Liability of the de facto policymaker in bankruptcy

Under Section 2:248 of the Dutch Civil Code (DCC), each director is jointly and severally liable to the estate for the bankruptcy deficit if the board has manifestly improperly performed its duties and it is plausible that this improper performance of duties was a major cause of the bankruptcy. The trustee of a bankrupt company can hold not only the company’s directors liable, but also its factual policymakers. The seventh paragraph of Section 2:248 DCC stipulates that the person who determined or co-determined the company’s policy ‘as if he were a director’ must actually be equated with a director for the purposes of this liability provision.

Qualification as a factual policymaker

For a long time, there was debate as to when someone could be regarded as a factual policymaker within the meaning of Section 2:248(7) DCC. That debate focused, among other things, on the question whether there had to be ‘de facto overruling of the formal management.’ The Supreme Court recently, on 24 March 2023, handed down a guiding judgment on the matter. In its judgment, the Supreme Court provides more clarity on the scope of Section 2:248(7) DCC by considering that overall de facto overruling is not required in order to qualify someone as a factual policymaker. What matters is whether someone has usurped at least part of the management, and has thus determined or co-determined the policy as if he were a director. This means that even if the formal directors have continued to fulfil their duties as directors, there may be another factual policymaker.

Should you have any questions following the article or wish to exchange views on the question whether you qualify as a factual policymaker and the possible associated liability risks, please feel free to contact Koen Rutten or Carlijn Tjoa.