Liability of a board member for the liabilities of a limited liability company.

The Law Firm’s lawyers represented a client operating in the commercial real estate leasing industry, in a multi-year litigation in which the Client, based on Article 299 of the Code of Commercial Companies, claimed from the members of the management board of a limited liability company (the lessee), compensation for premature termination of the contract for reasons attributable to the company.

The Client – as the lessor – concluded with the limited liability company – as the lessee, a lease agreement for premises located in a shopping center, which was supposed to be in force for 5 years. The agreement was terminated before the expiration of the agreed period for reasons attributable to the lessee (the lessee ceased conducting business in the premises and stopped paying rent and other services under the agreement). The Client filed a lawsuit for payment against the company, in which he demanded an award of part of the rent receivable, and obtained a final judgment, based on which he then initiated enforcement against the company. The enforcement proved ineffective due to the lack of assets on the part of the lessee.

Based on the provisions of the lease agreement, the Client was also entitled to claim compensation from the lessee for premature termination of the lease for reasons attributable to the lessee. In view of the ineffectiveness of enforcement against the assets of the limited liability company in the previous case, the Client decided to seek damages directly from the members of the company’s board of directors, without first seeking an award of damages against the company and without obtaining an enforcement order against the company.

In the course of the trial, the defendants argued that it remains inadmissible to impute liability for the liabilities of a limited liability company to the members of its management board based on Article 299 of the Code of Commercial Companies, in a situation where the existence of a claim against the company was not previously established by an enforcement order. They also questioned the existence of the prerequisites for the termination of the lease agreement by the Client and the effectiveness of the Client’s statement of termination.

However, the courts of both instances fully shared the position and argumentation presented by the Law Firm’s lawyers that, in the specific realities of the case in question, there were grounds for departing from the general rule that a creditor of a limited liability company suing members of the management board under Article 299 of the Code of Commercial Companies should have an enforcement order issued against the company stating a liability

Also, the argument in which the Law Firm argued that in view of the failure by the members of the board of directors of the limited liability company to meet the deadline for filing a petition for bankruptcy of the company, it was possible to assume their liability also on the basis of Article 21(3) of the Bankruptcy and Reorganization Law (in the wording prior to January 1, 2016).

The defendant members of the company’s board of directors filed a cassation complaint with the Supreme Court, but it did not have the effect they intended.

Thanks to the quick and effective actions of the Law Firm’s lawyers, including actions aimed at securing the claim asserted in the case, including by establishing a compulsory mortgage on the real estate owned by a member of the company’s management board, the case ended in full satisfaction of the Client, who, in connection with the ruling, in a short period of time received the amount of the principal amount, together with interest receivables and litigation costs, in an amount exceeding a total of PLN 600, 000.