A creditor who sees no other options may choose to apply to the court for the bankruptcy of his debtor. But what if the bankruptcy declaration is not upheld later on? Does this mean that the creditor is liable towards the debtor?

One of the conditions for declaring bankruptcy is that the debtor is "has ceased to pay his debts". In that case, a creditor can apply to the court for the debtor's bankruptcy. If the bankruptcy is indeed pronounced afterwards, then the debtor can lodge an appeal. It is possible that the bankruptcy is cancelled by the higher court, if it turns out that the bankruptcy petition was unlawful.

It is possible that the debtor will suffer damages as a result of the (annulled) bankruptcy. Can the debtor hold the creditor liable for that?

Our highest court, the Supreme Court, rendered an interesting judgment on this subject at the end of 2020. It concerned a chain of clothing shops, HSK. The creditor delivered building products to HSK, but did not receive payment. Hence, the creditor filed for HSK's bankruptcy. HSK challenged this bankruptcy up to the Supreme Court. That proved successful: the bankruptcy was annulled after all.

HSK did not leave it at that and claimed compensation from the original creditor. After all, HSK had suffered damage because the bankruptcy had been declared and was later annulled.

The district court agreed with HSK's claims, but the Court of Appeal did not: according to the Court of Appeal, such a claim is only admissible if there is abuse of process or otherwise unlawful conduct within the meaning of Section 3:13 of the Dutch Civil Code. After the appeal, cassation proceedings followed at the Supreme Court.

The Supreme Court ruled that the creditor (i.e. the bankruptcy petitioner) is liable towards the debtor, but only if the petitioner knew or should have known that there were no grounds for declaring bankruptcy, or if he has otherwise abused his powers by filing for bankruptcy.

HSK had argued that the liability of a creditor in a bankruptcy petition can be compared to the liability of a person making an unlawful attachment. But the Supreme Court does not follow this reasoning. After all, the levying of an attachment is an exercise of rights by the person person making an attachment, whereas the declaration of bankruptcy is a decision by the court. A bankruptcy petition is therefore only unlawful if the applicant has truly abused his power.

You can read the full judgment here: https://uitspraken.rechtspraak.nl/inziendocument?id=ECLI:NL:HR:2020:2004

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