THE BOTTOM LINE
- High Bar for Director Liability: Suing a director personally for their company’s contractual failures remains exceptionally difficult in the Netherlands. Creditors must prove the director is guilty of “serious personal blame,” a standard the courts are reluctant to meet.
- Financial Distress Isn’t Automatic Liability: A company having negative equity when it signs a contract is not, on its own, enough to make its director personally liable if the company later goes bankrupt. The key is whether the director knew default was practically inevitable.
- Business Disputes Aren’t Personal Torts: A director who instructs their company not to pay a creditor based on a plausible contractual dispute is not automatically acting unlawfully. This protects directors from personal liability during legitimate commercial disagreements.
THE DETAILS
This case involved a dispute between an energy consulting firm, Energie van Oranje B.V. (EVO), and the former director of a now-bankrupt energy supplier. EVO had a reseller agreement under which it was owed commission payments. When the energy supplier ran into financial trouble and eventually went bankrupt, EVO sued the director personally to recover its losses. EVO argued the director had committed a tort by signing the agreement when he knew his company was insolvent (it had negative equity) and by later refusing to make payments, effectively ensuring the company would breach its contract.
The District Court of Gelderland firmly rejected the claim, reinforcing the high threshold for director liability under Dutch law. The court first analyzed whether the director knew, or should have known, that his company would be unable to meet its obligations when the agreement was made. While the company did have a negative equity position, it had also proactively reported this to the Dutch market authority (ACM) and was actively working on a recovery plan. The court found that this transparency and effort meant the company’s failure was not a foregone conclusion at the time. Therefore, the director could not be seriously blamed for continuing to do business.
Secondly, the court examined whether the director willfully caused his company to breach the contract. The director’s defense was that the refusal to pay was based on a legitimate contractual dispute about whether payment obligations from a previous, liquidated entity had been properly transferred to EVO. The court sided with the director’s perspective, noting that refusing to pay based on a colorable legal argument is fundamentally different from a malicious or deliberate act designed to harm a creditor. Because a genuine business dispute existed over the payment obligation, the director’s actions did not rise to the level of a personal tort. The court dismissed all claims against the director.
SOURCE
Rechtbank Gelderland
