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No, they cannot do that. Delaying filing for insolvency is a crime in Germany. Unable to pay wages is reason enough to file for insolvency. German courts don't take that lightly.

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So the owners can go to jail or get their personal property confiscated for this in Germany? That's reassuring.

The situation I described happened with a US startup. I'd be curious what we should have done in that situation.

They can go to jail, yes. But confiscation of property depends on the company type. Crytek is a "GmbH", which means that the property of the owners is usually safe, unless they unlawfully took assets out of the company.

I can't imagine a silicon valley startup that doesn't blur the lines of miss using assets. Though good luck getting a hold of their books.

If you delay in filing for insolvency you become liable with your private assets in Germany (certainly true for GmbH).

Same for Australian corporations (directors become liable for knowingly trading while insolvent). Normally they're treated as completely separate legal entities, but not in this specific case. I'm sure there are instances of this in US law too: I'd always thought the term 'piercing the corporate veil' originated from the US...

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