Wrongful trading: the asset of the directors could be in danger

Dr Boglárka Zsófia Joó and Dr Zoltán Csernus // origo.hu // 2 December 2015

Experts at VJT & Partners highlight that if the company becomes insolvent, and the creditor wins the case, the director may be liable with his/her personal asset.

Recently you may have frequently met with the expression ”wrongful trading” — and not just in legal, but also in the business circles. This clearly shows the tendency of increase of lawsuits aiming to determine the liability of directors.

Are the personal assets of directors really in danger? The answer is yes according to Zsófia Joó Boglárka. If the company becomes insolvent, then any creditor may file a lawsuit to determine the personal liability of the director, where the creditor shall prove that after the occurrence of threatening insolvency the director’s duties have not — based on the priority of the creditors’ interest in the company — been fulfilled. If the creditors win the case, the director will be liable for his/her personal asset.