Phillips, the son of Bolton Wanderers hero Jimmy Phillips, is on a season-long loan with VfB.
"My relationship with Jürgen played a role in this transfer," VfB sports director Sven Mislintat told BILD. "We knew the player, of course.
"But Kloppo came up to me and we then discussed how this change could suit all sides.
"We were able to hire a very good centre-back, who was a long way from a place at Liverpool."