Insolvency law is characterized by full seizure of the capital of the enterprise (sole proprietorship, commercial partnership, private and public limited companies). The entrepreneur will lose the control and disposition of his capital. The liquidator appointed by the court is charged with the liquidation of the insolvent estate for the benefit of the joint creditors.
Conflict of interest
The interests of the liquidator are often contrary to the interests of the party declared insolvent. Many businesses that are insolvent believe that the liquidator is appointed to assist the entrepreneur in question, which is a persistent misconception. The liquidator holds a hybrid position: on the one hand he looks after the interests of the joint creditors, whilst on the other hand he must bear in mind the aspects of a social nature when balancing the interests.
Rights of the insolvent
The party declared insolvent is not without rights. After all, the liquidator is required to act as may be reasonably expected from one with sufficient understanding and experience, who performs his tasks meticulously and insightful. The performance of the liquidator may always be tested for compliance with these criteria of due care. Furthermore, the insolvent party has the possibility to contest every decision by the liquidator with the delegated judge in charge of supervision of the administration and winding up of the insolvent estate.
Liability of the director
Upon his appointment the liquidator will first investigate to what extent the entrepreneur (director) has complied with his legal obligations and obligations under the articles of association. Among other things, he will therefore check as to whether the director has presented the annual reports and accounts with the Chamber of Commerce in time, whether he has complied with his accounting obligation, whether the shares have been paid up in full, etc. In case the director has failed to present the annual reports and accounts, or else has failed to comply with some other legal obligation, this is a case of manifestly improper management. According to the Supreme Court manifestly improper management exists when no right thinking other director would have acted similarly under the same circumstances. Once it is determined that the director has provided manifestly improper management, he will be jointly and severally liable for the negative balance of the insolvent company. This negative balance may amount to staggering proportions and may cause the entrepreneur to become liable with his private capital.
The liquidator may also hold the director liable when in the opinion of the liquidator serious blame can be attributed to the director. Serious blame is present:
1.in case the director, when assuming his obligations, was aware or should have been aware that the company would not be able to comply with its obligations;
2.in case the director caused or allowed the company not to comply with existing obligations, resulting in damages to the creditor in question and for which sufficient serious blame may be attributed to the director;
3.in case the director, in a situation where such may be demanded from him, has failed to regard the interests of the creditor(s) by taking the necessary measures, such as warning the creditor(s) or else filing for bankruptcy or applying for suspension of payments;
In case the liquidator holds the director liable, either on the grounds of manifestly improper management or else on the grounds of personally attributable serious blame, the director may lose his private capital as the liquidator will seize this capital for the benefit of the joint creditors. This unenviable position may result in personal bankruptcy.
Expert lawyer in insolvency law
By engaging expert and specialized legal assistance on time, it will be possible to investigate whether the director has breached an obligation pursuant to the law; in principle it will then also be possible to restore said obligation as yet. Our years of know-how, expertise and experience in the field of insolvency law and the fact that we closely monitor the legal developments of this part of the law, rightly make us front-runners in assisting directors and entrepreneurs who, often through no fault of theirs, have somehow become involved in insolvency and we are a formidable adversary to every liquidator.
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