Short Reads

Bankruptcy trustee may be personally liable if claims encumbered by an undisclosed right of pledge are collected against the will of the pledge holder

Bankruptcy trustee may be personally liable if claims encumbered by an undisclosed right of pledge are collected against the will of the pledge holder

Bankruptcy trustee may be personally liable if claims encumbered by an undisclosed right of pledge are collected against the will of the pledge holder

02.03.2016 NL law

On 5 February 2016, the Dutch Supreme Court (“Supreme Court“) ruled (ECLI:NL:HR:2016:199) that an estate claim (boedelvordering) based on damage suffered by a pledge holder, caused by the wrongful collection of claims encumbered by a right of pledge by a bankruptcy trustee, does not have priority over the estate claim relating to the remuneration of the trustee.

 

The Supreme Court declined to create a new category of so-called “super estate claims” (superboedelvorderingen), although it stressed that bankruptcy trustees may be personally liable vis-à-vis the pledge holder if  the bankruptcy trustee collects claims encumbered by a right of pledge against the will of the pledge holder.

Factual Background

Rapsody Shipyard B.V. (“Rapsody“) was a shipyard primarily concerned with the development and repair of luxury yachts. In 2009, Rapsody gave Coöperatieve Rabobank Sneek-Zuidwest Friesland (“Rabobank“) an undisclosed right of pledge on all of Rapsody’s claims against its debtors.

On 12 April 2011, Rapsody was declared bankrupt and Mr Verdonk (“Verdonk“) was appointed as bankruptcy trustee. Over the course of the liquidation of the estate, it came to light that Rapsody had claims amounting to EUR 33,000 against its customers based on repair works which had not yet been invoiced.

Rabobank declared to have an undisclosed right of pledge on the uninvoiced claims, which would allow the bank to collect these claims for its own benefit. On the other hand, Verdonk did not allow Rabobank access to the administration of Rapsody and proceeded to collect the claims not yet invoiced for the benefit of the estate. In the end, the estate held an amount of EUR 53,000 of which an amount of EUR 50,000 was claimed by the trustee on account of his remuneration.

Rabobank subsequently started proceedings against Verdonk, in his capacity as both bankruptcy trustee and personally, before the District Court of the Northern Netherlands. In 2012, The District Court ruled that Verdonk was liable in his professional capacity, but not personally. Both Rabobank and Verdonk appealed to the Court of Appeal of Arnhem-Leeuwarden, which largely confirmed the District Court’s judgment. Rabobank subsequently appealed the Appellate Court’s judgment before the Supreme Court.

The judgment of the Supreme Court

Rabobank’s main ground of appeal was directed against the Appellate Court’s ruling that in the event of a bankrupt’s insolvent estate, the estate claim relating to the trustee’s remuneration has priority over the estate claim of a pledge holder relating to the wrongful collection of claims by the trustee.

The Supreme Court dismissed the appeal on the basis that the scheme which ranks the priority of estate claims (preferentiestelsel) does not allow the estate claim of the pledge holder to have priority over the estate claim of the trustee. Although the Supreme Court remarked that not allowing priority to the estate claim of the pledge holder could have the undesirable result that trustees will intentionally – and wrongfully – collect claims encumbered by an undisclosed right of pledge in order to recoup their salaries, this was not considered sufficient reason to overturn the Supreme Court’s earlier case law. In this regard, the Supreme Court followed the opinion of the Advocate-General that a new category of “super estate claims” should not be created.

The judgment of the Supreme Court makes clear, however, that a bankruptcy trustee who willfully ignores the relatively clear rules for the collection of claims encumbered by an undisclosed right of pledge, may be personally liable. In the end, however, Rabobank had not appealed the District Court’s ruling relating to the absence of personal liability of Verdonk and the District Court´s judgment had thus become final on that point.

The takeaway message from this judgment is that professional pledge holders, such as banks, should keep in mind that holding a bankruptcy trustee personally liable for wrongfully collecting claims may not always be the uphill battle it was previously perceived to be.

The post Bankruptcy trustee may be personally liable if claims encumbered by an undisclosed right of pledge (stil pandrecht) are collected against the will of the pledge holder is a post of www.stibbeblog.nl

 

Related news

08.11.2019 BE law
Interview with Wouter Ghijsels on Next Gen lawyers

Articles - Stibbe’s managing partner Wouter Ghijsels shares his insights on the next generation of lawyers and the future of the legal profession at the occasion of the Leaders Meeting Paris where Belgian business leaders, politicians and inspiring people from the cultural and academic world will discuss this year's central theme "The Next Gen".

Read more

07.11.2019 NL law
Symposium 'From Stint to Fipronil: a compensation fund for victims of energetic government intervention in crisis situations

Seminar - Stibbe is organising a symposium in Amsterdam on Thursday 7 November entitled 'From Stint to Fipronil: a compensation fund for victims of energetic government intervention in crisis situations'. During this symposium, Stibbe lawyer Tijn Kortmann and Prof. Pieter van Vollenhoven, alongside other experts,  will speak about the compensation fund which, according to van Vollenhoven, injured parties should be able to call upon if a decision by the government turns out to be too drastic.

Read more

24.10.2019 BE law
Stibbe hosts a seminar on the act of 4th of April 19 on abuse of economic dependence

Seminar - On October 24th, VBO/FEB's Secretary General Philippe Lambrecht and Stibbe Brussels' Peter Wytinck, Paul Van der Putten, Erik Valgaeren and Sarah De Wulf hosted a lunch seminar aimed at clarifying the scope, interpretation and implications for businesses of the ground-breaking (but still enigmatic) law of 4 April 2019 on the abuse of economic dependence and unfair terms and practices in B2B relationships.

Read more

Our website uses functional cookies for the functioning of the website and analytic cookies that enable us to generate aggregated visitor data. We also use other cookies, such as third party tracking cookies - please indicate whether you agree to the use of these other cookies:

Privacy – en cookieverklaring