PHILIPSBURG - A court in Sint Maarten has ruled that Windward Island Bank, the local operating name of Maduro & Curiel’s Bank, must return money withdrawn from a company’s account after the company had already been declared bankrupt. The judgment was delivered by the Court of First Instance of Sint Maarten.
The case centered on the fixation principle in insolvency law, which dictates that once a bankruptcy order is issued, a company’s assets are effectively frozen. From that moment, no distributions may be made to individual creditors or account holders; all remaining assets must be collected into the bankruptcy estate and shared equitably among creditors to prevent preferential treatment.
In this instance, the bank processed payments from the firm’s account after the bankruptcy was declared. Windward Island Bank argued that it was not aware of the bankruptcy declaration and that, in practice, it had no way of knowing that the insolvency order had already taken effect.
However, the court rejected this defense. According to the ruling, the fixation principle applies automatically from the date of the bankruptcy declaration, regardless of whether a bank, supplier, or other party is aware of it. The court emphasized that ignorance does not negate responsibility and that all funds distributed after the point of insolvency must be returned to the bankruptcy estate.
The ruling underlines that the legal effects of bankruptcy are immediate and absolute, and that financial institutions bear the risk if they make payments after the fact. This aligns with similar legal doctrine in Dutch law, where the fixation principle prevents any party from extracting value from a bankrupt estate once the insolvency takes effect.
The judgment also highlighted a procedural obstacle faced by banks and other parties operating in the region: Sint Maarten’s bankruptcy registry is not available as an open online database. While a physical registry does exist, access currently requires an in-person visit or liaison with the court registry, making real-time checks difficult for external parties.
Legal experts have described the decision as significant for the broader Caribbean context. They note that the ruling could prompt discussions about the value of a centralized digital insolvency register covering Curaçao, Aruba, Sint Maarten and the Caribbean Netherlands. Such a registry would allow banks, businesses and individuals to quickly verify the bankruptcy status of companies, potentially preventing similar disputes in the future.
Despite these procedural challenges, the court’s message remains clear: payments made after a company’s bankruptcy order are made at the payer’s own risk, and all such amounts must be restored to the bankruptcy estate to safeguard the collective interests of creditors.
