Vulnerable consumers hit hardest by bankruptcy of Groupcard
Groupcard provided prepaid cards to Dutch municipalities for welfare recipients, informal carers and volunteers. Now it is bankrupt, the cards are worthless and consumers and municipalities have lost money. Associate Professor Jessie Pool is investigating whether vulnerable people need better protection in bankruptcies.
The main activity of the bankrupt Groupcard, a company based in Aalsmeer, was the sale of local gift cards. Acting on behalf of more than 120 municipalities, it issued gift cards to people who needed a bit of extra support, such as welfare recipients, informal carers and volunteers. Now the company has been declared bankrupt, these cards are useless. Vulnerable consumers, like other holders of gift cards, are last in line when it comes to payouts in bankruptcies. Pool: ‘They’ll likely be left empty-handed unless municipalities decide to intervene and cover part of their losses.’
The bankruptcy hits vulnerable people the hardest. ‘I wonder if that's fair and if there's not another way. I'm conducting research into whether vulnerable people should be given extra consideration in bankruptcies’, says Pool. She believes that one possible solution would be to give certain types of vulnerable creditors a priority position in a bankruptcy settlement: 'They’d then have a better chance of getting their money back.'
Research into fraud
The bankruptcy trustee who is responsible for winding up Groupcard estimates the financial damage to be at least 14 million euros. Several media outlets have reported that Groupcard did not have the necessary licence to handle large sums of money, not did it have the necessary supervision. Also, the company is said to have used the money from municipalities, intended to be loaded onto the gift cards, to cover financial shortfalls.
The bankruptcy trustee’s investigation will have to establish if something went wrong. Pool: ‘The bankruptcy trustee is obliged to investigate whether any “irregularities” occurred in the period before the bankruptcy. If this reveals that Groupcard diverted money, it can be a reason to hold the company management liable. And if it turns out that they have committed fraud, the bankruptcy trustee can press charges against them.’
In the meantime, certain municipalities have joined forces and placed a legal claim on the house of the director of Groupcard (Algemeen Dagblad (€), in Dutch).
Fraudsters sometimes get away with it
Pool warns, however, that it's often difficult to investigate fraud in bankruptcy cases. ‘It takes time to find out if fraud has been committed. But time is money and money, of course, is what’s often lacking in these cases. As a result, fraudsters can get away with fraud relatively easily.’
More information?
Articles (in Dutch) on the topic have been published by NOS and Algemeen Dagblad.
Jessie Pool also contributed to an article by Dutch investigative journalism platform Follow the Money about suspicious bankruptcies (€). She discusses the issue of fraudsters getting away with fraud. You can also read our in the media item about this article.