Set-off prohibition in bankruptcy: when may a bank no longer set off?
Trustee in bankruptcy reclaims NOW subsidy from café-restaurant's bankruptcy estate
The Supreme Court held on 13 March 2026 that Rabobank wrongly set off the full NOW subsidy of €15,478 against its claim on a bankrupt company. No exception to the set-off prohibition of Section 54 Fw exists for outgoing payments made after the cut-off moment. The judgment refers the case to the 's-Hertogenbosch Court of Appeal.
The company operated a café-restaurant and was financed by Rabobank on the basis of a current account with a credit limit of €25,000. When the coronavirus crisis broke out in March 2020, the restaurant was forced to close. The company applied for NOW support and received the first instalment of €15,478 into its Rabobank account on 14 April 2020. The balance beforehand was -€25,569; after crediting -€10,092 — the payment thus set off automatically within the current-account relationship of Section 6:140 DCC.
Three days later, on 17 April 2020, the company filed its own petition for bankruptcy. Bankruptcy was declared on 21 April. In the intervening period the company had, on instruction, made outgoing payments to creditors: the debit balance rose from -€10,092 to -€23,494. As a procedural agreement, it was established on appeal that Rabobank was already no longer acting in good faith within the meaning of Section 54 Fw before 14 April 2020. Rabobank remitted only €2,076 to the estate — the difference between the balance before the NOW credit and the balance on the date of bankruptcy.
Supreme Court: no exception to the set-off prohibition for outgoing payments
The Arnhem-Leeuwarden Court of Appeal had held that Section 54 Fw does not preclude set-off in so far as the incoming payment was subsequently used for outgoing payment instructions. Where the bank, after the cut-off moment, still executes payments out of the credit facility created by the incoming payment, there is, according to the Court of Appeal, no unjustified advantage at the expense of other creditors. Moreover, unqualified application of Section 54 Fw would prompt banks to block payment instructions sooner when financial difficulties arise — with socially undesirable consequences for businesses in distress.
The Supreme Court rejects that reasoning. The settled line from the Amro Bank/THB judgment (Supreme Court 7 October 1988) holds that the crediting of a bank account as a result of a deposit by a third party is treated as an assumption of debt by the bank. If the bank was at that moment no longer acting in good faith, Section 54 Fw prevents set-off. There is no ground to accept an exception to this for the situation in which the bank has, after the cut-off moment, still made outgoing payments. Giro payment traffic gives banks no exceptional position — that principle has been settled for decades and is reaffirmed here.
What does this mean for banks financing in the shadow of bankruptcy?
The judgment clarifies the scope of Section 54 Fw in insolvency practice: once a bank is no longer acting in good faith, it must remit the full amount of an incoming payment to the estate — regardless of what happened to the account afterwards. The size of its own claim on the bankrupt party on the date of bankruptcy is not decisive for that calculation. The amount that comes in after the cut-off moment is potentially estate property.
For trustees in bankruptcy, this judgment confirms claims against banks that allowed incoming payments to be set off in the face of imminent bankruptcy. Where outgoing payments were also made after the cut-off moment, the bank cannot rely on those to reduce its remittance obligation.
Frequently asked questions
When is a bank 'no longer acting in good faith' within the meaning of Section 54 Fw?
A bank is no longer acting in good faith once it knows or ought to know that the bankruptcy or suspension of payments of the account holder is to be expected. In this judgment that was established as a procedural agreement. In practice, that knowledge may exist earlier than the moment at which the petition for bankruptcy is formally filed.
What is the cut-off moment under Section 54 Fw for a bank account?
The cut-off moment is the moment at which the bank is no longer acting in good faith — that is, the moment at which it knows or ought to know that bankruptcy or suspension of payments is to be expected. Payments that come into the account after that moment may not be set off against the bank's claim on the account holder.
Can Rabobank reclaim the NOW subsidy from the UWV if the set-off is invalid?
That is a question that did not arise in these proceedings. The Supreme Court decides only that Rabobank must remit the amount to the estate. Whether Rabobank subsequently has recourse against other security or parties depends on the specific circumstances in the referral proceedings before the 's-Hertogenbosch Court of Appeal.
Supreme Court 13 March 2026, ECLI:NL:HR:2026:390. On appeal in cassation from ECLI:NL:GHARL:2024:1635.
Cited case law
Supreme Court: ECLI:NL:HR:2026:390
Courts of Appeal: ECLI:NL:GHARL:2024:1635