Principle of universality

In Curaçao, bankruptcy in general serves the purpose of liquidating assets of a particular person or legal entity and distributing the proceeds among the combined creditors. Under Curaçao insolvency law, the Curaçao courts have jurisdiction in respect of insolvency proceedings against legal entities that have their corporate seat in Curaçao and against any legal entity that carries on business or professional activities through an office in Curaçao. A foreign party can therefore be declared insolvent in Curaçao if it has a branch office in this jurisdiction. Whether or not a concurrent insolvency proceeding against that foreign party has been started in that foreign country is irrelevant in relation to the commencement of insolvency proceedings in Curaçao against the Curaçao branch.

In the event that the Curaçao courts were to declare a Curaçao branch insolvent, Curaçao insolvency proceedings would not be confined to that Curaçao branch, but would be in respect of the assets and liabilities of the party involved (wherever they were located). Therefore, even creditors whose claims were payable through a different branch may participate in Curaçao insolvency proceedings.

In general, Curaçao insolvency law follows, as far as insolvency proceedings commenced in Curaçao are concerned, the principle of ‘universality of bankruptcy’. This means that the Curaçao insolvency aspires to comprise all assets, including those situated in foreign countries, and also claims to have legal effect, irrespective of factors such as the place of incorporation or the laws governing transactions with the bankrupt. Insolvencies commenced in other jurisdictions must, on the other hand, in principle be assigned territorial effect. Therefore, a Curaçao bankruptcy trustee of a Curaçao based company or a branch of a foreign may try to recover the bankrupt’s assets located abroad. However, the Curaçao trustee in bankruptcy practically may not be able to impose Curaçao law abroad.

Karel Frielink
Attorney (Lawyer) / Partner

(16 June 2016)


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