CONFLICTING INTERESTS IN CURACAO INSOLVENCY LAW (part 6)
Conflicting interests of different bankruptcy estates
The management of different but associated bankruptcy estates can be entrusted to one and the same person who therefore is appointed several times as receiver. In this connection group relationships come to mind. It is true that in connection with different estates with one and the same person as receiver, companies not affiliated in a group also come to mind, but this will probably not often occur. Regularly, (members of) groups go bankrupt (for instance RSV, OGEM, DAF, Fokker, Infotheek Groep, Bredero, Text Lite, Mediasafe, Medicopharma, Palthe, Verto, Wyers, HCS, UPC, Van der Moolen, Lehman Brothers, Econcern, Kroymans and DSB Bank come to mind). The receiver will usually wind up the bankruptcies separately but due to their interrelatedness probably as much as possible at the same time. However he has to wear multiple hats and that is sometimes difficult.
Previously I mentioned the example of two (or more) bankrupt companies in a group with one and the same person appointed as the receiver of the companies. Say that the immovable property is placed in the one company (company A) and the other company (company B) runs a business. If the immovable property and the (assets of the) business are each sold separately they will generate 100 and 20 respectively. If the immovable property and the business are sold jointly as a going concern they will generate 80 and 50 respectively. Could the creditors of company A object successfully to this latter option? This is not possible if at least 100 would accrue to company A and at least 20 to company B. The question is then how the “profit” of 10 must be divided: on a fifty/fifty basis or via a different distribution code? The answer cannot be given in the abstract and it will therefore become a question of negotiation.
Suppose that there are mortgage covered credit relationships between two bankrupt group companies. As the receiver of the borrower (company A) he wonders whether the right of mortgage might have been created fraudulently against the creditors, but as the receiver of the lender (company B) he wants to exercise the right of summary execution (a conflicting interest attached to his capacity). If the receiver decides not to invoke the actio Pauliana (fraudulent preference action) one or more creditors of company A can obtain an order to this end from the supervisory judge. When this order entails that the dispute about the legal validity of the right of mortgage should still be submitted to the court, it is obvious that the receiver will resign from his office as receiver in that bankruptcy or have himself represented by an independent third party (not being one of his firm’s colleagues) in the lawsuit intended to annul the mortgage. In my view the third party will have to be appointed with the consent of the supervisory judge. The question is whether this is contrary to the law. I would think not, since the lawsuit will be formally conducted by the receiver. But the receiver will have to refrain from giving instructions to his representative. If necessary, the latter can consult the supervisory judge about how to plan to address the case.
Pursuant to Article 45 paragraph 2 of the Bankruptcy Decree (Curacao) creditors themselves can dispute the acceptance of a claim on grounds derived from the provisions of Articles 38-44 of the Bankruptcy Decree. A disadvantage attached to this possibility is that these creditors usually do not have at their disposal information which the receiver on the other hand has at his disposal and that they do not have any general right to inspection. However, the receiver is indeed obliged to inform and advise the creditors such that they are able to reach a well-founded opinion on the question of whether a certain creditor must be accepted or his claim disputed. Claims covered by mortgage are not presented to the receiver for the creditors’ meeting, except insofar as a part of it is not covered by the right of mortgage or conditionally when it is doubtful whether the right of mortgage is legally valid. As a secured creditor the mortgagee has in principle nothing to do with the bankruptcy. Via this route the creditors cannot therefore achieve the receiver bringing the actio Pauliana (fraudulent preference action). This is different if it is not the mortgagee but the receiver who is entrusted with the sale and the mortgagee can exercise (with priority) a right to the proceeds. In my opinion the acceptance of the priority attached to this claim can indeed be disputed by the other creditors.
Karel Frielink
Attorney (Lawyer) / Partner
(18 January 2013)
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