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Welcome / Blog Archive / English / 2023-06-doc3 Spanish banks beware of insolvent Dutch nationals with holiday homes!

2023-06-doc3 Spanish banks beware of insolvent Dutch nationals with holiday homes!

Intro. A recent Dutch court case provides a Spanish bank (with a secured claim) an expensive lesson when dealing with the bankrupt Dutch owners of a Spanish holiday home. The bank collaborated in the sale and transfer of title of the holiday home in Spain owned by the two Dutch nationals, without permission from their IP appointed in the insolvency proceedings in the Netherlands. It is not the first case in which a bank has been rather careless in acquainting itself with the necessary facts and information in another EU jurisdiction, prior to acting. The Dutch IP, however, could also have been more forthcoming. This is the case.

Case. On 7 June 2016, two natural persons were declared bankrupt (“faillissement”) by the Northern Netherlands court. At the time, they owned a holiday home in Spain that was subject to a mortgage established under Spanish law for the benefit of the Spanish bank Caixa Rural Altea Cooperativa de Credit Valenciana (“Caixaltea”). By e-mail dated 20 July 2016, the individuals’ Dutch IP notified the bank of their bankruptcies – in English. He also sent along the bankruptcy judgment, reported that the bankrupts no longer had the power of disposal and requested that the accounts they held at the bank be blocked. The IP also asked for information about their Spanish holiday home and the loan for which a mortgage right had been granted.That same day, the bank blocked the natural persons’ accounts. A week later, the bank asked for a translation of the bankruptcy judgment, invoking Article 19 of the EU Insolvency Regulation 1346/2000 (EIR 2000), which is similar to Article 22 of the recast EU Insolvency Regulation 2015/848 (EIR 2015). In August 2016, however, the holiday home was transferred to a third party. The bank cooperated in cancelling the mortgage and the transfer of the home’s title. It then received the purchase price and offset that amount against its claim against the bankrupt persons.  The estate (apparently) received nothing.

Dutch IP. The Dutch IP accused Caixaltea of violating its banking duty of care by acting unlawfully towards the insolvency estate, on the one hand by not informing the IP on time about the forthcoming sale/transfer of the holiday home, and on the other hand by collaborating on the cancellation of the mortgage right and the transfer of title. In short, the IP stated, the bankrupts no longer had authority to dispose of their property and due to the bankruptcies’ public announcement, the bank did not act in good faith (in the meaning of Article 54 of the Dutch Bankruptcy Act) and was therefore no longer authorised to set off the purchase price received against its claim against the bankrupts.

The bank. The bank grumbled. It said it could not have been expected to inform the IP about the upcoming sale/transfer of the holiday home after receiving the IP’s notification on 20 July. The bank had not yet been able to verify the existence of the bankruptcy, it said, while on the other hand, the IP – as evidenced by his requests for information – already knew of the existence of the house and the right of mortgage. Based on Spanish law, the bank also said, it could not have prevented the transfer of ownership when the purchase price had been paid to it.

The court. The court ruled in favour of the IP. It rendered a tough judgment that I will consider here point by point:

  1. Pursuant to Article 19, Caixaltea argued it was free, after receiving the e-mail from the IP on 20 July 2016, to demand a translation of the bankruptcy judgment from him in order to obtain more certainty. However, in the court’s opinion, this did not release Caixaltea from its duty to act with the necessary diligence, since it had to take serious account of the possibility that the e-mail had come from the IP in the couple’s bankruptcy. In principle, the court opined, the bank had to adjust its actions accordingly.
  2. However, Caixaltea waited a week before taking any further action, only confirming receipt of the e-mail from the IP on 27 July 2016 and requesting a translation of the bankruptcy judgement with apostille. In the court’s opinion, Caixaltea failed to give a satisfactory explanation for this passage of time. The court also took into account that Caixaltea was aware of the intended sale of the holiday home from 14 July 2016 – the date the bank was informed of the sale by a real estate agent.
  3. On 19 July 2016, Caixaltea informed the couple’s broker of the outstanding mortgage debt. The same Caixaltea employee that made the notification to the broker received the email from the IP. The notification to the broker included information that a bank, as a professional institution, must have known was of great importance to an IP. The bank should therefore have known that speed of response as regards the IP was absolutely necessary in the circumstances.
  4. In the court’s opinion, Caixaltea could have been expected to ask the IP for a translation of the bankruptcy judgment, immediately after receiving his e-mail. If it had done so immediately, the bank would have received the translation a week earlier, i.e. before the planned transfer of the holiday home on 3 August 2016.
  5. The fact that the IP had not published the bankruptcy judgment in Spain pursuant to Article 21 of the EIR 2000 (very similar to Article 28 of the EIR 2015) did not, in the court’s opinion, release Caixaltea from its duty to immediately REQUEST a translation of the filing for bankruptcy. I add here that Article 21 would only apply in the case that the couple had an “establishment” in Spain, which in case of a holiday home can be seriously doubted.
  6. The same applied to the argument put forward by Caixaltea that the bank employee in question had only a limited knowledge of the English language. In the court’s opinion, if the employee did not understand the IP’s e-mail sufficiently, she should have immediately “looked higher” to ascertain how to act in response . The court said it was remarkable that the banks head office did not immediately request a translation from the IP, where the necessary know-how was apparently lacking within its the branches.
  7. If Caixaltea had immediately requested a translation of the bankruptcy judgment from the IP and after receiving it, had provided the IP with the information known to it about the sale of the holiday home, then the IP could have taken action to prevent the cancellation of the mortgage or the delivery of the holiday home to its buyer on 3 August 2016, preventing the holiday home’s disappearance from the estate.

Observations. It is quite possible to think about this case differently. It would have been rather easy for the IP to send a Spanish translation with his email on 20 July in addition to the English translation. Using Google translate (and the IP’S explicit mention of this translation tool) would result in a non-certified one page judgment. This would have been a piece of cake. Cross-border communication requires an IP to be more empathetic than the facts here indicate.

In the case at hand, the court decided that the bank has acted negligently, and therefore unlawfully, towards the insolvency estate. After immediately blocking the couple’s accounts, the bank could have been expected to act more quickly in regards the IP. After the IP’s announcement, the bank had to at least seriously consider the bankruptcy situation, given the fact the bankruptcy judgment had immediate effect in Spain. Moreover, the bank was aware that an asset was in danger of disappearing from the bankruptcy estate. If the bank had informed the IP about the planned transfer, he could have taken action to prevent the sale and the transfer.

The court ultimately found that the bank had acted negligently by cooperating in the transfer of the home’s title since the bankrupts had lost control of the management and right of disposal of their estate, including under Spanish bankruptcy law, and those powers had been vested in the IP. The court also ruled the bank was no longer acting in good faith and was no longer authorised to invoke set-off against the bankrupts. The bank was ordered to pay the estate €215,000 in compensation.

In all, the bank learned an expensive lesson that it should seriously reconsider the internal structure and organisation between its head office and branches, where it has to deal with European holiday home owners living outside of Spain. And my guess is that there will be several hundreds of thousands of such homeowners!


District Court Noord-Nederland 8 March 2023, ECLI:NL:RBNNE:2023:1331 (Mastenbroek q.q./Caixaltea)

This is a slightly adapted version of a regular column I am writing for Global Restructuring Review (GRR) on the topic of cross-border restructuring and insolvency in a European context. GRR is a subscription-only publication and the column appeared in GRR mid May 2023. See