A settlement reached by a creditor with a subsidiary – if a so-called 403 declaration is involved – does not automatically imply that the creditor in question has waived its right of action against the parent company. The Supreme Court recently ruled that, due to the joint and several liability of a parent company, independent performance of an obligation can be claimed.
Within a group of companies, the group exemption under Article 2:403 of the Dutch Civil Code is often used for filing annual financial statements. This exemption means that, under certain conditions, a subsidiary is not required to prepare and publish full annual financial statements. In that case, the subsidiary's financial data must be accounted for in the consolidated financial statements of its parent company. Furthermore, the parent company must declare itself jointly and severally liable for the debts arising from the legal transactions of its subsidiary. This so-called "403 statement" must be filed with the Chamber of Commerce.
The present case concerns the following. Parent company Bia Beheer has issued a 403 declaration regarding its subsidiary Mastertools. Mastertools has committed to supplying a die to Lentink Metaalwarenfabriek. Because the die is unsatisfactory, Lentink terminates the agreement and demands reimbursement of the portion of the purchase price already paid. Furthermore, it holds Mastertools liable for the damages it has suffered.
In 2007, both Mastertools and Bia Beheer were declared bankrupt. Two different trustees were appointed for the bankrupt companies. Ultimately, Lentink Metaalwarenfabriek reached a settlement with Mastertools' trustee, stipulating that Mastertools would pay Lentink Metaalwarenfabriek €25,000 and that the parties would grant each other final discharge.
Lentink Metaalwarenfabriek subsequently appealed to Bia Beheer's trustee for the remainder of its claim, based on the 403 declaration issued by Bia Beheer. Bia Beheer's trustee argued that Bia Beheer could no longer be held liable under the 403 declaration, as a settlement had been reached between Lentink Metaalwarenfabriek and Mastertools, resulting in Mastertools no longer having any obligations to Lentink Metaalwarenfabriek.
The Supreme Court, however, ruled that the 403 declaration implies that Bia Beheer has accepted joint and several liability for the debts arising from Mastertools' legal acts. This joint and several liability of Bia Beheer means that its liability is based on an independent obligation towards Lentink Metaalwarenfabriek, the fulfillment of which can be independently demanded. Since Lentink Metaalwarenfabriek did not waive its right of action against Bia Beheer in the settlement, the settlement reached with Mastertools only results in Bia Beheer's debt being reduced by the amount of €25,000 paid by Mastertools' trustee. Bia Beheer's liability towards Lentink Metaalwarenfabriek remains unaffected for the remainder.
The conclusion of this ruling is that a parent company can be held directly and jointly and severally liable based on a 403 declaration it has made. If a settlement is reached with the subsidiary as part of the settlement of a debt relationship, it is therefore important that the parent company is also granted discharge.
HR 3 April 2015, ECLI:NL:2015:837
This contribution was written by Mr. J. van der Beek
