The Insolvency and Financial Rehabilitation Law came into effect in 2019. The new law added a new cause of action for imposing personal liability on a director or CEO of a corporation in insolvency in respect of damages caused to the corporation and to its creditors, insofar as such directors and officers failed to take action to minimize the scope of the corporations insolvency.
The purpose of the provision is to incentivize directors and CEOs to take action immediately when a corporation finds itself in a state of insolvency and before creditors suffer substantive damages. In this way, directors and officers are able to eliminate their exposure to personal liability in respect of damages caused to the corporati…
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