Facts in the Case
The Court of Appeal, reviewing the appeal against the syndic judge’s ruling, addressed the administrator’s objection regarding the expiry of the right to claim, as well as the substance of the claim under Article 169 (1) letters (a) and (d) of Law 85/2014.
In this case, the debtor company was under simplified insolvency proceedings initiated in 2023 at the request of the fiscal creditor. Financial and accounting documents revealed the former administrator carried out substantial unexplained cash withdrawals, while failing to pay tax obligations established through final enforcement decisions.
Furthermore, the administrator failed to file annual financial statements, did not maintain legally compliant accounting, and made contradictory accounting entries without correcting the balance sheet. Fiscal and judicial auditing bodies labeled these withdrawals as hidden dividends, which led to an additional fiscal liability for the company in the form of dividend tax plus penalties.
Due to the absence of credible documentation or explanations—and considering the administrator’s multiple failures—the court found illicit acts and a causal link to insolvency, affirming the administrator’s personal liability.
Applicable Legal Texts
Article 169 (1), Law 85/2014
The syndic judge may, at the request of the judicial administrator or liquidator, oblige members of the debtor’s governing or supervisory bodies—or any other person who contributed to the company’s insolvency—to bear part or all of the insolvent company’s liabilities, not exceeding the prejudice linked causally to their wrongdoing, if they:
a) used the company’s assets or loans for their own benefit or that of another; …
d) maintained fictitious accounting, caused accounting documents to vanish, or failed to keep accounting in compliance with the law. If accounting documents are not submitted to the judicial administrator or liquidator, both guilt and causality are presumed (this presumption is relative).
Article 170, Law 85/2014
“Prescription begins when the person contributing to the state of insolvency is known or should have been known, but not later than the date the judicial administrator’s or liquidator’s report is published in the Official Insolvency Monitor.”
Article 73 (1)(c),(2), Law 31/1990 (Companies Law)
Administrators are jointly liable to the company for:
c) existing required registers and their correct maintenance;
(2) Administrators are liable for damage caused by breaching legal duties.
Articles 10 & 32(2), Law 82/1991 (Accounting Law)
- Art. 10 – The administrator or designated person is responsible for organizing and managing accounting.
- Art. 32(2) – Annual financial statements must be filed within the legal deadline.
Why the Statute of Limitations Defense Failed
The Court held that the 3-year statute of limitations under Article 170 cannot begin before the insolvency procedure’s start.
Thus, the appellate argument that the limitation period started with the conclusion of the 2020 fiscal audit was dismissed. The court confirmed that the right to seek liability arises only once insolvency proceedings begin.
Since the lawsuit was filed within one year of the insolvency opening, the filing was timely—the limitation defense was correctly rejected.
Conditions for Holding the Administrator Liable
1. Use of Company Assets for Personal Benefit (Art. 169 (1)(a))
Repeated cash withdrawals without justification, coupled with failure to pursue recovery of receivables or correct accounting entries, supported the conclusion that the funds were used in personal interest or for unidentified parties.
2. Failure to Meet Accounting Obligations (Art. 169 (1)(d))
The administrator didn’t submit properly drafted financial statements, didn’t correct accounting errors, and couldn’t justify withdrawals. Tax authorities deemed the withdrawals to be concealed dividends, suggesting intent to evade taxes.
Given the legal presumption of guilt and causation, and the administrator’s lack of credible proof, full personal liability was upheld.
3. Causal Link and Damages
Unjustified withdrawals and deficient accounting contributed to—and worsened—the company’s insolvency. The fiscal creditor recorded damage in the form of unrecoverable tax claims.
The court established a direct causal relationship between the administrator’s actions and the debtor’s inability to pay, confirming his culpability.
Conclusion
The Court of Appeal dismissed the administrator’s appeal and upheld the syndic judge’s decision to hold him personally liable for the debtor’s obligations.
This decision reinforces jurisprudence that strictly applies Article 169 (1)(a) and (d) of Law 85/2014, underscoring the importance of maintaining proper accounting and prohibiting use of company assets for personal interest. Administrators of companies nearing insolvency must foresee and understand the risks of personal liability during proceedings—maintaining accurate accounting and clarifying potential issues before insolvency is vital.