Volkswagen is considering legal action against Martin Winterkorn, its former chief executive, for negligence over his part in the "Dieselgate" emissions scandal, says a spokesman for the company.
Winterkorn is already facing criminal charges in the US over his role in the affair, although the case is unlikely to go to trial as Germany does not extradite its citizens.
But a civil lawsuit from VW could potentially ruin him, according to German legal experts, who said the company could seek damages of more than €100 million ($170m).
"The investigation has been going on for quite some while and is conducted independently of the authorities' investigation," said Michael Brendel, a spokesman for the VW supervisory board.
Winterkorn was VW chief executive in 2015 when it emerged that the company had rigged software on 11 million cars to enable them to cheat emissions tests. He initially tried to cling on to his position, but resigned five days later saying he was "utterly sorry".
Investigations over his role in the affair in the US and Germany have centred on how much he knew about the emissions rigging. He has always maintained he was completely unaware it was going on and that he resigned because he "accepted responsibility for the irregularities" as chief executive.
He said he had decided to step down "in the interests of the company even though I am not aware of any wrongdoing on my part".
He declined to comment on the possibility of being sued by his former employer.
German legal experts said last week's decision by US prosecutors to unseal criminal charges of conspiracy and wire fraud against Winterkorn had left him exposed to a civil lawsuit.
"With the charges in America, Winterkorn's fate has taken a dramatic turn," Prof Gregor Bachmann told the newspaper Frankfurter Allgemeine Sonntagszeitung.
Under German law, managers can be held liable not only for harm caused to a company by their own direct actions, but also for any failure of internal control mechanisms.
VW could seek to hold him liable for any losses caused by "negligent breach of duty".
The scandal has already cost the company €25.8 billion and it is facing a €10b lawsuit from shareholders in Germany. Unlike in a criminal case, the burden of proof would be on Winterkorn to prove he did everything possible to detect wrongdoing at the company and punish those responsible.
The former chief executive was paid more than €100m during his time at VW, and is currently entitled to a €30m pension.
"In a worst-case scenario, all this money would be gone," Bachmann said.
Winterkorn faces a possible 25 years in jail under the US charges. American prosecutors last week issued a warrant for Winterkorn's arrest and branded him a fugitive from justice. He is safe from extradition as long as he remains in Germany, but could face arrest if he leaves the country.
He also faces a possible criminal case in Germany, where prosecutors say they are still investigating.