Different types of interests
A receiver cannot escape the weighing of interests. Such a weighing should be verifiable. The line of thought followed by the receiver should be clear. Particularly because, apart from his liability and remuneration, these being of a different order, he has no self-interest in the winding-up of the bankrupt estate, the receiver is the obvious person to weigh the interests. If required he can and will himself be assisted by an expert. In connection with bigger bankruptcies or when a business is continued, it is for instance sensible also to appoint as receivers one or more registered accountants or business consultants. This expertise is so vital in managing and winding up such bankruptcies that I prefer these experts to be appointed as receivers and not merely to be engaged as advisors. They are then necessarily involved in the decision-making process and are also co-responsible for this. This also fits in with my starting point that bankruptcies are not covered by the exclusive domain of advocates. In addition, they will, as I presume, usually work as receivers for a lower hourly rate than as an advisor.
For the assessment of the policy of the receiver no stricter standard is applied than can be derived from the general rules of the doctrine of the wrongful act. This means that when a receiver makes a certain choice which is (in advance or with hindsight) on balance more detrimental to the estate compared with the alternatives, that choice will not be wrongful for that reason alone. As appears from case law the receiver has a high degree of discretionary power and can also take social interests into account (but is not obliged to do so), for instance in connection with a bankruptcy-restructuring plan, the continuity of the business to be transferred and the associated employment.
In his annotation to the ‘Ontvanger vs mr. Gerritse q.q.‘ ruling (Hoge Raad 24 February 1995, NJ 1996, 472) Kleijn noted that when the aggrieved party is the tax authority, the amounts involved in social security provisions for the unemployed can also be included in the weighing of interests, so that set against the disadvantage to be suffered by the tax authorities there is the advantage to society as a whole. I think that a receiver is not the obvious person to incorporate such macro-economic aspects in his weighing of interests. Neither is it the duty of the receiver to serve environmental interests or for instance – to mention a Dutch example – to protect Fokker as the heritage of social interest. He should exclusively weigh those interests capable of being expressed in money which are actually involved in the bankruptcy and this should include the interest of the employees in continuing to be able to obtain employment income and in connection with this he should allow the interest of the joint creditors to weigh heavily. To that extent the concept of ‘social interests’ should be interpreted restrictively.
It speaks for itself that a certain choice should not be aimed at thwarting the possibilities of recovery of one or more certain creditors but under certain circumstances a creditor should put up with his interest being sacrificed for an interest to which a greater importance is given. An individual interest can be subordinated to that of the joint creditors, but in my view it is not possible the other way around. The notion does not appear to be correct that a receiver is only allowed to decide to continue the business operations if it is an established fact that the value of the estate will not decrease as a result of the continued business operations: after all (business) risks are inherent in such a continuation. But there should be sufficient prospects of a positive result for the estate. Therefore a receiver should not quickly be held liable pro se for damage created by the continuation and which cannot be paid from the estate. Obviously the decision of the receiver should be based on an analysis of the condition of the business and a prognosis of the results and he requires the authorization of the supervisory judge.
The starting point for the receiver is the generation of maximum proceeds for the creditors, but this starting point does not apply fully. The social ideas about bankruptcy, its consequences and the role of the receivers have clearly undergone a change. In particular, the restriction of social consequences where possible has become important with good reason. The receiver is also allowed to represent social interests, in the restricted sense as described above. With regard to a review of the Bankruptcy Decree, attention should be paid to the ideas endorsed above.
Attorney (Lawyer) / Partner
(11 January 2013)