Einde inhoudsopgave
Faillissementspauliana, Insolvenzanfechtung & Transaction Avoidance in Insolvencies (R&P nr. InsR1) 2010/8.2
8.2 The possibility and desirability of an objective rule?
mr. R.J. de Weijs, datum 15-03-2010
- Datum
15-03-2010
- Auteur
mr. R.J. de Weijs
- JCDI
JCDI:ADS405722:1
- Vakgebied(en)
Rechtswetenschap / Algemeen
Insolventierecht / Faillissement
Voetnoten
Voetnoten
The distinction made here between objective and subjective criteria is different from that made in the Uncitral Legislative Guide. There the question whether the debtor was insolvent is characterised as a subjective test. Uncitral Legislative Guide, p. 137: 'In terms of the specific criteria, they can be grouped broadly as objective and subjective criteria. (a) Objective criteria. One approach emphasizes the reliance on generalized, objective criteria for determining whether transactions are avoidable. The question would be, for example, whether the transaction took place within the suspect period or whether the transaction evidenced any of a number of general characteristics set forth in the law (e.g. whether appropriate value was given for the assets transferred or the obligation incurred, whether the debt was mature or the obligation due or whether there was a special relationship between the parties to the transaction). White such generalized criteria may be easier to apply than criteria that rely upon prooi; for example, of intent, they can also have arbitrari, results i f relied upon exclusively. So, for example, legitimate and useful transactions that fait within the specified suspect period might be avoided, white fiuudulent or preferential transactions that fait outside the period are protected. (b) Subjective criteria. Another approach emphasizes case-specific, subjective criteria such as whether there is evidence of intention to hide assets from creditors, whether the debtor was insolvent when the transaction took place or became insolvent as a result of the transaction, whether the transaction was unfair in relation to certain creditors and whether the counterparty knew that the debtor was insolvent at the time the transaction took place or would become insolvent as a result of the transaction. This individualized approach may require detailled consideration of the intent of the parties to the transaction and of other factors such as the debtor 's financial circumstances at the time the transaction occurred, the financial effect of the transaction on the debtor 's assets and what might constitute the normall course of business between the debtor and particular creditors.'
M. Bridge, `Collectivity, Management of Estates and the Pan Passu Rule in Wmding-up', in: J. Armour en H. Bennet (red.), Vulnerable Transactions in Corporate Insolvency', Oregon: Hart Publishing 2003, p. 18. 'The pain of the subordinated crediton adversely affected by the preference, is no less intense because the debtor did not mean to hurt him.'
If the question depends on whether the counterparty acted with a certain state of mind, the act is not reversible because of the effects, but because of this state of mind. Illustrative of the conflicts arising out of such an approach is the view held by the Cork Commission on the labelling of the provisions (Cork Report, p. 283). In our view the word `fraudulent' in this context is inaccurate and misleading, and we are satisfied that its use has unfortunate consequences. We believe that many creditors who have been unfairly preferred, and who would otherwise readily agree to repay moneys paid to them shortly before the bankruptcy, may be reluctant to do so when they mistakenly suppose to be a charge of fraud against them is involved. We recommend that in future the word `fraudulent' should no longer be used in this context and that it should be replaced by the word `voidable'.
Prejudice to creditors does not, on its own and in itself, provide sufficient justification for the reversal of legal acts. Interests other than those of the creditors are worthy of protection as well. These conflicting interests are foremost as follows:(i) respect for the debtor's legal acts (especially if the debtor is a natural person) (ii) contractual finality (iii) a counterparty's interest in not being put in a worse situation and (iv) the capacity of debtors in distress to reorganise their business.
A balance must be struck between the interests of prejudiced creditors on one hand and these conflicting interests on the other. Legislators are required to formulate further criteria for determining which legal acts are subject to reversal and which are to be upheld. These criteria can be either subjective or objective. Subjective criteria are concerned with the state of mind of the parties involved. Examples include intent, desire to prefer, good faith and bad faith. Objective criteria are those that do not deal with the state of mind of the parties. The clearest examples of these are the periods of time involved, e.g. three months before the onset of insolvency. Also, whether the debtor was solvent or insolvent at the time of transaction is considered an objective criterion, since it does not depend on the state of mind of the debtor. The same goes for the capacity of the persons involved, such as the fact that a counterparty is, for example, a controlling shareholder of the debtor.1
Both objective and subjective criteria have their specific merits and drawbacks. The most notable drawbacks of subjective criteria are the following: (i) The evaluation by courts of whether subjective criteria have been fulfilled is a time-consuming and expensive exercise. (ii) The outcome of proceedings revolving around subjective criteria is often uncertain. (iii) Whether or not the parties acted with a certain state of mind does not alter the prejudice itself, and is therefore irrelevant from the viewpoint of the creditors.2 (iv) Subjective criteria carry with them a moral reproach, thereby causing new conflicts about the moral integrity of the counterparty.3 Objective criteria have their own specific drawbacks: (i) Objective criteria are inflexible and unable to take into account the specific circumstances of the case at hand. (ii) Objective criteria are more likely to infringe on the principle of finality of contracts. (iii) The reliance on solely objective criteria creates the risk that the prejudice caused to the creditors is shifted to the counterparty, without the counterparty being at fault.
The research question is whether, and to what extent, it is possible and desirable to identify transaction avoidance rules solely on the basis of objective criteria. To establish whether such an objective rule is possible, an analysis will be made to what extent German law, English law and Dutch law rely on objective and subjective criteria. If an objective rule is actually in force in one of these legal systems, it remains to be seen whether such an objective rule realizes the underlying policy of the rule, without making unjustified infringements on the conflicting interests. If such an objective rule successfully overcomes the drawbacks relating to subjective criteria, without creating new problems, this objective rule can also be regarded as desirable.