The insolvency procedure, regulated by Law no. 85/2014 on the procedures for preventing insolvency and insolvency, has among its objectives the identification of causes that led to a debtor’s insolvency. In this context, the legislator provided the possibility of patrimonial liability for administrators, directors or other persons who have contributed, through illicit acts, to the debtor’s inability to pay. This mechanism is regulated by Article 169, which stipulates the specific cases in which liability may be incurred.
Legal Framework: Article 169 paragraph (1) letters (a)–(h) of Law 85/2014
Under Article 169(1), the judge-commissioner (judecător-sindic) may order, at the request of the judicial administrator or judicial liquidator, that part of the debtor company’s liabilities be borne by persons who contributed to its insolvency by committing one or more of the illicit acts expressly enumerated:
a) they used the company’s assets or credits for their own benefit or for the benefit of another person;
b) they carried out production, trade, or service activities in their personal interest while hiding behind the company;
c) they, in their personal interest, continued a business activity which plainly led the company toward cessation of payments;
d) they kept fictitious accounting, made accounting documents disappear, or failed to maintain accounting in accordance with the law. In the case of failure to deliver accounting documents to the judicial administrator or liquidator, both fault and the causal link with harm are presumed (a relative presumption);
e) they diverted or concealed part of the company’s assets, or fictitiously increased its liabilities;
f) they used ruinous means to obtain funds for the company in order to delay cessation of payments;
g) in the month preceding cessation of payments, they paid or arranged payment preferentially to one creditor to the detriment of others;
h) any other intentional act that contributed to the state of insolvency of the debtor, recognized under this title.
This list is express but not exhaustive, meaning that letter (h) allows liability to be imposed for other illicit acts, provided they were intentional and contributed to insolvency.
Conditions for Imposing Liability
For a court to hold someone liable, the following cumulative conditions must be met:
- Existence of an illicit act (one of those in letters a)–h));
- Existence of damage (usually the unmet portion of the creditors’ claims);
- Causal connection between the illicit act and the insolvency (liability cannot exceed the harm causally tied to the act);
- Fault (the act must be committed with at least intent, whether direct or indirect).
Courts examine concretely whether these are satisfied. Decisions of the High Court of Cassation and Justice help clarify the application of these rules.
Decision No. 14/2022 of the High Court (in Recourse in the Interest of the Law)
By Decision 14/2022, the High Court ruled that in an action under Article 169, the patrimonial liability of an administrator requires analysis of the causal link between the illicit act and the company becoming insolvent — not between the act and the full amount of liabilities. In other words, one does not need to prove exactly how much harm each act caused, but only that it contributed causally to insolvency. This helps avoid conflicting court practice that demanded precise mathematical proof, which is often practically impossible.
Decision No. 27/2022 of the High Court
The High Court also decided that the insolvency procedure cannot be closed before a final judgment is reached in the liability action under Article 169. The judge-commissioner must resolve that action within the insolvency procedure itself, because once the procedure is closed, neither the judge nor the insolvency practitioner retains competence. Premature closure would prevent the practitioner from exercising necessary duties and would vitiate legality. Subsequent forced execution is still possible after closure, but the liability verdict must be final while the insolvency procedure is still open.
Practical Applicability
Given these jurisprudential clarifications, in practice actions to hold administrators liable must meet strict evidentiary standards. Simply showing negative financial results or poor managerial decisions is insufficient. One must:
- Clearly identify the illicit act under one of the enumerated letters;
- Prove that the act was committed with fault (intention);
- Prove the causal link between that act and the company’s inability to pay.
For example, under letter a), it must be shown that assets or funds present in accounting were not truly there, implying they were used personally by the administrator. If from accounting records a company shows assets that do not exist materially, it may be presumed (unless rebutted) that the administrator used them personally.
However, mere nonpayment of debts or failure to declare VAT retroactively is not sufficient to hold liability under letter a) if there is no proof of intent to defraud or misappropriate assets.
Under letter c), for liability, it must be shown that the administrator continued operations despite clear evidence of financial collapse, in personal interest.
In letter d), failing to maintain accounting or refusing to hand over accounting documents triggers a presumption against the administrator. Under Decision 14/2022, if an administrator refuses (expressly or tacitly) to provide accounting to the judicial administrator or liquidator, that may be deemed as never having maintained the books, triggering liability.
In letter g), when it concerns preferential payments in the month before insolvency, the court examines whether payments were made to some creditors in violation of equality among creditors.
If multiple persons contributed to insolvency (e.g. several administrators), their liability is joint and several, provided that their periods of involvement overlapped with or preceded the insolvency onset. After satisfying creditors, one liable party may claim regress against the others.
The law also protects associates/shareholders who dissented from decisions contributing to insolvency — their liability cannot be engaged if they opposed or abstained and recorded their opposition. Similarly, lawful payments made in good faith in connection with an out-of-court agreement to restructure debt shortly before the company’s failure, aiming at financial recovery, are protected (if nondiscriminatory among creditors).
Procedural Aspects
a) Who may initiate the liability action?
The judge-commissioner cannot, ex officio, impose liability; liability action must be initiated by someone with standing: the judicial administrator or liquidator, the president of the creditors’ committee (by creditor meeting), or, if no committee, a creditor designated by the meeting. Also, a creditor holding over 30 % of total registered claims can institute the action.
b) Who may be held liable?
Primarily the statutory administrators for acts during their mandate. But liability may also extend to any person shown to be responsible (e.g. shareholders, de facto administrators) if they committed one of the enumerated acts with intent.
c) When can the liability action be filed?
It must be filed within 3 years, counting from the date the liable person was or should have been known. The term begins at latest from publication in the Insolvency Procedures Bulletin (BPI) of the judicial administrator’s or liquidator’s report on causes of insolvency (as required by law). Actions filed later than 3 years from that date are to be dismissed as time-barred. The debtor (or defendant) must invoke prescription at the first court hearing; the judge-commissioner cannot raise it ex officio.
According to the High Court’s Decision 27/2022, after the insolvency procedure is closed, liability cannot be pursued anymore.
d) Means of Proof
The judge-commissioner bases the decision on the agreement file documents and on evidence presented by parties. The person sought may defend using all appropriate means of proof, respecting civil procedure rules. Possible proofs: witness testimony that assets were misused by others, evidence of privileged payments, proof that nonpayment stemmed from objective causes beyond their control, or that another administrator committed ruinous acts.
Effects of a Final Liability Judgment
- The liable person must pay personally from their own assets toward the insolvent company’s debts, meaning their personal assets can be seized to satisfy creditor claims.
- Once a final decision is entered, the person loses the right to be appointed administrator of any company for 10 years from the decision’s final date.
- Imposing such liability does not prevent criminal sanctions if the act is also criminal under law.
Conclusions
The mechanism under Article 169 of Law 85/2014 has a twofold function: to sanction abusive or negligent management and to partially compensate the debtor’s estate for creditors. In light of Decision 14/2022, it is clear liability is not automatic, but must rest on fulfillment of the four essential conditions: illicit act, damage, causality, and fault. Liability must not become a coercive tool or simple way to cover liabilities—it must uphold civil liability principles and guarantee procedural rights.