2.2 The Effects of Insolvency in General

Insolvency intertwines with the transfer of (immovable) property on two levels. Firstly, insolvency impacts the seller’s ability to conclude a contract pertaining to the sale of immovable property. Secondly, insolvency impacts on the power to dispose of immovable property that forms part of the insolvent estate. On both of these levels, insolvency interferes in two different ways. Firstly, interference may occur because of the fixation principle (see subsection 2.3); this usually occurs on or after the day of the bankruptcy judgment by the court. Secondly, the rules on transaction avoidance may affect a person’s ability to conclude a contract or deliver immovable property.

The goal of the body of rules on bankruptcy is to facilitate the process of taking recourse against a debtor’s assets. Without bankruptcy, a judge would have to decide on the distribution of the proceeds of every individual asset, where debtors no longer fulfil their obligations. However, bankruptcy is all too often perceived as being more of a curse than a blessing.1 This effect of bankruptcy can constitute an incentive for the debtor and the creditors to conduct juridical acts that are detrimental to the creditors as a whole, or have the effect of favouring one creditor over another. Therefore, most jurisdictions have a body of rules for the purpose of avoiding such juridical acts under certain conditions.

This paper focuses on interference by virtue of the fixation principle.