The liability to cover losses under Section 264(3), first sentence, item 2 of the German Commercial Code (HGB) in times of crisis

The obligation to assume liability under Section 264(3), sentence 1, no. 2 of the German Commercial Code (HGB) for the use of simplifications in the preparation, audit, and disclosure of balance sheets of corporations is becoming increasingly important in times of economic strain and entails significant liability risks for parent companies. This article analyzes the key implementation tools—loss absorption, letters of comfort, and cash pools—and highlights their varying effects, particularly in the event of insolvency. At the same time, it provides concrete recommendations for legally sound structuring to minimize liability risks and mitigate crisis situations at an early stage.