We successfully represented the bankruptcy trustee of a bankrupt company in a claim for compensation against a member of the company’s management board. As a result, the bankruptcy estate increased by nearly EUR 125 000.
An important opportunity to increase the bankruptcy estate and prosecute a member of the management board
We filed an action on behalf of the trustee in bankruptcy against a member of the management board of the company because the member of the management board had made total payments of EUR 125 000 to another company related to them, within a couple of months, while the first company was on the verge of bankruptcy. The court found that there was no legal basis for the payments, since the shareholders of the bankrupt company did not have an agreement to make the payments in question, and neither were the payments made in the interests of the bankrupt company.
Court explained due diligence obligation of a management board member
This decision is an important one because the court explained how to furnish the due diligence obligation of a member of the management board. It must be assessed that the member of the management board is not personally interested in the consequences of their decision, and the decision must be made in good faith, in a sufficiently informed way and with rational belief that the decision was made in the best interests of the company.
The decision is also significant as the court relied on an earlier judgment as important evidence, although not the member of the management board but a company related to the member of the management board, to which the member of the management board had transferred money, was party to the other proceedings. Moreover, in the earlier case, the court had found, on the basis of largely overlapping evidence, that payments had been made without legal basis, that another company related to the member of the management board had been unjustly enriched and the company was ordered to pay it back. However, the company related to the member of the management board had gone bankrupt and the claim therefore could not be enforced. Thus, the recent decision of the county court also confirms that in a situation where, as a result of an act of malicious behaviour on the part of a member of the management board, and if money removed from the company cannot be recovered elsewhere, it is possible to file a claim in court against the member of the management board themselves.
The court decision has not yet entered into force and the dispute is likely to continue at the second-instance level.
Our services and client team
We have represented the client in all legal matters from the beginning of the dispute.
The client team includes partner Carri Ginter, the head of our Estonian insolvency and restructuring workstream Mari Agarmaa, and associate Liisa-Maria Puur.
