There is the idea that a claim against an administrator is a matter for listed company boards. The real cases tell a different story: most are against administrators of medium-sized companies, and often against the founding partner.
Fraudulent bankruptcy
It is by far the most common route. In the qualification section, it is examined whether there was an aggravation of insolvency, delay in filing for bankruptcy, or accounting irregularities. If found guilty, the administrator may be obliged to cover the bankruptcy deficit with their personal assets.
Derivation of debts with the Administration
The Tax Office and the General Treasury of Social Security can transfer the responsibility for the company's debts to the administrator, with procedures that act directly on personal assets. The debt itself is not insurable, but legal defence against the procedure is, and that is where the matter is contested.
Conflict between partners
The social action of liability and the challenge of agreements are common in family businesses and companies with minority shareholders. This is why we always check that the policy does not include a majority shareholder exclusion, which would precisely leave out the most likely scenario.
Claims after cessation
Liability survives the position during the limitation periods, which in the corporate sphere reach four years from cessation. As the policy operates on a claims-made basis, those who resign need a discovery period contracted, usually of six years. Forgetting this is the most common and costly mistake.
Corporate operations
Many policies incorporate a change of control clause that converts them into run-off upon closing a sale. Outgoing administrators are left without cover for acts during their mandate if no one contracts the run-off at the time of closing.
