Bankruptcy trustee in private

Liquidators are the ‘debris cleaners’ of our economy. When things go wrong at a company, a receiver is appointed. The trustee converts everything into cash and distributes what remains. The aim is to limit the damage bankruptcy for those involved, mainly the creditors. The receiver investigates illegality and has certain special powers to undo legal acts. This legal action is called the (bankruptcy) pauliana. The trustee can use the actio pauliana to recover money taken from the estate shortly before the bankruptcy.

However, it happens that trustees in their actions cause damage. The trustee often acts on behalf of the bankrupt company. The problem is that you often have little or nothing on a claim against the bankrupt. The question then arises, can you then sue the receiver privately?

In this blog, I briefly explain which standard applies. I also discuss by way of example a recent interlocutory judgment of the Amsterdam Court of Appeal. Here it is concluded that there are grounds for private liability of the receiver.

Freedom and the Maclou standard

According to the consistent line in Supreme Court case law, insofar as the bankruptcy trustee is not bound by specific rules, he is in principle entitled to a wide degree of freedom. When using that wide degree of freedom, the Maclou standard applies.

The Maclou standard implies that the trustee in bankruptcy should act as may be required of a trustee with sufficient insight and experience who performs his duties with meticulousness and commitment. In doing so, the trustee should act by the interest of the estate. In principle, it is left to the trustee’s discretion how to serve those interests.

Example, the Paulian acting trustee

As an example of how bold a trustee should be, it is interesting to look at the Amsterdam Court of Appeal’s interlocutory judgment of 16 May 2023 on the subject. In the judgment, there was a receiver of company 1 who had a large claim against company 2.

With that claim, the receiver of company 1 had filed for the bankruptcy of company 2. Before handling the bankruptcy, the trustee of company 1 made a deal with company 2 whereby €130,000 was paid to the bankrupt estate of company 1 by several other presumably affiliated companies for company 2. In return, the trustee withdrew as bankruptcy petitioner.

Bankruptcy declared anyway, deal is paulian

Even though the trustee indeed withdrew as applicant, other creditors did follow through on the request. Company 2’s bankruptcy was therefore declared despite the deal. The trustee appointed at company 2 subsequently annulled the deal with the trustee of company 1 and claimed back the €130,000 paid.

However, company 1’s estate offered no recourse, mainly because in bankruptcy, estate costs, including the trustee’s remuneration, take precedence over third-party claims. The trustee of company 2 thus risked falling behind the net due to the paulian deal of the trustee of company 1. The receiver of company 2 decided not to leave it at that and claimed damages from the receiver of company 1 privately.

Court

At first instance, the court ruled that company 2’s payment to company 1’s bankrupt estate was paulian. This means that it was voidable. but that there was no basis for the trustee’s liability in private is lacking.

The court decides the opposite in the interlocutory judgment. On the contrary, it considers that it is not yet clear whether the payment was paulianus. This is because it has not been established whether the other companies that paid the €130,000 made those payments to discharge debts to company 2 or not. This is important, because if there was no debt to company 2 against the €130,000, company 2’s estate could not have lost out. The court therefore asks the trustee of company 2 to provide further information on this.

If pauliana, then liable in private

However, the Court does rule that it is established that, if the actions are indeed paulian, the trustee can be held liable in private for damages. The Court reasoned that the receiver of company 1 knew, or should have known, that he was acting in a paulian manner. After all, he knew that there were other unpaid creditors, the bankruptcy petition he co-filed stated.

Because he knew, or should have known, that the company 2 would go bankrupt, he knew, or should have known, that the deal would be voided and the estate of company 1 would have to repay the amount to the estate of company 2.

However, he also knew, or should have known, that due to the ranking of creditors, there would be no money to repay the money. This because at the time the money was transferred, the estate costs (mainly his own bills) were already so high that there was no money to repay company 2. And that in addition, there was no expectation of any more money coming in.

In other words, the trustee knew that the €130,000 would have to be paid back. But that this would not be possible. The court’s verdict is that he thereby breached the Maclou standard. A trustee with sufficient insight and experience who performs his task with conscientiousness and commitment could not have reasonably decided to act in this way.

Dispute with receiver? Call us

As this article shows, there is a high threshold for holding a receiver liable in private. Nevertheless, it is not impossible and there are situations where, as a creditor, you have no other choice. Do you have a dispute with a receiver? Then contact one of our lawyers by mail, telephone or fill in the contact form for a free initial consultation. We will be happy to think along with you.