Dutch directors' liability for bankruptcy deficit only reduced on specified grounds

Dutch Supreme Court, May 13, 2022 Case number: ECLI:NL:HR:2022:691

Background

Under Dutch law, the directors of a (private) company can be held personally liable by the trustee for the bankruptcy deficit. Liability can arise when the directors have manifestly performed their management duties improperly and if it is reasonable to assume that bankruptcy was declared as a result. Section 2:248(4) of the Dutch Civil Code (DCC) contains a list of grounds for reducing the amount of the directors’ liability. 

Decision

The trustee sought a judgment stating that the directors of the company in question had manifestly improperly performed their duties and were liable for the deficit in the bankruptcy. Both the district court and the court of appeal granted the claim and saw no grounds to reduce liability under the DCC.

The directors argued that the list of grounds for mitigation in section 2:248(4) DCC is not exhaustive, and the court of appeal should also have considered the circumstances which the directors had argued in the appeal.

The Supreme Court rejected this complaint, considering that both the text and the parliamentary history of section 2:248 DCC show that the grounds for mitigation are exhaustively listed in this provision. 

Key takeaways

Directors should take note that the DCC contains an exhaustive list of grounds for reducing their liability for the bankruptcy deficit and the court will not consider any other matters. 

Find out more

To discuss the issues raised in this article in more detail, please contact a member of our Restructuring and Insolvency team.