Warranty claim after a share purchase: selling company pays, director not liable
On 23 October 2026, a judgment of the Amsterdam District Court of 14 October 2026 was published on a warranty claim following a share purchase. The ruling shows how difficult it is to hold a director liable when the seller turns out to be an empty shell.
The facts
In February 2022, a company acquired the shares in an IoT business, including for EUR 2,758,377 in cash plus an earn-out. According to the buyer, before closing the sellers had provided no or incorrect information on the termination of a major project and on contracts terminated by customers, in breach of the warranties in the share purchase agreement. The buyer claimed EUR 2,669,164 from one of the sellers, a private limited company, as well as from its indirect director and his two holding companies.
The court's decision
The selling company did not appear in the proceedings. The court grants the claim against it, plus statutory interest from 22 February 2022. The claim against the director and his companies is dismissed. Director's liability requires a serious personal reproach. The buyer had not sufficiently argued that, when the purchase was concluded, the director knew or should reasonably have understood that the selling company would not be able to pay; that is an independent requirement. The fact that the company is now empty according to its 2024 financial statements does not mean this was foreseeable in 2022. Nor does a statement given at the acquisition that the company would maintain a certain level of assets for eighteen months change that.
Practical tips
As a buyer, look not only at the content of the warranties but also at recourse: who will actually stand behind them?
Secure that recourse, for example through an escrow, a bank guarantee, joint and several liability of the ultimate shareholder or warranty and indemnity (W&I) insurance.
Align the term of any security with the period within which warranty claims can be brought.
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This blog provides general information and is not legal advice. For advice on a specific situation, please contact us.
