In economically difficult situations or when payment difficulties arise, company managers often face a situation where the principle of limited liability may no longer protect them. If a private limited company is permanently insolvent, the obligations arising from the law become strict and mistakes can lead to long-term litigation.

Liability of a board member and main risks

According to Estonian legislation, a private limited company is a limited liability company, which means that the company is primarily liable for its obligations with its assets. However, this protection is lost if a board member breaches the duty of care or delays taking steps arising from the law.

The following risks are critical in the light of bankruptcy proceedings:

1. Delay in filing a bankruptcy petition: If a company is permanently insolvent, the board must file a bankruptcy petition immediately, but no later than within 20 days. In case of delay, a board member is liable for the damage caused to creditors with his or her personal assets.

   
   

2. Joint and several liability: If obligations are violated intentionally or due to gross negligence and this is proven in court, the board will be jointly and severally liable. Creditors or the Tax and Customs Board can demand payment of debts from the board members.

   
   

3. Criminal and misdemeanor proceedings: Failure to organize accounting, concealment of assets or submission of knowingly incorrect data may result in criminal proceedings.

   
   

4. Business ban: The court has the right to impose a business ban on a board member who has violated his or her obligations, which prevents him or her from managing new companies and continuing business activities.

How can Likvidaator.com reduce risks?

Managing a company in financial difficulties requires specific legal knowledge and quick response.   likvidaator.com offers legal and sometimes creative solutions that help the management board and owners of a company in crisis to minimize risks.

Such a super professional service helps to mitigate risks by taking the following steps:

1. Operational takeover of the company: The most effective way to terminate the legal relationship is to transfer the company's shareholding to the holding company Likvidaator.com. Likvidaator.com will change the company's management board, address, business name and beneficial owner within two weeks of the transaction.

   
   

2. Termination of legal relationship and obligations: By registering the change of management board and shareholders in the commercial register, the direct legal relationship of the previous management with future processes ends. Further actions with creditors or the court will take place without the client's participation.

   
   

3. Crisis management and liquidation: The new management will carry out procedures if necessary, be it voluntary liquidation, reorganization, compulsory winding-up or bankruptcy proceedings. In the case of bankruptcy, however, there is a risk that the court will appoint a former board member as the debtor's representative.

   
   

4. Support from experienced experts: The process is led by Raul Pint, who has over 30 years of experience and more than 5,000 successfully terminated companies. This ensures that all actions are carried out in the best and most professional way possible in the interests of the client.

When is the right time to contact?

The rule  is - the sooner the better. You should not wait until the bailiffs have seized the account or the bankruptcy trustee knocks on the door.

Likvidaator.com services should be considered as soon as cash flows are negative, the debt burden is growing too much, or critical deficiencies have arisen in the accounting.

Timely response ensures that the process is carried out as smoothly as possible and the board member does not find himself in a situation where he can, for example, be accused of delaying the filing of a bankruptcy petition.

Timely engagement of likvidaator.com allows entrepreneurs to save time, conserve energy, and most importantly – protect their personal assets and reputation.