Dutch Caribbean law contains various statutory provisions on creditor protection. They include the so-called actio Pauliana, which can be used to contest legal acts concluded to the detriment of one or more creditors. Any creditor who is adversely affected by such a legal act may request the annulment of that act. Such an annulment by a creditor presupposes that the debtor and the other party with whom the debtor performed the legal act knew (or should have known) that the act would prejudice the recourse options of the creditor. A typical case would be where a debtor’s assets are transferred to a third party in order to make them inaccessible for recourse by creditors.
In order for the actio Pauliana to apply the legal act must be non-obligatory, i.e. not mandatory by law or contract. Second, the legal act must have prejudiced the creditors (i.e., outside of bankruptcy: one or more creditors; in bankruptcy: the combined creditors). And third, if the legal act was performed in exchange for consideration, the creditor/trustee must prove that both the debtor and the other party knew or should have known that the act would prejudice the creditor at the time the legal act was performed. The legal requirement of knowledge of prejudice is not always easy to prove in practice. For this reason the Civil Code contains a number of (rebuttable) presumptions with regard to the knowledge of prejudice.
The knowledge that a legal act would prejudice the debtor’s creditors is presumed by law for all acts performed in case of bankruptcy: within one year of the bankruptcy declaration, and outside of bankruptcy: within one year of invoking the actio Pauliana, when it can also be established that the legal act meets the criteria of one of the following categories: legal acts as a result of which the debtor received substantially less than the value that was given by the debtor; payment of, or granting of security for, debts which are not yet due; legal acts entered into by the debtor-natural person with certain relatives; legal acts entered into by the debtor-corporation with (of one) its managing or supervisory directors or relatives of these directors or shareholders; legal acts by the debtor-corporation with another legal entity, provided that one of the involved entities is a director of the other, or that there are certain family ties between either the director-natural persons or the shareholder-natural persons of the involved entities; or legal acts by the debtor-corporation with a subsidiary or affiliate company.