Recommendations to mitigate directors’ liability in Belgian companies in financial distress
When a company faces financial distress that threatens its continuity, its directors must be vigilant about exercising their fiduciary duties. The potential for liability is heightened when a company is in financial distress. Board decisions may be scrutinised by third parties considering suing directors, and some legal provisions may even attach personal liability to directors in cases of bankruptcy.
We have listed below some high level and practical recommendations to the directors of a Belgian company in financial distress. Bear in mind that by ‘directors’, we mean not only the individuals that are formally appointed as director (either in person or via a management company), but also de facto directors being any person that has actual decision-making powers with respect to the Belgian company, through a formal mandate or otherwise. Please note that the risk assessment and adequate measures depend in large part on the factual circumstances surrounding the company and should be assessed carefully.
In a previous article we highlighted directors’ duties and liabilities in Belgium, within the context of COVID-19.
Regarding a director’s criminal liability risk, you can read more about the blind spot of directors' criminal liability as participants in offences committed by or within the company here.
Vanessa MarquettePartner Attorney at Law
Vanessa Marquette, attorney at law, is a partner in the Banking and Finance Practice Group of our Brussels office and a member of the firmwide Restructuring & Insolvency team. She is recognized for her expertise in Banking and Finance with a focus on international finance law, regulated financial services, sustainable finance and banking litigation.T: +32 2 773 23 25 E: [email protected]
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