Trustee liable for misinforming buyer in restart in the Netherlands
The Court of Appeal recently found the trustee of a bankrupt company liable for giving wrong information to a buyer in a restart of a company. This despite the trustee’s exclusion of liability in the restart agreement. What are the rules of the game when dealing with a trustee in a restart in The Netherlands? When can a bankruptcy trustee (official receiver) be held liable? Dutch insolvency lawyer Sander Schouten explains.
Liability trustee in case of mismanagement
According to standing case law a trustee can be held liable for his (mis) management in the winding up of liquidation
The assets of a Dutch company reflect the value of all that the company possesses
» Meer over assets assets when he does not act in a manner that could be reasonably be expected of a trustee who performs his duties with adequate knowledge and experience. In his capacity of trustee, he is confronted with various, sometime contradictory interests. The liability of the trustee will always depend on the circumstances of the case.
Obligation to get well informed about assets
In litigation leading to a decision of the Court of Appeal the topic of trustee’s liability was discussed. The trustee concerned had concluded a restart agreement with a buyer regarding several bankrupt companies. The buyer had made clear from the start that the transfer of certain machines of the companies would be vital for the restart. The trustee had assured the buyer that the machines were part of the deal and had included the machines in the sale agreement. The trustee also excluded specifically all liability for possible ownership claims from third parties regarding liquidation assets. Such exclusions are fairly common practice in restart agreements.
Machines not included in restart after all
Only days after the restart was agreed and signed for, the buyer learns that the desired machines were not part of the liquidation assets after all and that the trustee was therefore not competent to sell these. In order to get the machines transferred, the buyer had to pay an additional € 200.000 to a lease company. The buyer holds the trustee responsible. He claims that the trustee has failed to fulfill his obligations. The Court of Appeal rules in favour of the buyer. The trustee is liable for compensation. The Court emphasizes that the trustee had ample time to get the right details regarding the machines. He should have be better informed especially taking into consideration the importance of the transfer of the machines for the buyer. The exclusion of liability does not hold up in this case.
Dutch Law Firm AMS for restart and insolvency
If you have any questions about restart agreements or insolvency matters, please do not hesitate to contact one of our specialized lawyers. The Court of Amsterdam appoints the insolvency lawyers of AMS Advocaten regularly as trustees as well. Therefore they have broad experience in dealing with restart and the liquidation of assets.