A board member's claim against the CEO was dismissed by the court!

EUR 1.4 million. That is exactly how much the claimant asked the court to award against my client, the company's former general director. And I succeeded in defending him: after 3 years of litigation, the claim for damages was dismissed in its entirety.

What is interesting is that this was an indirect action brought by a former member of the company's board, who had himself been directly involved in the company's activities during the disputed period and tried to prove to the court that he, of all people, had known nothing about the damage allegedly being caused to the company by my client and other former managers, shareholders and board members. The claim was filed in the bankruptcy proceedings, but only at the point when the insolvency administrator, after almost 10 years of proceedings, applied to the court to have the bankrupt company deregistered from the register. And it was precisely in this case that the insolvency administrator had finished bringing claims against the managers, the cases had eventually ended, but at the very end of the proceedings a completely new claimant appeared – a former member of the company's management board.

The indirect action was brought on behalf of all the creditors. And although their total claims exceeded EUR 2 million, the claimant himself chose, on behalf of all of them, to frame the claim for a different amount.

In this case, although there was an attempt to convince the court that the bankrupt company had already been insolvent in 2009, we succeeded in proving to the court that, once thorough analyses of the company's activities had been carried out, the situation was in fact the opposite: in 2010, compared with the appellant's figures for 2009, the company's revenue increased almost 190-fold and its assets 3-fold. In 2011, the company's turnover also grew, and its sales revenue doubled compared with the previous year. So without proof of the company's insolvency at a particular point in time, granting the claim simply became impossible. But presenting such data in the case “in black and white” took so much work that I sometimes feel I would not be able to repeat it a second time.

In the case there was also an attempt to prove that, in order to establish the moment of the company's insolvency, it is sufficient to rely on interim balance sheet data. However, we succeeded in convincing the court that the company's interim balance sheet in no way reflects the final result of the company's activities, since the actual debts of suppliers/buyers have not been reconciled, business and financial processes started and not completed by the end of the financial year have not been assessed, nor have commitments started and not completed or the terms of contracts with suppliers and buyers, and no review of the year's financial and business activities has been carried out, etc.

In view of these and other circumstances, the court held that no civil liability could arise for my client. And the court even recognised the case itself as exceptional in its judgment.

I have been working with this particular client on his cases – the claims brought against him in the bankruptcy proceedings – “from start to finish” for 8 years now, and I so want to believe that this case I have won really is the last one for him.

And this is one of those bankruptcy proceedings that seem as if they will never end until the whole “assortment” of possible claims, pre-trial investigations and other proceedings has been exhausted.

I have been working with complex bankruptcy cases, damages claims and challenges to transactions for more than 10 years, and every day I discover something new in these proceedings.

LAWYER