CIVIL LIABILITY OF THE DIRECTOR FOR NON COMMENCEMENT OFINSOLVENCY PROCEEDINGS IN TIME

Abstract

This article examines the issue of the application of the civil liability of the director of a company for the failure to commence insolvency proceedings in time. This form of liability is specific, relating to the breach of the obligation to initiate insolvency proceedings in time, and its purpose is to compensate the company’s creditors for damage caused. Following the adoption of the Law on Insolvency of Legal Entities and the reform of the insolvency process in Lithuania, the question arises as to the process in which the liability of the director of a company for the failure to commence insolvency (bankruptcy) proceedings in time should be examined. In order to answer these questions, this article examines the nature, legal regulations, and case law of this liability in the United States, France, the United Kingdom, and Poland. The analysis of the problems of the application of the civil liability of a director for failure to commence insolvency proceedings in time has focused on the identification of unlawful actions as the main conditions of tort liability, which has triggered a lot of questions in the case law. The purpose of this article is to reveal when the director of a company has a duty to commence insolvency proceedings, as well as the circumstances to be considered in deciding on the fulfillment of this duty.