A director whose company was held liable for the consequences of an accident at work, by an employee who suffered burns while performing his duties, terminated the company through expedited liquidation in order to avoid payment of the compensation. Does such an action give rise to directors’ liability?
During his work, the employee cleaned facades with hydrochloric acid and he suffered burns to both hands.
He held his employer liable under employers' liability for the damages he suffered and his claim was upheld by the subdistrict court.
However, the employer subsequently failed to comply with the judgment and the company was terminated through expedited liquidation.
The employee then held the director of the (former) company, who was responsible for the expedited liquidation, personally liable for his damages.
Wrongful expedited liquidation/directors’ liability?
The subdistrict court granted the employee's claim and ordered the director to compensate the employee's damages.
According to the subdistrict court, expedited liquidation is only allowed if there are no more assets in a company.
The director disputed that there were assets present at the time of the expedited liquidation, as these would have been sold in exchange for payments to creditors, but he did not sufficiently substantiate his challenge.
Therefore, the subdistrict court assumed that there were still assets in the companies at the time of the expedited liquidation.
By proceeding with expedited liquidation when that was not the appropriate course of action, the director caused the company to be unable to fulfil its obligations towards the employee.
According to the subdistrict court, the director’s actions were so careless that he could be personally and seriously blamed for them.
The director knew or should have known that the expedited liquidation would result in the employer's company not (being able to) fulfil its obligations towards the employee.
Therefore, according to the subdistrict court, he is personally liable as a former director (in addition to the company itself).
Read the ruling here.
Both the legal issues surrounding employer’s liability and directors’ liability are complex. However, the specialised employment and corporate lawyers at SPEE advocaten & mediation will be happy to guide you through it.