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Partner Chirag Mody and senior associate Silvia Urgas successfully represented a client in three court cases

29.09.2023 Partner Chirag Mody and senior associate Silvia Urgas successfully represented a client in three court cases

Harju County Court dismissed all three actions brought against our client in the total amount of EUR 2,500,000. In three court cases that lasted more than two years, it was argued whether our client had breached their official duty and failed to protect the interests of the corporate debtor in the bankruptcy proceedings.

The courts clarified several important issues relating to claims against a trustee in bankruptcy proceedings:

  • a shareholder of a corporate debtor cannot claim compensation for damage from the trustee in bankruptcy;
  • a shareholder of a corporate debtor may not claim compensation for damage even if a claim has been accepted in the debtor’s bankruptcy proceedings which reduces the value of the share of the corporate debtor;
  • the liability of a trustee in bankruptcy for violations of a non-bankruptcy nature is not fully excluded (although debatable);
  • since a claim cannot be time-barred before the damage has occurred, such an action cannot be brought “preemptively” either.

According to Chirag, this is an important ruling on the liability of the trustee in bankruptcy in bankruptcy proceedings. The rulings clarify that a trustee in bankruptcy cannot be liable to a debtor shareholder for an alleged bankruptcy violation. Liability for other types of violations is also only theoretical and rather unlikely.

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