Directors’ and officers’ liability for a creditor’s claim in case of unjust expedited liquidation
If there are no more
The assets of a Dutch company reflect the value of all that the company possesses
» Meer over assets assets (revenue) present in the event of the dissolution of a company, this will immediately cease to exist. It is usual for a dissolved company to remain in existence during liquidation. But in the event of expedited liquidation, as this procedure is referred to, no liquidation will take place. This can sometimes result in frustration on the part of the creditors for example, when there is a discussion regarding the question of whether or not assets are present. In the event of expedited liquidation a director can even be personally liable towards the creditors of the dissolved company. Insolvency lawyer Hidde Reitsma deals with this further on the basis of recent case law.
Dissolution without liquidation
In a recent case the question arose of whether the director had acted unlawfully towards the creditor by means of conducting expedited liquidation. The creditor had a claim against the construction company of the director and had been granted a judgment against the defendant at court. The construction company had been dissolved during the collection proceedings. It was set out in the commercial register that the construction company had ceased to exist because there was no longer any revenue. No liquidation had taken place and there was expedited liquidation.
Directors’ and officers’ liability
The creditor subsequently held the director of the construction company personally liable. We would have acted unlawfully. Due to not proceeding with proper liquidation of the construction company the director would have effected that the creditor’s claim was not paid. However, according to the creditor the resources for this were available. There was therefore unwillingness to pay (rather than inability to pay), according to the creditor.
Serious blame on the part of the director
The court held first and foremost that only a legal entity is personally liable for its debts. In special cases a director can be personally liable towards third parties. It is required for this that the director can be seriously blamed for breaching the (unlawful act) standard of Section 162 Book 6 of the Civil Code towards the third party. This is in principle the case if the director at the entering into of the obligation knew, or ought to have known, that the company could not fulfil its obligations and also could not offer any recovery for the damage arisen through this.
Amsterdam lawyer during expedited liquidation
The creditor argues that there was still revenue, or at least that revenue had disappeared. It is evident from the 2018 annual accounts that the paid up
The portion of registered capital of a private or public limited company
» Meer over share share capital of € 18,000 was still present in December 2017, but as at 16 May 2018, the day of the dissolution, this was reduced to € 2. The court was of the opinion that at the dissolution this capital of the company must be released, There was therefore revenue which, in the event of liquidation, could have been used to pay the creditor’s claim. For this reason there is unwillingness to pay. The director can be seriously blamed for this. This result in an unlawful act towards the creditor. The director is ordered to pay the claim to the creditor.