Directors' liability (IVOR nr. 101) 2017/2.4.2.2:2.4.2.2 Bankruptcy

Directors' liability (IVOR nr. 101) 2017/2.4.2.2

2.4.2.2 Bankruptcy

Deze functie is alleen te gebruiken als je bent ingelogd.Deze functie is alleen te gebruiken als je bent ingelogd.Deze functie is alleen te gebruiken als je bent ingelogd.

‘We tried to save the joint! We didn’t think of our liabilities. The idea creeps in when you get to the point that you have to report to the tax authorities that you’re actually bankrupt. The bad thing is that it triggers the actual bankruptcy. The bank will ask questions. And then you say to the bank, things are well. And then things get worse.’1

Bankruptcy was perceived to be personally threatening, as research participants strongly believed that a bankruptcy trustee will likely lodge a claim in most cases, or at least threaten to do so. The participants felt that they were easy targets for bankruptcy trustees and, as such, subject to ‘selective liability’ practices, irrespective of whether they were to blame. Bankruptcy trustees have been criticised for deviating from their own professional standards and being motivated by their own or their firms’ financial interests rather than the interests of the bankruptcy estate.2

Moreover, the fear of a claim was reinforced by the availability of D&O insurance and the prospect that recovery or settlement is secured. There was a general feeling that the accessibility of D&O insurance increased directors’ vulnerability to threats of litigation, as the participants felt that others perceive them as having ‘deep pockets’. Therefore, many of the participants assumed that the higher the D&O limit, the more likely it would entice bankruptcy trustees, creditors or the company to press for settlement or litigation.

Deze functie is alleen te gebruiken als je bent ingelogd.