You continue to operate a bankrupt fashion chain, transferring the staff to separate companies whilst keeping the assets and revenues elsewhere. A smart move – until those staff companies also go bankrupt and the insolvency practitioner holds you personally liable for millions. Is that really possible? The Amsterdam Court of Appeal answered that question on 14 April 2026 with an unequivocal yes. According to the court, such a separation of assets, proceeds and staff entails significant risks for which directors can be held personally liable.
What was the situation?
Following the bankruptcy of the FNG Group (Miss Etam, Promiss, Steps), a relaunch was achieved in September 2020. The shop staff were placed in four staff companies, but the turnover was channelled into a different company (NLS B.V.). The staff companies had no bank accounts of their own and no income of their own. Furthermore, agreements regarding the terms under which staff were hired out – such as remuneration, rates and which company acted as the hirer – were not set out in writing anywhere. Following the national lockdown in December 2020, the shops closed and NLS stopped advancing wages. In early 2021, all four staffing companies went into liquidation with a shortfall in assets of over four million euros.
The Court of Appeal’s ruling
The Court of Appeal first established that the record-keeping obligation under Article 2:10 of the Dutch Civil Code had been breached: there was no record of the companies to which staff were hired out, the terms and conditions, or the remuneration, and invoices were entirely absent. Pursuant to Section 2:248(2) of the Dutch Civil Code, it is therefore presumed that improper performance of duties is a significant cause of the bankruptcy. Section 2:248(6) of the Dutch Civil Code further stipulates that a breach of the duty of record-keeping in the three years preceding the bankruptcy implies that improper performance of duties has been established. It is then up to the director to demonstrate that other circumstances caused the bankruptcy. If he succeeds in doing so, the insolvency practitioner must in turn demonstrate that the improper management was also a significant cause of the bankruptcy. In this case, however, the directors failed to do so.
Moreover, there was also evidence of manifestly improper management, quite apart from the accounting issues. The management should have ensured that the revenue generated by the staff employed was collected in good time to enable the payment of payroll tax, social security contributions and employer’s charges. This was neglected: even after the tax debts became due and payable, the management remained passive. The argument that the COVID-19 lockdown was the cause of the bankruptcies was rejected. The directors’ own liquidity forecast showed that, at the time of the lockdown, NLS still had ample funds available. The fact that those funds were not used to pay creditors is a consequence of the board’s failure to act and therefore not of the lockdown. This failure carries particular weight because the Supreme Court ruled in the Comsys-arrest that a parent company which establishes a group structure in which costs and revenues are deliberately separated has a special duty of care towards the creditors of the companies bearing the costs. This duty of care entails that the board must actively intervene to ensure that those creditors can be paid, and this did not happen here.
According to the Court of Appeal, all director companies in the chain, including the Swiss FLV Group Holding AG, are jointly and severally liable for the shortfall in the estate under Article 2:11 of the Dutch Civil Code. The natural person behind the structure is not included in this: the Supreme Court ruled in the My Guide-arrest that Article 2:11 of the Dutch Civil Code does not extend to the person behind the director with legal personality. Nor could he be held liable as a de facto policy-maker within the meaning of Section 2:248(7) of the Dutch Civil Code, since that provision applies specifically to persons who determine company policy outside the formal management structure, whereas he acted in his capacity as a formal indirect director. The Supreme Court drew that line in the Red Dragon-arrestHowever, the natural person is personally and seriously at fault on the grounds of a tort: as a direct director of both the income-generating company and the staff companies, he had both the actual power and the duty to collect the necessary funds and to fulfil the special duty of care incumbent on a parent company in such a group structure. His failure to do so gives rise to liability under Article 6:162 of the Dutch Civil Code, in line with the Supreme Court’s ruling in Ontvanger/Roelofsen.
Read the full judgment of the Court of Appeal here.
Practical implications
In a going concern arrangement where assets and revenues are separated from the companies employing the staff, the board bears a heavy responsibility and duty of care. Maintain proper records from day one, set out secondment agreements in writing, and actively ensure that revenues are collected before debts become due. If this is lacking, invoking external circumstances such as a pandemic offers little solace. Moreover, it does not matter how the structure is set up: even those who pull the strings remotely from a foreign holding company run the risk of being held personally liable.
Are you, as an entrepreneur or director, dealing with a business restart or a complex corporate structure? Please feel free to contact the corporate law solicitors at SPEE advocaten & mediation. We would be happy to advise you on your position and the steps to take.