No wonder, since at this stage they have already completed time-consuming and frustrating attempts to recover debts amicably. The majority of them have also fought a battle in the court to acquire an order for payment.
Meanwhile, pursuant to Article 299 of the Commercial Companies Code, in case of ineffective enforcement against a company, members of the management board shall be held jointly liable with their private property for the obligations of their company.
However, the article becomes a contentious issue. It results from the conviction that senior managers are hardly responsible for mismanagement.
Practitioner, however, convince that the majority of cases in which creditors decide to make claims against former members of the board, are successful and finish with the complete claim satisfaction. What premises shall there occur for a creditor to claim damages from a board member?
Firstly, board members are liable with their property for the claims that are or become due during the period they performed the function of board members in a company.
When does creditor make a claim for damages from a board member? Usually, only when the enforcement against a company proved ineffective, unless there are evident reasons indicating that enforcement proceedings against the company prove ineffective.
For instance, when a petition for bankruptcy of the Company was rejected, since the debtor’s property was not sufficient to satisfy the mere costs of the bankruptcy procedure. Demonstration of the ineffectiveness of enforcement conducted by another creditor also allows to file a claim for damages against a board member.
Nevertheless, creditors should know that there are circumstances that release board members from their liability for obligations of the company.
Members of the board will avoid liability if they prove that they filed a petition for bankruptcy or commenced composition proceedings ‘in due time’, i.e. when they were not able to meet their obligations towards all creditors, thus securing interests of creditors who can count on even, though only partial satisfaction ot their claims.
That is why we encourage creditors not to give up. Assistance of professional representatives, experienced in filing claims resulting from trade turnover, will make it possible to verify chances to recover money from former board members, when the assets of the company are not sufficient.
Published on: 14 November 2016