Impairing creditors during bankruptcy

Impairing creditors during bankruptcy

If you, as director, anticipate that bankruptcy is imminent, it is wise to ask for advice about what actions are still and no longer permissible. We can advise you on your position as director if an impending bankruptcy affects your company.

Should impairing creditors (pauliana) occur, the curator has the power to reverse certain legal acts (such as payments) when they were carried out prior to bankruptcy.

If a certain creditor is still paid just before bankruptcy, this creditor is favoured and other creditors are therefore disadvantaged. It often happens that a director of a company close to bankruptcy quickly makes a payment to a parent (holding) company or sister company. Examples include a repayment of a loan, salary or management fee of the director. If such a payment is made when it is known that a bankruptcy is imminent, it can be reversed by the curator, even if the payment was due. After all, the idea behind a bankruptcy is that all creditors receive the same amount, be it much or little.

Other examples of pauliana are a donation or a sale of goods for an amount which is too low. Those are common cases of bankruptcy fraud. Especially acts committed within one year before the date of bankruptcy are always scrutinised by the curator.

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