No role for a bankruptcy trustee in respect of shareholders

It doesn't happen very often, but sometimes a bankrupt estate has sufficient resources to fully satisfy the verified creditors and the bankruptcy costs. For some time there has been discussion about what should happen then: should the bankruptcy be terminated, or may the bankruptcy trustee continue to liquidate assets for the benefit of unverified creditors and shareholders. The Dutch Supreme Court ended this discussion with its judgment of 24 April 2020.

The decision

The court in the first instance had already decided on the admissibility of the request for termination of the bankruptcy by the director of the bankrupt company. The court held that, after winding up the bankruptcy and dissolution of the company, a director is the liquidator of the assets of the company and from that moment can collect and distribute the remaining income among the shareholders. It is in his interest to do so, instead of the bankruptcy trustee, with the estate costs associated with his work. The director's request, therefore, was admissible, as (implicitly) confirmed by the Supreme Court.

When answering the main question that was put before it, the Supreme Court was crystal clear in its concise judgment.

The purpose of bankruptcy is to distribute the debtor's assets among his joint creditors. For this purpose, the bankruptcy trustee is charged with the management and liquidation of the bankrupt estate.

Based on art. 193 paragraph 1 of the Bankruptcy Act, the bankruptcy ends by operation of law as soon as the full amount of their claims has been paid out to the verified creditors. The ratio of this provision is that when the curator has realized sufficient proceeds  to pay the verified claims (after payment of the estate costs), the purpose of the bankruptcy is met. As soon as the verified creditors have been paid, the bankruptcy and thus the management and liquidation task of the bankruptcy trustee ends.

Implications

This means that if the estate is sufficient to pay the verified creditors, the trustee is not free to continue the liquidation and to liquidate other assets for the benefit of other, unverified creditors or, in the case of a company, the shareholders.

The bankruptcy trustee has only a task for as long as the bankruptcy lasts. After the bankruptcy has ended, if neither the court nor the articles of association appoint any other liquidators, the directors will be charged with the liquidation of the remaining corporate assets.

Opmerking verdient nog dat de curator in het kader van de vereffening van het vermogen van een door insolventie ontbonden rechtspersoon, slechts een taak heeft zo lang het faillissement duurt. Na het einde van het faillissement zijn, indien de rechter geen andere vereffenaars benoemt en de statuten geen andere vereffenaars aanwijzen, de bestuurders van de rechtspersoon met de vereffening van het resterende vennootschapsvermogen belast.
 

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