04.07.2017, XI ZR 562/15 and XI ZR 233/16).

The BGH's reasoning

According to the judges, the agreement of a processing fee that is independent of the term is a violation of the requirement of good faith. In the view of the Senate, processing fees cover the costs of activities that are either in the interest of the bank itself or serve only to meet statutory obligations. Accordingly, to impose them on the company as a borrower is an unreasonable disadvantage of the contracting party by the bank within the meaning of § 307 para. 2 no. 1 CIVIL CODE. Loan law provides only for interest as a term-based fee.

Such a far-reaching deviation from the legal requirements of loan law as a processing fee was not validly compatible for the judges through pre-formulated clauses. Loan fees are "inconsistent with the essential rationale of the statutory scheme"

In another decision (BGH, 16.10.2018, XI ZR 593/16), the Federal Court of Justice came to the same conclusion. In this case, a financial broker had fought his way through the courts to challenge a savings bank's "processing fee" in connection with a corporate loan.

"Money back": the company's claim for surrender against the bank

As this renders the agreement of a processing fee in the loan contract invalid, the company as borrower is entitled to a claim for repayment. According to the BGH ruling, the payment of the processing fee was made without legal grounds because it was made on a debt that did not exist.

In other words, companies can reclaim the processing fees paid under business loans from banks.

The catch: statute of limitations looms

However, these recovery claims are at risk of becoming time-barred. The claim for repayment is subject to a three-year standard limitation period pursuant to Sections 195, 199 (1) of the German Civil Code: It begins to run as soon as "the creditor becomes aware of the circumstances giving rise to the claim and the person of the debtor or should have become aware of them without gross negligence."

Now, one might think that this means that the limitation period started to run at the end of the year in which the BGH made the aforementioned decisions on the processing fee for corporate loans, i.e. at the beginning of 2018. However, as early as 2011, a tendency had manifested itself among the higher courts to find loan processing fee agreements invalid, contrary to prior case law. In the opinion of the BGH, it was therefore reasonable for consumers as well as entrepreneurs to file a claim as early as 2011.

The bottom line is that claims for recovery based on processing fees paid in 2015 are generally subject to the statute of limitations at the end of 2018.

If the limitation period expires, the managing director faces personal liability

A risk lurks here for managing directors of a GmbH. If the company has a claim against its bank for repayment of the processing fee, which the management has allowed to lapse, then the managing director is threatened with liability under § 43 para. 2 GmbHG. The managing director has the task of safeguarding the interests of the company, which includes asserting claims on behalf of the company in a timely manner and preventing the claims from becoming time-barred by taking appropriate measures.

It is true that a claim can only be brought against the managing director if he has violated the duty of care stipulated in Section 43 para. 1 GmbHG has violated the "due care and diligence of a prudent businessman" prescribed by law. However, there should be little doubt about this in the case of time-barred debts: A "proper businessman" will assert his claims in good time before the statute of limitations expires. This benchmark also applies to recovering loan processing fees from the bank.

Shareholder resolution discharging liability

A limited liability company director is unlikely to be able to rely on discretionary authority to assert the claim. Liability is excluded only if the shareholders' meeting has decided to leave the matter alone. In this case, the managing director must comply with the instructions of the shareholders.

When is the managing director off the hook?

The shareholders' claims against the managing director become time-barred in five years, calculated from the date on which the claim arose. If the claims against the bank for repayment of the processing fees from 2015 expire at the end of 2018, then the manager is liable for the lost amount until the end of 2023.

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