A curator can use a bankruptcy pauliana if the bankrupt has performed legal acts before her bankruptcy, while she knew or should have known that this would disadvantage creditors. The curator can annul such prejudicial actions. In the Netherlands, bankruptcy proceedings are not likely to occur and the curator has a heavy burden of proof. This is different in German bankruptcy law. Dutch entrepreneurs are often unaware of this and are unpleasantly surprised.
The German system: extensive recovery options
In Germany, the curator has ample options to annul legal acts in order to collect as much money as possible for the estate. This has to do with the German bankruptcy system.
German law imposes an obligation on the directors of a company to file for bankruptcy if there is insolvency “Zahlungsunfähigkeit” or “Überschuldung”. This happens very quickly. If this obligation is not complied with, a German driver can be criminally prosecuted. The purpose of this strict bankruptcy filing obligation is to ensure a timely opening of the bankruptcy. Old creditors are protected from further borrowing from the estate and new creditors are protected from entering into agreements with the ailing company.
Insolvenzanfechtung
The German system also has consequences for the creditors of the German debtor. Creditors must be aware of the debtor's financial situation, just like the debtor's directors. As soon as creditors know or may know of the (impending) poor financial situation of the debtor, risks arise for the creditors. German law and case law provide various starting points for the German curator to demonstrate this knowledge. If the German debtor suspends its payments, wants to make payment agreements or indicates that it is "short of cash this month", it is assumed under German bankruptcy law that the creditor is or should have been aware of the poor financial situation of the debtor. debtor. If you still receive payments from the German buyer despite these notifications, a German curator can reclaim these payments if the German buyer goes bankrupt.
The German bankruptcy trustee's recovery action can go far. In the case of German companies that went bankrupt before April 5, 2017, the trustee can reclaim payments up to ten years ago. Since a recent change in the law, the curator for bankruptcies can 'only' reclaim up to four years before the bankruptcy after April 5, 2017.
Lack of understanding among Dutch companies
The strict German bankruptcy law can give Dutch companies unpleasant surprises. After all, a German curator will do everything he can to annul legal acts and thus increase the income of the estate. From a Dutch legal perspective, these legal acts are often normal legal acts that fall under normal business risk. A Dutch entrepreneur will therefore find it difficult to understand such an action by a German curator.
Escape for Dutch companies
The European legislator also understands that a foreign creditor cannot simply become a victim of another legal system. That is why an escape is provided for in the European Insolvency Regulation.
An escape is possible when two requirements are met:
- Dutch law applies to the agreement between the Dutch entrepreneur and the German bankrupt, on which the payments are based. This is the case, for example, if a choice of law for Dutch law has been made in the purchase agreement or the general terms and conditions.
- Under Dutch law, the payments cannot be challenged or affected. It is therefore necessary to look at the hypothetical situation as to how a Dutch curator would judge if there were a Dutch bankruptcy.
The Dutch company must prove that these two requirements have been met. The two requirements seem simple, because in Dutch law the trustee cannot quickly affect payments. The problem is that the German judge and the German curator must be convinced that in the Dutch system the soup is not eaten so hot. This can be difficult. Even a German lawyer will not easily understand the Dutch system.
Closing comments
As can be seen from the above, German bankruptcy law is very strict and the trustee has many far-reaching powers to recover payments. As a Dutch entrepreneur you may be surprised by this. After all, the Dutch system works differently. You can reduce the risk if you act with your German buyer on the basis of Dutch law or by opting for insurance. If you are insured against debtor risks, credit insurers offer limited additional cover for this. In addition to additional coverage from your insurer, there are also other options for insuring risk. We are happy to inform you about the different forms of risk reduction.
Source: boelszanders.nl lawyer Anne-Marie van Dijk
