This week, another interesting case in the area of directors' liability. It concerns a DGA who liquidates his company (in the framework of a restructuring) while legal proceedings are still pending against the BV. A few years later, the company went bankrupt due to the outcome of these proceedings. The receiver then holds the director personally liable. You can read how it all ended here.
What are the facts?
It concerns Anode BV and Anode BVBA, its Belgian sister company. Together they operate a company that trades in energy. Anode BVBA bought electricity from WOM, a group of horticultural companies. The agreement between Anode BVBA and WOM was also signed by Anode BV. Unfortunately, things went wrong and Anode BVBA did not pay the electricity supplied by WOM anymore. Before Anode BVBA goes bankrupt in June 2010, WOM starts proceedings against both Anode BVBA and Anode BV before the Belgian courts. The court rejected the claims on 13 November 2012 but WOM lodged an appeal on 15 March 2013.
Between 10 December 2012 and 30 December 2016 - and thus during the hearing of the appeal - a restructuring of the group to which Anode BV belongs is taking place. For Anode BV this means that its wholesale customer portfolio will be transferred; the purchase price will be administratively settled. Furthermore, the inventory of the BV will be sold in June 2013; the purchase price will be settled for the most part. The remaining amount will be transferred to the bank account of the BV. The small business customer portfolio will also be transferred; the amount will be booked and settled in current account.
You may have guessed it: on 8 September 2016, the Belgian Court of Appeal granted WOM's claim on appeal. Both Anode BVBA and Anode BV are ordered to pay the dear sum of €11.5 million. Anode BV goes into cassation but the Belgian Court of Cassation rules on 18 January 2019 that the judgment on appeal remains valid. Meanwhile, Anode was also declared bankrupt on 10 November 2017.
Judgment of the court
The receiver of Anode BV held the director of this BV liable. This was due to the fact that the DGA liquidated the company while the appeal proceedings against WOM were still pending. The trustee first tries to claim damages on the basis of Section 2:248 of the Dutch Civil Code, because Anode BV did not disclose its financial statements in 2014 and 2015 and the administration was not in order. In that case, it is assumed that the managing director did not fulfill his duties properly and that this improper fulfillment of duties was an important cause of the bankruptcy. However, the director of Anode BV succeeded in refuting the latter. After all, WOM's claim was an important cause of Anode BV's bankruptcy.
But the DGA is not off the hook yet: the claim of the trustee based on tort (Section 6:162 DCC) does succeed. The Court holds that the director of Anode BV knew or reasonably should have known that liquidating Anode BV would result in the company not fulfilling its obligations towards the joint creditors and not being able to offer redress.
Therefore, if a company is liquidated, the director must also take into account uncertain debts, such as proceedings that are still pending. If a director does not do this, there is a chance that he is privately liable for damages suffered by creditors. And that can be very expensive.
The director of Anode BV is ordered by the court to pay the damage: € 1,5 million plus interest, and a compensation to be drawn up by state.
Read the ruling here.
Do you also have questions about directors' liability or other corporate law issues? The experienced team of SPEE advocaten & mediation will be happy to assist you.