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Declaration of Bankruptcy Does Not Relieve CEO of Liability for His Own Activities

Declaration of Bankruptcy Does Not Relieve CEO of Liability for His Own Activities

Czech Republic
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The Supreme Court dealt with the liability of the insolvency administrator and the debtor's managing director (CEO) after the declaration of bankruptcy and their obligations to proceed with due managerial care.

The insolvency administrator is obliged to proceed with professional care when performing the function. In the event of a declaration of bankruptcy on the debtor's property, the right to dispose of the property passes to the insolvency administrator, and the existing statutory body thus effectively loses this right. However, this does not mean that it is relieved of the obligation to act with due managerial care and, therefore, it is necessary to examine all its actions taken even after the declaration of bankruptcy.

The Supreme Court thus confirmed that it cannot be easily concluded that liability for damage to property is always borne by the insolvency administrator and the liability of a member of the statutory body is thus excluded. The court must therefore always take into account all the circumstances of the case.

By Tomas Richter, Counsel and Marek Pume, Junior Associate, PONTES 

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