Case regarding a legal body’s management civil responsibility

Motieka & Audzevičius represented a client in the Supreme Court of Lithuania in a case regarding a legal body’s management civil responsibility.

The Supreme Court of Lithuania in its judgement provided new interpretations on the responsibility of the management. According to the new interpretation, for instance, the fact that a company is solvent in accordance to Bankruptcy Law does not prove that the management acted in line with the interests of its shareholders and creditors or, conversely, that actions are necessary if company performance indicators are worsening.

The Supreme Court also provided new interpretations on prescription applications when a claimant (a creditor of the insolvent company) demands the reimbursement of damages from responsible parties on behalf of a debtor (insolvent company). The court provided a controversial opinion that when this type of indirect claim occurs, the prescription is counted not from the moment when the breach of rights is encountered by the debtor, but from the moment when the creditor acting on behalf of the debtor becomes aware of it. This interpretation significantly restricts the possibilities to apply prescription.