After the collapse of a family business run by two brothers, a dispute arose over more than EUR 300,000 in damages. One of the brothers was the company's director and held 60% of the shares, while our client held 40% of the shares and worked as deputy director for commercial affairs. The company had two lines of business — construction and catering: the director handled construction, the client the café chain. The bankrupt company argued that such active involvement in the business meant that the client was in fact a second manager of the company, merely not formally designated as such, and on this basis claimed around EUR 340,000 from him.
We focused the defence on the distinction between an active employee and a de facto manager — in case law, the latter status applies only to a person who, on an ongoing basis and independently, takes strategic decisions significant to the company as a whole, not one who merely organises the day-to-day operations of the unit entrusted to them. The client's job description confirmed the opposite: the functions assigned to him — organising the unit's work, controlling its finances, cooperating with partners — were those of an employee, not a manager, and he himself reported to the director. Neither recording the revenue, nor paying it into the company's cash desk, nor making personal property available for the company's use proved that the client had independently, without the director's knowledge, concluded the company's contracts or taken decisions significant to it.
The first-instance court did not attribute de facto manager status to the client, and the Court of Appeal of Lithuania, having reassessed this issue, agreed. As a result, the court also dismissed the part of the claim of more than EUR 30,000 relating to assets not handed over to the insolvency administrator — this duty remained with the formal director.
The remaining liability was assessed on a different basis — as that of a former shareholder. The first-instance court attributed to the client around EUR 260,000 of subsidiary liability for the late initiation of bankruptcy proceedings, plus around EUR 45,000 under a separate claim — more than EUR 300,000 in total. In our appeal, we proved that the client could not be liable for debts incurred after he had left the company's shareholders in 2015 — a person cannot be made to answer for decisions subsequently taken by others.
The result: the appellate court reduced the client's liability for the late initiation of bankruptcy proceedings from around EUR 260,000 to more than EUR 70,000. Together with the remaining claim of around EUR 45,000, the final amount awarded came to approximately EUR 120,000 — almost EUR 190,000 less than in the first-instance judgment.
The case is a reminder that active involvement in a family business or in a company's operations does not in itself make a person a de facto manager — what is decisive is who actually took the strategic decisions. A clear dividing line of duties and responsibilities between family members can become decisive when a business fails.
