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International Law

: Karel's Legal Blog

LIABILITY FOR NOT OR LATE FILING FOR BANKRUPTCY IN THE DUTCH CARIBBEAN

By Karel.Frielink

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No obligation to file for bankruptcy

There is no statutory obligation in the Netherlands Antilles for managing directors of a company to file for the bankruptcy of the company. Managing directors are therefore 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 company either. A liquidator of a company shall, however, file for bankruptcy if he finds that the liabilities are likely to exceed the assets, unless all known creditors agree in writing that the liquidation be continued on a voluntary basis (Article 2:29(3) Netherlands Antilles Civil Code).

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

One may also be held liable for fraudulently disposing of the company?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 prior to the commencement of bankruptcy) was a major cause of the bankruptcy of the company, 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.

Karel Frielink
Attorney (Lawyer) / Partner

Full post as published by Karel's Legal Blog on August 19, 2008 (boomark / email).