Legal Blog

Thursday, September 12, 2013

Insolvency and liability

Not (or late) filing for bankruptcy

In Curaçao, there is no statutory obligation for managing directors of a company to file for the bankruptcy of the corporation. Therefore, managing directors are not responsible to the creditors for damages sustained by them as a result of any ‘late’ filing for bankruptcy. There is no such obligation for shareholders of a corporation either.

However, creditors of the corporation may hold a director liable on the basis of tort if he entered into a transaction on behalf of the corporation while he knew, or should reasonably have known, that the corporation would not be able to fulfil the obligations arising from that transaction and the corporation would not have sufficient assets for the creditor to take recourse against. If the shareholder (or another person) is actually in control of the corporation and the managing director is more or less forced to carry out its instruction to enter into said transaction, the shareholder (or other person) could be held liable as a de facto managing director.

One can be held liable also for fraudulently disposing of the corporation’s assets or disguising profits or losses prior to or during bankruptcy proceedings. If the bankruptcy trustee proves that improper management (during the three years before the commencement of bankruptcy) is a major cause of the bankruptcy of the corporation, the managing directors (and in addition the policy makers) can be held jointly and severally liable for the total remaining debt, i.e. the debt after the liquidation of all other assets.

Filed under: Corporate by Karel Frielink.



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