Manager's liability for social security contributions after bankruptcy

The Constitutional Court recently considered the liability of a manager (zaakvoerder) of a limited liability company (BVBA/SPRL) if his company, after bankruptcy, still owes social security contributions. Article 265, § 2 of the Companies Code provides for such liability if the manager caused the bankruptcy through his gross negligence, or if he had already been involved in two other bankruptcies within the past five years. The liability can then be invoked by the National Social Security Office (NSSO) itself or by the bankruptcy trustee.   This no-fault liability was introduced in order to counter the practice in which managers sought to escape such liability by allowing different companies to go bankrupt, one after another. The criticism of this liability was, correctly, that good-faith managers could be held liable in this way as well.   It is in such a situation that last year a question was raised before the Commercial Court of Antwerp. There the liability in the legal proceeding was that of a manager who was involved in the earlier bankruptcies of two affiliated companies that initially had also been set up together. Because he was in good faith in these bankruptcies, the Constitutional Court was asked whether the equal treatment with bad-faith managers didn´t violate the constitutional principle of equality.      In its decision of 8 May 2014, the Court emphasises that what the legislature had in mind was the bad-faith practice of successive bankruptcies. The Court acknowledges that the trustee and the NSSO administration have a substantial degree of discretion in this context. In particular, they are not obliged to file such an action. This is also clear from the text of the law, which provides that managers can be held liable.      According to the Court, the judge enjoys the same degree of discretion. In assessing the liability, the judge must explore whether the described bad-faith practice was implemented in reality. In addition, in assessing the scope of the liability, he must take account of the good faith of the manager in question.   The Court concludes that article 265, § 2 of the Companies Code is in accordance with the constitutional principle of equality only in this specific interpretation. In this way, the decision mitigates the objective or no-fault liability created by the article of the law. This ruling is in line with an earlier decision of the Court concerning the liability of directors (bestuurders) of a limited liability company (NV/SA) in a similar situation.   In sum, the liability of the manager is thus properly limited to the bad-faith managers that the legislature had in its sights when it adopted the law.