It is no easy task for a creditor to hold a director of a bankrupt private limited company personally liable. One of the situations in which a director may be personally liable is if the director knew or should have understood that, when entering into obligations with the creditor, the company would not be able to fulfill those obligations and would not be able to compensate the creditor for the damage it would suffer as a result. The threshold is always high: a director is only personally liable to the creditor if there is a serious personal reproach. The creditor must prove that this criterion has been met.

In practice, this often presents creditors with a fundamental problem of proof. They often have little concrete information about the financial situation of the company before it went bankrupt. This makes it very difficult to prove that a director knew or should have understood at a certain point in time that obligations should no longer have been entered into. And even more so to demonstrate that the director personally acted in a seriously culpable manner by entering into those obligations anyway.

The bankruptcy trustee usually has records that may be essential for the creditor to substantiate director liability. But can the creditor simply gain access to these records? A case heard by the Court of Appeal in Arnhem-Leeuwarden illustrates that this will become easier for creditors from January 1, 2025.

The old situation: high threshold for access to records

This ruling by the court of appeal on January 7, 2025, focused on a creditor’s claim for access to the records of a bankrupt private limited company. The trustee had these records in his possession. The creditor wanted access in order to prove that the director should not have entered into certain obligations and that he could be seriously blamed for this personally.

The crux of the problem? According to established case law of the Supreme Court, in such proceedings a creditor had to, among other things, demonstrate sufficiently that there was serious personal blame, even before he could gain access to the documents necessary to further substantiate his claim. This effectively led to a paradoxical situation: no access without evidence, and no evidence without access.

This is precisely why, in this case, the court had rejected the creditor’s claim for access to the records. On appeal, the court of appeal reached a slightly different conclusion. Although the request for generic access to the entire records was again rejected, the creditor was now granted access to specific financial documents, such as an Excel file and an overview of bank transactions. The court took into account that the creditor had sufficiently demonstrated that the director could be liable.

The new situation: broader access to data from January 1, 2025

With the entry into force of the Evidence Law Simplification and Modernization Act on January 1, 2025, the threshold for access has been significantly lowered. The requirement of sufficient plausibility is no longer maintained. This means that a creditor no longer needs to provide prima facie evidence of director liability before being granted access to data. In addition, creditors can now claim access to data more emphatically outside of court, even if this data is held by a third party (such as a trustee). This significantly lowers the threshold for gathering evidence at an early stage and should lead to fewer legal proceedings to obtain access to documents.

Had the case before the Arnhem-Leeuwarden Court of Appeal been heard under the new law, the creditor would probably have gained access to (parts of) the trustee’s records much more quickly and easily.

Conclusion

The Simplification and Modernization of Evidence Law Act represents a significant shift in the right of access, including in directors’ liability proceedings. Whereas creditors previously had to contend with a high threshold of proof, they now have a much broader right of access. This increases their chances in directors’ liability cases.

Do you have any questions about directors’ liability or the right of access? Please feel free to contact Bart Lenferink at b.lenferink@paulussen.nl or +31 (0)45 560 6000.

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