Loan agreements valid despite act breaches
Agreements not contrary to good morals
Is the investor unjustifiably enriched?
Bankruptcy trustee's victory proved pyrrhic

The Supreme Court recently handed down an important ruling in the Van Hees qq/Y case on the possibility to reclaim money from investors involved in a classic Ponzi scheme - a scheme in which money from new investors is used to fund (fictitious) profits for other investors.


Mr Van den Berg set up a Ponzi scheme that was uncovered in 2005. He was declared bankrupt, convicted for fraud and jailed for five years. He had defrauded some 1,400 investors of a total amount of approximately €85 million.

As in any Ponzi scheme, Van den Berg's scheme created winners as well as losers. The bankruptcy trustee sought to claw back the profits that one of the investors had made (as a trial case) on behalf of, among others, the defrauded investors.

The defendant had entered into loan agreements with Van den Berg for approximately €1.4 million. The interest rates of the loan agreements varied, but included rates of 33.33%, 50% and 80%. The bankruptcy trustee sought to claw back approximately €1 million.

The bankruptcy trustee claimed that the payments:

  • were based on void agreements because of breaches of mandatory laws (the Securities Transactions (Supervision) Act and the Credit System (Supervision) Act, now both replaced by the Financial Supervision Act);
  • were void as they were contrary to good morals because of the exorbitant interest rates; and
  • resulted in the unjust enrichment of the defendant.

Both the district court and the Court of Appeal denied the bankruptcy trustee's claim. The Supreme Court upheld these rulings (although with a different reasoning on the issue of unjust enrichment).

Loan agreements valid despite act breaches

In principle, agreements that violate a mandatory statutory provision are void unless the relevant statutory provision does not purport to invalidate the agreement. The current Financial Supervision Act stipulates that, unless otherwise stated, legal acts that breach the act are valid. This rule was not contained explicitly in preceeding acts. However, the Supreme Court found – under reference to the parliamentary history of Article 1:23 of the Financial Supervision Act – that the same exception applied to the credit and securities supervision acts.

Agreements not contrary to good morals

The Supreme Court confirmed the Court of Appeal's ruling that the alleged disproportionate interest rates as such were insufficient grounds on which to rule that the underlying agreements were void. If there were additional circumstances (eg, the fact that the agreements formed part of a fraudulent scheme) and the investor had been or should have been aware of Van den Berg's immoral intentions (the high interest rates alone were insufficient for this), the conclusion would have been different. The Court of Appeal had found, however, that the investor acted in good faith. The Supreme Court upheld this decision.

Is the investor unjustifiably enriched?

A party which has been unjustifiably enriched at the expense of another is obliged, insofar as is reasonable, to make good the other's loss up to the amount of its enrichment. The Court of Appeal ruled that although the investor had been enriched, this was justified because of the existence of valid agreements. The bankruptcy trustee complained that the Court of Appeal did not recognise that an agreement between A (Van den Berg) and B (the defendant) as such could not justify an enrichment at the expense of third party C (the defrauded investors).The Supreme Court agreed and found that an enrichment of party A at the expense of third party C was not justifiable per se by the agreement between A and B. This was all the more so, the Supreme Court found, if the mutual obligations following from that agreement were severely imbalanced, as was the case in the current matter.

Bankruptcy trustee's victory proved pyrrhic

Although the Supreme Court disagreed with the Court of Appeal's ruling, it did not quash its decision. The Supreme Court held that the bankruptcy trustee's claim as made could not be granted due to the bankruptcy regime, and more specifically Article 47 of the Bankruptcy Act.

According to this article, a payment made to a creditor that was due and payable can be voided only if it can be shown either that:

  • the recipient knew that bankruptcy had been filed; or
  • the debtor and the creditor arranged the payment with the intention of favouring the creditor over other creditors (collusion).

Neither was the case in the current matter.

The Supreme Court established that the bankruptcy trustee made its unjust enrichment claim on behalf of the joint creditors as a whole and not just the defrauded investors (the bankruptcy trustee has the right to make claims on behalf of the bankruptcy estate). Furthermore, the Supreme Court established that the fraudulent payments to the defendant qualified as due and payable because the underlying loan agreements were valid.

The Supreme Court found that the strict system laid down in Article 47 of the Bankruptcy Act cannot be bypassed by an unjust enrichment claim. The unjust enrichment claim is trumped by the principle that a creditor whose due and payable claim was paid is entitled to rely on such payment not being clawed back even if the debtor becomes bankrupt shortly after payment, save for the two exceptions mention in Article 47. So while the enrichment was not justified by the agreement between Van den Berg and the enriched investor, it was justified towards the estate's creditors by the system of Article 47.

By way of obiter dictum (an observation that does not form a necessary part of the court's decision), the Supreme Court reaffirmed that the recipient of a payment can act unlawfully towards the estate (eg, depending on the circumstances in the case of selective payments) and, as such, can prejudice the possibilities of recourse of the other creditors. In that case the bankruptcy trustee has a claim against the recipient of the payment on behalf of the joint creditors. However, the Supreme Court established that in the current matter there were no such circumstances.


The bankruptcy trustee was charged with the administration and liquidation of the bankruptcy estate. In that capacity it had a number of 'fraudulent preference' actions to annul voluntary and involuntary payments by the debtor – that is, payments that the debtor had made without any obligation (on the basis of a law or agreement) and payments that were due and payable. In the case of payments that are due and payable, a bankruptcy trustee can recover payments only either if the recipient knew of the bankruptcy application or if there was collusion. Next to fraudulent preference actions, a bankruptcy trustee is entitled to claim damages from a third party on behalf of the estate (ie, on behalf of the joint creditors) based on a wrongful act of that third party. The Supreme Court decision in this case makes clear that this rule cannot be extended to unjust enrichment claims.

Van den Berg's scheme brings to mind the Ponzi scheme set up by Bernard Madoff. The Madoff trustee has (thus far) succeeded in pursuing avoidance claims under the US Bankruptcy Code,(1) which allows a trustee to avoid voluntary and involuntary transfers made up to two years before the bankruptcy if made with 'actual intent' to defraud creditors. However, other types of avoidance claim have been disallowed by a district court judge (now subject to appeal) because the US Bankruptcy Code precludes most types of avoidance action (except those under Section 548(a)(1)(A)) when the transfers are securities-related transactions involving a financial institution

One interesting difference seems to be the burden of proof with regard to clawback claims. Under Section 548(a)(1)(A), the bankruptcy trustee must prove that a payment (whether related to an antecedent debt or not) was made with actual intent to defraud creditors. In a Ponzi scheme case, the US courts presume that any transfer was made by the scheme manager with actual intent to defraud creditors. Therefore, an avoidance claim under Section 548(a)(1)(A) is relatively easy for the Madoff trustee to maintain. The recipient of the payment has a good-faith affirmative defence, but the burden is on the recipient to establish that defence.

In the Netherlands, the burden of proof regime seems to favour the investor. A bankruptcy trustee in a Ponzi scheme can only claw back due and payable payments under Article 47 of the Bankruptcy Act if it can prove collusion or that the recipient had knowledge of the bankruptcy petition having been filed at the time of the payment. Alternatively, the bankruptcy trustee could seek to annul the transactions on the basis of Article 3:40 of the Civil Code because the underlying agreements were contrary to good morals. However, the bankruptcy trustee then has to prove that the investor had been or should have been aware of the immoral nature of the agreements, which has proven to be difficult.

Another interesting difference is that the Madoff trustee has not sought to rely on common law claims such as unjust enrichment. In contrast, the biggest feeder fund, Fairfield Sentry, has brought claims for unjust enrichment and other quasi-contract claims against investors which received payments funded by transfers from Madoff, which the Madoff trustee has sought to avoid. There has not yet been any ruling on the merits of these claims.

The question remains whether individual investors in the Netherlands could successfully bring unjust enrichment claims against the winners of Van den Berg's Ponzi scheme directly, thereby bypassing the estate. This question was not posed to the Supreme Court. The investor will, in any event, be assisted by the Supreme Court's finding that the agreement between Van den Berg and the enriched investor cannot, as such, be a justification for the enrichment at the expense of the defrauded investors.

For further information on this topic please contact Robert Verburg at Clifford Chance LLP by telephone (+31 20 711 9000), fax (+31 20 711 9999) or email ([email protected]).


(1) Section 548(a)(1)(A).