Einde inhoudsopgave
Faillissementspauliana, Insolvenzanfechtung & Transaction Avoidance in Insolvencies (R&P nr. InsR1) 2010/8.1
8.1 Three categories of acts prejudicing creditors
mr. R.J. de Weijs, datum 15-03-2010
- Datum
15-03-2010
- Auteur
mr. R.J. de Weijs
- JCDI
JCDI:ADS404588:1
- Vakgebied(en)
Rechtswetenschap / Algemeen
Insolventierecht / Faillissement
Voetnoten
Voetnoten
An example of the latten is the sale of assets at an arm's length price in order to enable the debtor to throw a fmal pre-insolvency party or pay dividends to its shareholder. Although the sale is not detrimental to the creditors in itself, it is when combined with subsequent acts.
This further distinction is not made in English law, but is made in both German law and Dutch law. American law also makes a similar distinction within the rules on preferences and the exception for payment of debts within the ordinary course of business.
Why is this third category considered to be an aspect of transaction avoidance in insolvencies? In English law, the payment of a company's creditor by the company for which the shareholder acted as a guarantor (category 3(b)), constitutes a preference in the relationship between the company and the shareholder. The mere inclusion of these cases in the framework of transaction avoidance therefore needs no further explanation at this point; what does need further explanation is the treatment of these cases as being in a different category than preferences. The basic underlying idea is that the shareholder is an equity participant in the company, whereas a normal creditor is not. One should therefore not view the limitation of the shareholder's exposure under a guarantee as the payment of a creditor, but as a divestment by the shareholder. The dynamic in payments made to creditors for which the shareholder acted as a guarantor is rather similar to that in dividend payments. With regard to the issue of shareholder loans (category 3(b)), the repayment of a shareholder should not be viewed as the repayment of a creditor, but as a divestment by a shareholder. The rules about whether and to what extent a shareholder is free to also act as an ordinary arm's length creditor could also be dealt with by company law, instead of as a situation of transaction avoidance under insolvency law. In German law, as part of the recent modernisation of company law, the rules dealing with shareholder loans were removed from the German Company Act and integrated into the Insolvency Act, mostly within provisions on transaction avoidance. Since the ranking of different claims becomes only really relevant in a situation where not all creditors can be paid in full, the subject fits better into insolvency law than company law.
Developed legal systems provide for certain legal acts performed prior to an insolvency declaration to be reversed on the grounds that they were prejudicial to the interests of creditors. There are countless ways in which a debtor can prejudice its creditors. Legal systems group the various detrimental acts into categories, but differ considerably in what the categories are, thereby complicating comparative law research in this area. In this comparison of German, English and Dutch law, the detrimental legal acts are divided into the following three categories.
Legal acts compromising the integrity of the estate of the debtor
Legal acts (whether alone or in combination with other acts) detrimental to the debtor itself and therefore detrimental to its creditors in subsequent insolvency proceedings. The main characteristic of a transaction in this category is that the counterparty was not a creditor prior to the transaction. There are two subcategories:
transactions not against value received or at an undervalue; and
transactions not at an undervalue but intermediately prejudicial to creditors.1
Preferences
The debtor does something, or allows something to be done, that has the effect of putting a person into a position that will, if the company goes into insolvent liquidation, be better than the position that person would have been in if that thing had not been done. These cases can be further subdivided into two subcategories:2
payment of an undue debt, or payment in kind instead of the agreed payment in money; and
payment of a debt due at the time and in the way agreed beforehand.
Shareholder loans and shareholder guarantees
Shareholders can prejudice creditors by not providing capital to the company, but by choosing an alternative way of financing instead.3 There are two subcategories. Instead of providing capital, the shareholder provides:
a loan, possibly even a secured loan; and
a guarantee to a specific creditor of the company.
These distinctions are all found to a greater or lesser extent in the different legal systems. No legal system has, however, fully, formally and expressly introduced these distinctions. It has been demonstrated that the result of the failure to maintain clear demarcations between these different categories has been legal uncertainty. These distinctions are therefore useful not just for comparing the various legal systems, but as a potential framework for organising the law itself.