The client's situation
The company operated in the HoReCa sector and, against the difficult economic backdrop of recent years, saw a progressive decline in its activity and revenue.
Seeking to support and turn the business around, the director lent money to the company from his own funds. Those loans were never recovered, and the financial difficulties continued.
The tax authority subsequently applied to engage the director's personal liability and to have him pay, from his personal assets, company tax debts of approximately RON 600,000.
The defence
The defence was built on a detailed analysis of the company's accounting position, carried out together with specialists in the field, and on the documentation placed on the case file: the financial records, the documents evidencing the director's funding of the company, and the records showing how the business had developed.
We argued that the mere existence of tax debts and the company's economic difficulties are not sufficient to engage the director's personal liability.
Such a measure requires concrete proof of the acts alleged, of bad faith, of the causal link, and of the director's contribution to the company's financial position.
In this case, the evidence showed that the director:
- sought to continue and turn around the business;
- funded the company from his own resources;
- never recovered the loans he had granted;
- did not seek to defraud creditors;
- did not act in bad faith in performing his mandate.
The company's difficulties were a consequence of how the business developed economically, not the result of fraudulent acts by the director.
The final decision
The court dismissed the claim seeking to engage the director's liability and the request that he personally settle the company's debts of approximately RON 600,000.
The decision became final, confirming that a director's liability cannot be engaged automatically simply because the company accumulated tax obligations or failed to continue trading.
Why the decision matters
A company's liability and its director's liability are distinct. A company's debts cannot be transferred automatically to the person who managed it.
To engage personal liability, concrete acts must be proven, committed with the form of fault required by law, together with the link between the director's conduct and the loss alleged.
Business failure, falling revenue or the inability to turn a company around do not, in themselves, prove bad faith or an intention to defraud.
Which documents matter in the defence
The company's accounting and financial picture is, in most cases, the decisive element. In defences of this kind we review:
- Annual financial statements and trial balances — they show how the business actually developed and when the difficulties began;
- Records of the director's funding of the company — loan agreements, bank statements, payment instructions; they evidence the effort to support the business from personal resources;
- The record of payments to the state budget — showing whether the company paid in part, applied for a payment schedule, or otherwise sought to comply;
- Documents on how the business developed — contracts, relationships with partners and clients, the concrete causes of the fall in revenue;
- Decisions taken to turn the business around — resolutions of the company's bodies, restructuring measures, negotiations with creditors;
- Correspondence with the tax authority and the tax decisions issued — the procedural framework and the legal basis relied on.
Reviewing these documents together with specialists establishes whether the company's difficulties have an economic explanation or whether there are acts attributable to the director.
This list is a starting point. During the consultation we determine what further documents are needed, depending on the company's specific situation and the legal basis relied on by the tax authority.
Legal assistance in similar cases
We advise and represent directors and companies in disputes concerning:
- engaging the personal liability of company directors;
- tax authority claims for payment of company debts;
- joint and several liability for tax obligations;
- challenging administrative and tax decisions;
- protecting the director's personal assets;
- tax disputes and insolvency-related proceedings.
Every situation calls for a review of the company's records, of the director's conduct, and of the legal basis relied on by the tax authority.