The Bottom Line
- Limited liability is robust: This ruling reinforces that directors of a limited liability company (B.V.) are generally not personally responsible for the company’s debts, even if it goes bankrupt.
- High bar for personal liability: To successfully sue a director personally, a creditor must prove “serious personal blame.” Simply running a company that fails and leaves invoices unpaid is not enough to meet this strict standard.
- “Piercing the corporate veil” is rare: Courts will only disregard the separate legal identity of a company in exceptional circumstances, such as clear and deliberate abuse of the corporate structure to harm creditors.
The Details
A recent case before the District Court of Midden-Nederland provides a critical reminder of the high legal threshold required to hold a director personally liable for a company’s debts. The dispute involved a contractor who was left with €18,810 in unpaid invoices after a limited liability company, [bedrijf 1] B.V., went bankrupt. Instead of pursuing the insolvent company, the contractor sued its indirect director personally. The claim rested on two key arguments: first, that the court should “pierce the corporate veil” and treat the director and the company as a single entity (“vereenzelviging”), and second, that the director had acted unlawfully towards the contractor, making him personally liable in tort (“onrechtmatige daad”).
The court swiftly rejected the argument for piercing the corporate veil. This legal remedy is reserved for exceptional situations where a director has clearly abused the company’s separate legal identity. The contractor argued that the director had set up other businesses to divert activities and avoid creditors. However, the court found no evidence of this. The business relationship was clearly with the limited company, not the director in his personal capacity. The fact that the director had another, older sole proprietorship in the same industry was not considered an exceptional circumstance justifying such a drastic measure.
The court then turned to the claim of director’s liability, which requires proof of “serious personal blame.” The contractor claimed the director had failed to warn him about the company’s financial troubles and had siphoned off funds for personal gain. The court found the opposite to be true. The director had, in fact, informed subcontractors of declining business and suggested they find other clients. Furthermore, the company had paid the contractor approximately €400,000 in the preceding years, undermining any suggestion of a deliberate plan to leave him unpaid. The court concluded that the director’s actions did not meet the high standard of serious personal blame, and the claim was dismissed.
Source
Source: Rechtbank Midden-Nederland
