CONFLICTING INTERESTS IN CURACAO INSOLVENCY LAW (part 1)
The receiver is sometimes described as an octopus
The receiver (trustee in bankruptcy) as an octopus: this means that in connection with each appointment he is in a way thrown in at the deep end because he has to make himself familiar with the relevant issues in a very short period and because of the number of interests involved in a bankruptcy and these being partly contradictory he often needs eight arms in order to cope with all the requirements and demands. One could just as well describe the receiver as a jack-of-all trades.
The receiver must make choices and take decisions. He primarily acts as the representative of the joint creditors. In addition, he has to take into account the individual interests, such as that of the pledgees and mortgagees, of the privileged creditors ranking above the pledgees and mortgagees and those with restricted rights, of the estate creditors, of the debtor and of the estate in general. Finally there are some (other) interests of a social nature and there is his own self-interest when his salary is involved or when the receiver is held liable qualitate qua or pro se by one or more of the creditors.
By definition insolvency law deals with a collision of interests fighting for priority. All kinds of conflicts of interest are imaginable in insolvency law. For instance how do the interests of the individual creditors and the collective creditors relate to each other? Should the business of the bankrupt be continued so that employment is maintained or should it be wound up for the creditors? Can any seizure by the tax authorities be thwarted to the benefit of the other creditors?
Here I will pay particular attention to conflicting interests occurring “in the person of the receiver“. For instance can the bankrupt’s regular law firm be appointed as his receiver? Can someone be appointed as the receiver of multiple companies, whether or not they form part of a group, when a situation can occur in which he has to represent conflicting interests. How should the receiver position himself in these cases? The law provides the receiver with little guidance on how he must act in such a situation. After first outlining the assessment framework with regard to all the receiver’s actions, I will discuss this and other conflicting interests. (To be continued)
Karel Frielink
Attorney (Lawyer) / Partner
(14 December 2012)
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