Annual accounts not filed? As a director you are liable for the full bankruptcy deficit

The filing obligation: an administrative formality that can cost you dearly as a director

Many directors regard the annual filing of financial statements as an administrative formality. A mistake. The Noord-Holland District Court made clear once again on 27 November 2024 that failing to file financial statements on time has a devastating legal consequence: the director is by operation of law liable for the full deficit in bankruptcy — without the trustee needing to prove that the bankruptcy was caused by the failure to file.

In this case, the deficit ran into hundreds of thousands of euros. The director was ordered to pay an advance of €500,000, to be reduced by amounts still owed by affiliated companies to the bankrupt estates.

What happened?

Within the Bauporte group — a concern active in the design, manufacturing and maintenance of turnstile, sliding and pivot doors — two companies functioned as staffing entities: BMF Install. 1 B.V. (Install) and BMF Man. B.V. (Man). Both companies were declared bankrupt in March 2023.

The director was the sole ultimate director of all legal entities within the group. The problems were structural:

• Install and Man were incorporated on 11 February 2021 and were in default with respect to payroll tax and other tax obligations from day one. The combined tax debt grew to approximately €600,000.
• The 2021 financial statements were not filed on time. The 2022 financial statements were only submitted after the trustee had already issued a writ of summons — just before the court hearing.
• Install entered into a five-year lease but paid only one month's rent. The landlord was left with an unpaid claim of nearly €100,000.
• Employees were transferred to two newly incorporated companies (BG Staff B.V. and BG Facility B.V.) just before the bankruptcy — which were also immediately in default on payroll tax.

This was not the first time: a predecessor company (BFM B.V.) had previously gone bankrupt with a tax debt of approximately €1 million, followed by Industries B.V. with a similar debt. The director had settled the BFM claim for €300,000 but had never fully paid that amount either.

The statutory presumption of Article 2:248 DCC

Article 2:248(2) of the Dutch Civil Code provides that if the financial statements have not been filed on time, it is presumed that the directors have manifestly improperly performed their duties and that this manifestly improper management was an important cause of the bankruptcy.

This is a double statutory presumption:

1. Manifestly improper management is established as soon as the filing obligation has been breached.
2. Causal link between that improper management and the bankruptcy is also presumed.

The director can only rebut this presumption by concretely and convincingly demonstrating that other factors were the actual, decisive cause of the bankruptcy. That is a heavy burden of proof.

The defence: COVID, Ukraine and Dubai

The director attempted to rebut the statutory presumption by invoking external circumstances:

• The COVID-19 pandemic had disrupted operations.
• The war in Ukraine had worsened market conditions.
• A failed major contract in Dubai — during which the director was briefly detained — had caused the downfall.

The court was not persuaded. The director had not produced concrete figures showing that these factors were actually the decisive cause of the bankruptcies. He had not explained how and to what extent these circumstances had specifically affected the companies.

Moreover: the companies had been in default with tax obligations from the very beginning — before the Ukraine crisis or the Dubai problems had materialised. The court identified a structural pattern of allowing tax debts to accumulate within the group, which had previously also led to two bankruptcies.

Mitigation? No.

The director requested the court to mitigate the liability. Article 2:248(4) DCC grants the court that power if liability for the full deficit seems unreasonable. The court rejected this request. Given the structural nature of the failings and the extent of the damage to creditors, full liability was not unreasonable.

Affiliated companies must also pay

In addition to the director's personal liability, the court also ordered two affiliated companies — Design Entrances and Maintenance — to pay claims of approximately €300,000 to the bankrupt estates in connection with the use of the bankrupt companies' staff for which no payment had ever been made. These amounts were deducted from the advances to be paid.

What does this mean for you as a director?

The filing obligation is not a formality. Always file your financial statements no later than 13 months after the end of the financial year (for small private companies). Late filing — even by one day — activates the statutory presumption of Article 2:248 DCC.

Rebuttal is extraordinarily difficult. To rebut the statutory presumption, you must demonstrate with concrete, quantitatively supported documentation that external factors were the real cause of the bankruptcy. Vague references to COVID or geopolitical developments are not sufficient.

Structurally failing to meet tax obligations is a serious warning sign. Payroll tax, VAT and corporate income tax must be remitted. Systematically failing to do so builds a pattern that courts weigh when assessing your performance as a director.

Transferring staff to a new company solves nothing. Placing employees in a new entity just before bankruptcy — which then also fails to remit tax — creates new liability risks for yourself and the new entity.

Do not wait too long to act. If your company is structurally loss-making and accumulating debts it cannot pay, consider seeking professional advice on restructuring, suspension of payments or a controlled bankruptcy in good time. The later you act, the greater the damage and the harder it becomes to rebut the statutory presumption.

Conclusion

This ruling confirms a consistent line in case law: breach of the filing obligation is one of the most effective weapons in the trustee's arsenal. Once it is established that the financial statements were not filed on time, the director is in principle liable for the full bankruptcy deficit. Only with extensive, concrete and well-supported documentation can that presumption be rebutted. In practice, very few directors succeed.

The message is simple: file your financial statements on time, keep your administration in order, and meet your tax obligations. The consequences of failing to do so can completely exhaust your personal assets.

Ruling

This blog post is based on ECLI:NL:RBNHO:2024:12289, judgment of the Noord-Holland District Court of 27 November 2024.