In today's post, we will discuss the last of the grounds for exempting a management board member from personal liability for the company's obligations: the absence of damage despite the management board member's failure to file a bankruptcy petition. The damage referred to in Article 299 of the Commercial Companies Code should be understood as the creditor's loss of assets due to the management board member's failure to timely file a bankruptcy petition, which would have allowed the creditor to satisfy their claims, at least partially, in bankruptcy proceedings. Conversely, a creditor will not be subject to damages under Article 299 of the Commercial Companies Code if the failure to file a bankruptcy petition did not diminish the creditor's chances of satisfaction from the company's assets, meaning, for example, the company's assets did not change, and the company's assets did not decrease.
A member of the management board may also use the argument that the creditor did not suffer any damage due to the fact that a bankruptcy petition filed in due time would have been dismissed due to the poverty of the estate (insufficient funds to cover the costs of the bankruptcy proceedings).
It is possible that, despite filing a bankruptcy petition and being granted by the court, only a preferential creditor (e.g., a creditor secured by a mortgage on real estate) would be satisfied in bankruptcy proceedings. In such a case, despite the declaration of bankruptcy, an "ordinary" creditor would not be satisfied. This situation relieves a management board member of personal liability for the company's obligations.
A management board member should bear in mind that they bear the burden of proof to demonstrate grounds for exemption from liability for the company's obligations. During a civil lawsuit, a management board member should present facts demonstrating the absence of damage to the creditor despite the failure to file a bankruptcy petition. It is worth emphasizing that the ground arising from Article 299 of the Commercial Companies Code establishes liability for damages, and this is a presumed damage. Consequently, a management board member should rebut the presumption of damage suffered by the creditor by failing to file a bankruptcy petition, presenting all evidence.
Finally, it is worth citing the Supreme Court ruling of 4 July 2013, I CSK 646/12, Legalis, which outlines the essence of liability resulting from a creditor suffering damage due to an unjustified and unlawful failure to file a bankruptcy petition. "A member of the management board of a limited liability company is liable under Article 299 of the Commercial Companies Code for his or her own actions, i.e., for the unlawful and culpable failure to file a bankruptcy petition. This liability therefore arises when the failure to file a bankruptcy petition causes damage to the creditor, as the creditor receives no satisfaction at all or only a smaller satisfaction than would have been the case had the bankruptcy petition been filed in due time."
This article is for informational purposes only and does not constitute legal advice.
Legal status as of September 14, 2022
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