Contractor bankrupt: when is the director personally liable?

Contracting of work when the contractor goes bankrupt

On a renovation the money runs ahead of the work. Where the contractor goes bankrupt, the published judgments have his director paying personally only where several facts coincide: invoicing without progress, money not spent on the work, and an empty company. On that footing the Amsterdam Court of Appeal awarded €47,237.62. Whether a claim succeeds turns on two preliminary questions, about time and about recovery, and on three hurdles: contracting party, reproach and loss.

First preliminary question: is the claim still in time?

Anyone who starts thinking about the director after a bankruptcy is often months down the road. Three periods run in that time, they do not run together, and the shortest runs against the contractor itself.

Section 7:761(1) DCC gives two years for a defect in the works delivered up, running from the client's protest. Where the client has set a period in which to remedy the defect, that clock starts only at the end of it, or as soon as the contractor indicates it will not repair. An absolute limit of twenty years after delivery up runs alongside it for building works.

The bankruptcy stretches that period, but only against the estate. Section 36(1) of the Bankruptcy Act lets a period that would expire during the bankruptcy, or within six months after it, run on until six months after the bankruptcy ends. The claim against the director personally falls outside that extension, because such a claim does not seek satisfaction from the estate.

Against the director a different clock runs. That claim is a tort and expires under Section 3:310(1) DCC five years after the day on which the client became aware both of the loss and of the person liable for it, with twenty years after the event as the outer limit. Where the director's role emerges only from the trustee's report, those five years can start later than the two years against the company. The first period stays pressing all the same: let it lapse and what remains is a claim against a director over a defect that can no longer be collected from the contractor.

Second preliminary question: is anything recoverable from the director?

An award against a director without assets costs money rather than producing it. In the judgments the question comes last, because a court reaches it only after all the others; for the client it comes first. No legal test applies here, but an assessment of what there is to collect, and two traps that overturn that assessment.

Start with what is at stake on the other side. In the judgments analysed the route to the director failed more often than it succeeded: alongside the Amsterdam judgment, in January 2024 the District Court of North Holland awarded €34,716.64, and against those two stands a series of dismissals with costs orders of €3,165, €5,495, €6,759 and €6,917 against the client. How unevenly the recovery side can fall out is shown by the case decided in The Hague in June 2021: the same prejudgment attachment, levied as security before any judgment existed, caught about €70 with one director and €80,615.82 with the other. Recovery cannot be inferred from the company or from the office held, and has to be investigated for each person.

The first trap is the assumption that a judgment against the company is a useful first step. The Amsterdam Court of Appeal held that a default judgment given against the company, entered without any defence from it, has no res judicata effect as against the director personally, so that the reproach has to be substantiated afresh in the second set of proceedings. Enforcement of that default judgment of €68,251.25 had yielded €4,641.01, of which €2,513.92 remained after costs. That was the cash with which the case against the director began.

The second is that the defendant disappears during the proceedings. In the case decided in The Hague in May 2025 the intermediate holding company had been dissolved on 11 November 2024 and had ceased to exist for want of assets. Because the writ had been served on 17 October 2024, the proceedings against it could be continued, and the client was ordered to pay €5,495 in costs. In the North Holland case of March 2026 the director sued went bankrupt himself after the writ was served and his trustee took over the proceedings. The trustee admitted the claim, whereupon the clients pressed on with the case regardless. They were left with an admitted claim in the estate and a costs debt of €6,917 to the very same estate.

Check, finally, whether a guarantor exists. In November 2023 the Arnhem-Leeuwarden Court of Appeal construed a guarantee given by a third party as a completion guarantee, and such a scheme produces money more often than the route to the director. A client who presses on even after that assessment faces three hurdles, in the order the courts work through them; stumble at the first and the rest is never reached.

Hurdle one: the contracting party decides which director is reachable

A director can only be held to account for what his company did. A client who sues the wrong party gets no ruling on the reproach and pays the costs. That question falls into two parts: which legal entity was contracted with, and which of its directors is within reach.

For the first part there is no separate test. In the judgments analysed the contracting party is established from the documents by which the contract was made and the invoices issued, and from the account into which payment was made. Who actually carried out or directed the work barely counts, and that works against the client who sat at the table with one man.

On 18 March 2026 the District Court of North Holland made that visible in a renovation and extension. The clients maintained that they had contracted with the contractor's sole proprietorship and sued him personally. The signed quotation was on the private company's letterhead, its name and Chamber of Commerce number appeared with the address details, the closing line stated that the quotation had been issued by the company, all invoices were on that same letterhead and all payments went to its bank account. General terms still carrying the Chamber of Commerce number of the sole proprietorship deregistered in 2021 did not outweigh that.

In both cases that failed on this point the client's own documents counted as well. In North Holland that was the letter in which their legal expenses insurer wrote to the trustee that the agreement had been entered into on behalf of the company, alongside the claim they had filed in that bankruptcy. In Limburg it carried the ruling: on 11 March 2026 the District Court of Limburg set aside a default judgment concerning a roof renewal because the clients had sued the wrong company within the group, and that emerged from the statement they had themselves forwarded to the national heat fund and from the position they had taken in earlier interim relief proceedings. What has been said earlier about the contracting party comes back in these proceedings.

A written contract is not required for that finding. Before the Amsterdam Court of Appeal the contract for work had come about orally, and that did not stand in the way of the director's liability: the invoices and the payments identified the company.

The second part concerns the chain above. For an indirect director, liability runs through Section 2:11 DCC, which passes the liability of a corporate director through to the natural person behind it. That pass-through does not replace the substantiation: on 25 November 2025 The Hague Court of Appeal held that for each director sued it must be alleged and, if disputed, proved that that director in particular acted unlawfully. A client who sues a holding company and its director in one breath without that distinction loses against the one what he might have recovered from the other.

Hurdle two: what the director can personally be reproached for

This hurdle defeats most claims. That the company fell short is usually common ground in these cases, and it is the company that is then liable for the loss; the reproach to the director has to be added on top. The client is moreover confined to the law of tort. In March 2026 the District Court of Limburg pointed out that the claims under Sections 2:9 and 2:248 DCC belong to the company and the trustee, and not to an individual creditor.

The standard runs in two steps. First the director must himself have acted unlawfully towards the client, under Section 6:162 DCC. In addition, he must be capable of being personally blamed in a serious way for the prejudice, and the requirements for that are higher than usual. In Ontvanger/Roelofsen the Supreme Court distinguishes two situations in which such blame can be found. The first is that the director enters into an obligation on behalf of the company while knowing, or reasonably having to appreciate, that it will not perform and will offer no recourse, the Beklamel standard, which therefore asks what he knew on the day of contracting. The second is that he brings about or permits the company's failure to perform, summed up by The Hague Court of Appeal as the frustration of payment and recovery, and that looks at what happened to the money afterwards.

Too much is often expected of that first route. On 9 June 2021 the District Court of The Hague set the bar: what is required is that at the moment of contracting the company was in fact in a hopeless position and had insufficient prospect of continuity. Money worries and negotiations with an investor do not clear that bar. In that case the turning point came only on 13 March 2020, when the investor gave notice of withdrawing from the investment, so the demolition work carried out before then gave rise to no reproach. A contractor who is short of money and takes the job on anyway does not by that fact act unlawfully.

The second route carries both awards, and both turn on where the money was destined to go. Before the Amsterdam Court of Appeal two private clients were having a house built and had undertaken to pay the fifth up to and including the tenth instalment under the payment schedule, each instalment ten per cent of the contract price, that is €17,012.54 per invoice. Five of those invoices were issued and paid, while the hearing on appeal established that the work had progressed through the sixth instalment, up to completion of the structural roof floor. Three invoices had therefore been issued too early.

The reproach came on top of that. The director had pressed for payment on the argument that the money was needed for the build, and could not later identify where it had gone, beyond saying it had been used "for the purposes of the business". The money was neither spent on the build nor set aside for it, and when he laid down the work in December 2018 the company was left as an empty shell while he himself remained active in construction.

Sharper still is the North Holland case of 10 January 2024. There €75,000 had been paid in advance, €25,000 on 28 November 2021 with confirmation that the sum was destined for the kitchen and the aluminium folding wall and €50,000 on 24 December 2021, while the written agreement was only concluded on 19 January 2022. The funds destined for the suppliers were never passed on. According to the court the director should have built into the company's operations, at the very least, a safeguard that would prevent the funds from being used for purposes other than the renovation of the house. A pattern went with that: a subcontractor left unpaid for €6,618 in April 2022, a glass order of €750 cancelled for want of money, a kitchen and a rear facade left unpaid, and continued invoicing where the progress of the work gave no cause for it.

That produced an award of €34,716.64 in principal. The extent of that loss was left undisputed in that case, so the judgment carries weight above all on the unlawfulness.

That is precisely where the boundary lies, and on 17 December 2024 the Arnhem-Leeuwarden Court of Appeal drew it. During a renovation the window frames turned out to cost more than budgeted. The contractor asked for an additional payment on the statement that the supplier would be paid from it directly, failed to do so, and went bankrupt. That may be improper, the court held, but it concerned an act within the handling of the agreement as a whole, in an ongoing project about which there were no other relevant complaints. Cutting that arrangement out as a free-standing legal act is wrong in law, and the bare fact that a promise to pass money on is broken does not without more justify the conclusion that loss flows from it. Earmarked money that never reaches its destination is therefore too little on its own: it has to sit within a pattern.

What else founders on this hurdle is most of what a client instinctively thinks of. In the North Holland case of March 2026 a surveyor had established that the contractor had removed a roof truss and a truss beam and left the house with an unstable roof structure. The claim failed all the same: merely delivering poor work or exercising insufficient supervision is not enough for a serious personal reproach. That money received is not spent one for one on the project paid for was, in the court's words, "not entirely unusual".

Three reproaches that are often raised together were all three rejected by The Hague Court of Appeal on 25 November 2025. That the contractor offers no recourse does not make its indirect director liable. That the director incorporated several companies does not, without further explanation, mean that he wanted to frustrate recovery. And expert statements establishing after the event that the work was defective show that there is a defect, not that the director knew at the time of contracting that the work could not be carried out. Nor did the court accept a personal duty to have a survey carried out beforehand.

Even a breach of a mandatory statutory provision by the contractor does not bring the client to the director. In February 2026 the Rotterdam District Court found that a company had invoiced in breach of Section 7:767 DCC on the construction of a house built from shipping containers. That provision, however, is addressed to the contractor, and its directors are liable alongside the company only where they can themselves be seriously blamed for the breach. That failed: the correspondence and the recorded conversations showed that they had made efforts to have the work completed, and having been too optimistic about whether that was still possible is, according to the court, not seriously blameworthy.

The outcomes are thus explained by how many facts coincide, rather than by the gravity of any one of them. That is where the difference lies between the window frames case, where a single promise was broken in an otherwise untroubled project, and the two awards, where the destination of the money, the progress of the work and the empty company confirmed one another.

Hurdle three: what loss survives against the director

A reproach that is made out does not yet produce the unpaid balance. The claim against the company follows the contract, the claim against the director follows the reproach, and the two are rarely equal. A client who claims the full contractual shortfall keeps part of it.

The measure is a comparison of the actual situation with the situation that would have arisen without the conduct complained of. The reproach itself therefore sets the window: under the Beklamel standard what matters is what the client still paid after that moment of contracting, and under the frustration of payment it is the payments made after the tipping point at which the director knew there would be no work in return.

Before the Amsterdam Court of Appeal that comparison came down to the three premature instalments totalling €51,037.62, less the €3,800 the company had already repaid in 2018. The extrajudicial costs and attachment costs from the earlier proceedings against the company fell outside the award, because those costs relate directly to those other proceedings.

How sharply that delimitation works is shown by the North Holland case of March 2026. The clients had paid €91,000.21 in six instalments. The trustee drew a cut-off date at 1 November 2023 and definitively admitted €21,807.67, exactly the sum of the four payments made after it. For the period before that, including the two largest instalments, the claim remained dismissed. What matters is what that admission is: a claim in the director's own bankruptcy, and therefore not a payment.

That window can also close. Stopping payment protects what has not yet been transferred and earns the client no reproach, but with that the ground is then exhausted. Before the District Court of The Hague on 7 May 2025, €77,170 had been transferred between April and September 2022 against €16,700 of work delivered. Even if it should have been clear to the director in October of that year that the company would no longer perform, the court reasoned, no payments were made from that moment on. There was nothing left to accept, and on precisely that finding this ground failed. For the sums predating that moment the Beklamel standard remains, and that asks what was known on the day of contracting.

What can a client do when the contractor is faltering?

Set the payment dates against the progress of the work, and keep that record invoice by invoice. That is the axis on which both awards turned, and equally the axis along which the trustee drew the cut-off date. Where advance payment is sought for a specific delivery, ask for the safeguard the District Court of North Holland held should have been built in: direct payment to the supplier, or proof of the order before the money leaves.

On new-build the statute protects the relationship between payment and progress. Section 7:767 DCC provides that a private client can only be obliged to make payments which correspond, at least approximately, to the progress of the building work. Anything overpaid counts as undue payment, and that cannot be departed from to the client's detriment. In the Rotterdam case what was paid exceeded the value of the work by 33 per cent of itself, and that fell outside the bandwidth the words "at least approximately" allow.

That protection also covers a client who works in construction. On the renovation of an existing home it does not in principle apply: Section 7:765 DCC confines the relevant part of the Civil Code to contracting for work directed at building a home. There the payment schedule has to be set out in the contract itself, tied to measurable milestones rather than to the calendar.

Where progress falls behind, suspend performance and record in writing what is expected. Suspending without that ground puts the client in default, making the client the party that falls short, and before the Amsterdam Court of Appeal the contractor's reliance on suspension failed on the absence of just such a notification. For the wider context see contracting of work and, on the position within the bankruptcy itself, bankruptcy and the trustee. And keep the financial trail alongside the surveyor's report: unpaid subcontractors, cancelled orders, other clients with the same story. The trustee's public report is the first source there that costs nothing: it sits in the central insolvency register and sets out the timeline, down to changes of director and cash withdrawals. A report proves the defect, and about the director it proves nothing. His knowledge has to come from other documents, and it must be substantiated for each director sued. A client holding only that report is litigating about a defect, not about a director.

Cited case law

Supreme Court: ECLI:NL:HR:1989:AB9521 (6 October 1989, Beklamel, the standard for a director who contracts on behalf of the company); ECLI:NL:HR:2006:AZ0758 (8 December 2006, Ontvanger/Roelofsen, the two situations in which a director may be liable alongside the company).

Courts of appeal: ECLI:NL:GHAMS:2024:1247 (Amsterdam, 7 May 2024, premature building instalments not spent on the work amount to a serious personal reproach); ECLI:NL:GHARL:2024:8011 (Arnhem-Leeuwarden, 17 December 2024, an additional payment for window frames that is not passed on is one payment within the agreement and not without more a serious reproach); ECLI:NL:GHDHA:2025:2379 (The Hague, 25 November 2025, the absence of recourse, several companies and reports drawn up later do not make the indirect director liable); ECLI:NL:GHARL:2023:9389 (Arnhem-Leeuwarden, 7 November 2023, a third party's guarantee construed as a completion guarantee on the contractor's bankruptcy).

District courts: ECLI:NL:RBNHO:2024:137 (North Holland, 10 January 2024, advance and earmarked funds not passed on: the director should have built in at the very least a safeguard against their being spent on other purposes); ECLI:NL:RBDHA:2021:5869 (The Hague, 9 June 2021, the Beklamel standard requires a factually hopeless position at the moment of contracting; money worries and ongoing negotiations with an investor do not suffice); ECLI:NL:RBNHO:2026:2837 (North Holland, 18 March 2026, contracting party established from the quotation, the invoices and the payments, and poor workmanship as such no serious personal reproach); ECLI:NL:RBDHA:2025:8222 (The Hague, 7 May 2025, no payments after the tipping point means no payments accepted without work in return); ECLI:NL:RBROT:2026:1231 (Rotterdam, 4 February 2026, invoicing in breach of Section 7:767 DCC is no serious reproach to the director); ECLI:NL:RBLIM:2026:2037 (Limburg, 11 March 2026, default judgment set aside because the wrong company within the group had been sued; Sections 2:9 and 2:248 DCC belong to the trustee and not to the client).

Juriaan de Vries is a lawyer at Prime Law and litigates construction and liability cases. See the disclaimer.

See also

• What happens to instalment payments when the contractor fails to deliver up the works?
• Villa renovation terminated: court of appeal awards the contractor €89,589 despite the missing signature
• De facto director: liability of the non-director
• Heat pump or home battery sold at the door: a strong right of withdrawal, a weak prospect of recovery