On the eve of bankruptcy the question that must be dealt with is how to determine the moment at which directors’ and officers’ liability occurs.

Things have started to change since the directors and members of the supervisory board of CETECO were held personally liable. It is important for management to be aware of the risks they run.

The Pauliana standard [for the prevention of a fraudulent preference] and the Beklamel standard [for the protection of new creditors] are important juridical pillars upon which directors’ and officers’ liability is based. It should be mentioned here that they were not the issues in the cases brought against Ceteco and Vie d’Or.

In February Horatio will publish an article in FIP [magazine] devoted to the moment upon which a director/officer breaches the duty of care with respect to liquidity and solvability requirements.

We will be pleased to forward you a copy upon request. Even when there is no issue of self enrichment or fraudulent behaviour on the part of a director/officer of the company, s/he may still have acted without due care. Horatio has developed principles regarding the breaching of such boundaries by the commission of reasonable acts on the part of an entrepreneur.

The application of these principles enables Horatio to trace the transition of a company from a successful rise to a dramatic decline (see further under: Directors’ & officers’ liability). At the end of 2010 Horatio was contracted to map out the causes of one of the biggest cases of bankruptcy in the Netherlands.