Recovering payments made from bank account after bankruptcy date

17 May '22

Author(s): Joost Kool, Lucas Lustermans,

Supreme Court 22 January 2022, ECLI:NL:HR:2020:80 - www.rechtspraak.nl

Introduction

Recently, the Supreme Court dealt with the following question: can the bankruptcy trustee recover a payment made from a bank account with a debit balance in the name of the bankrupt company after the bankruptcy date, as undue payment due to a breach of the fixation principle or the equality of creditors principle?  

In short, the Supreme Court concluded that this was not possible. Since as a result of the payment there is decrease of bankruptcy estate’s assets (as there already was a debit balance) and also no increase of the bankruptcy estate's liabilities (as the estate is not liable for the debt that arose as a result of the payment since the estate has not benefited from the payment), the fixation principle and section 23 of the Bankruptcy Act do not allow for such a claim being successful. In addition, an impermissible breach of the equality of creditors principle could not be assumed, since the payment in question was not charged to the assets of the bankruptcy estate.

The relevant facts, the claim and the proceedings

Bleiswijk Boeketservice B.V. (BB) leased premises from Coöperatie Royal Floraholland U.A. (RFH). On 2 October 2012, BB was declared bankrupt. The lease agreement between BB and RFH was terminated after the bankruptcy. On 3 October 2012, EUR 4,518.09 was paid to RFH by direct debit from BB's bank account, which amount was due under the lease agreement. The payment was made from BB’s bank account at ABN Amro, which at that time had a negative balance.

At first instance the bankruptcy trustee claimed that RFH should be ordered to pay EUR 4,518.09. According to the bankruptcy trustee, BB no longer had the authority to dispose of its assets on 2 October at 00.00 hours, in accordance with section 23 of the Bankruptcy Act. The payment would therefore be made undue, according to the bankruptcy trustee. The district court, however, rejected the claim.

The court of appeal concluded otherwise, annulled the judgment of the district court and ruled in favor of the bankruptcy trustee’s claim. To this end, the court of appeal ruled (in short) that the payment was made in breach of the fixation principle underlying section 23 of the Bankruptcy Act and in breach of the equality of creditors principle.

The Supreme Court

The Supreme Court considered that the rationale of the fixation principle follows from sections 20, 23 and 24 of the Bankruptcy Act. These sections are intended to "...offer creditors protection against both a decrease in the bankruptcy estate’s assets available for distribution among the creditors in the bankruptcy, and an increase in the bankruptcy estate’s liabilities as a result of which the distribution to the creditors in the bankruptcy is reduced".

The Supreme Court ruled that the payment to RFH was not made in breach of the fixation principle. After all, the payment did not result in a reduction of the estate assets, since the bank account already had a debit balance at the moment on which the company was declared bankrupt. The payment also did not result in an increase of the bankruptcy estate’s liabilities. It follows from section 24 of the Bankruptcy Act that obligations of the debtor arising after the moment on which the company was declared bankrupt will not be charged to the bankruptcy estate’s assets, except in so far the bankruptcy estate benefits therefrom. Although the payment to RFH increased BB's debt to ABN Amro, that debt was not charged to the bankruptcy estate as the bankruptcy estate did not benefit from that payment.

As regards a possible breach of the equality of creditors principle, the Supreme Court ruled that according to article 3:277 of the Dutch Civil Code, creditors should be treated equally as regards the settlement of their claims from (the proceeds of) the debtor’s assets. As already set out in the context of the fixation principle, ABN Amro's payment to RFH did not result in a claim on the bankruptcy estate. Consequently, the equality of creditors principle is not breached.

The Supreme Court therefore annulled the judgment of the court of appeal and upheld the judgment of the district court.

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Expertises:  Banking and finance,Corporate Law, Finance, Mergers and acquisitions,Start-up en Scale-up,

Expertises:  Banking and finance,Corporate Law,Insolvency law,Real Estate,Energy law, Construction and Real Estate,Finance,Energy, Distressed companies,Mergers and acquisitions,International sanctions and export controls,

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