In 2019, no fewer than 3,208 bankruptcies were declared in the Netherlands. Although that is a decrease compared to previous years, bankruptcies are still the order of the day. You may have had to deal with bankruptcy yourself, for example because your debtor has been declared bankrupt or possibly because your own company was in dire straits. In this blog I explain how a bankruptcy is filed and what the requirements for a bankruptcy are. I focus here on the situation in which the bankruptcy of a private limited company (BV) is filed.
Read more: jpost
Filing for bankruptcy: how does it work?
Bankruptcy can be declared by the court at the moment that a debtor – in this case I assume a BV – is in a situation in which it has ceased to pay. It is important that the BV has at least two creditors. This is also referred to as “creditor plurality”. Please note: if one creditor has several claims against a BV, the requirement of plurality is not met. In addition, at least one claim must be due and payable. The moment that no claim is due and payable, there is therefore no question of a situation in which the BV has ceased to pay. Bankruptcy can be requested by one (or more) creditor(s) as well as by the BV itself. It is important to make this distinction, as the way in which bankruptcy is filed differs.
File your own bankruptcy
Unless the articles of association provide otherwise, a director of a BV is authorized – by order of the general meeting of shareholders – to request the bankruptcy of the BV himself. If you want to file for the bankruptcy of your own company, it is important to request prior approval from the general meeting of shareholders. You can apply for your own bankruptcy by submitting the Self-declaration of bankruptcy form to the court. The assistance of a lawyer is not mandatory in this case.
Bankruptcy application by a creditor
The bankruptcy petition can also be submitted by one or more creditors of the BV. A creditor must have a reasonable interest in the bankruptcy of his debtor. Whether this is the case depends on the circumstances of the case. Case law shows, for example, that there is no reasonable interest if the claim of the applicant can be paid in full by the debtor and security has also been provided for this.
In addition, the applicant will often have to look for a support claim that can be submitted for verification. After all, without a support claim from another creditor of the BV, the requirement of plurality has not been met. To file for bankruptcy, the creditor must file a petition with the court. He will have to be assisted by a lawyer. If the BV does not agree with the petitioner’s bankruptcy petition, a defense can be launched. This can be done both with a notice of objection and during the oral hearing of the bankruptcy petition at the court. The debtor is not obliged to be assisted by a lawyer.
Filing for bankruptcy, how long does it take?
After receiving the bankruptcy petition, the court will schedule a hearing, for which the BV will be summoned. If bankruptcy has been filed by a creditor, they will also be sued. Incidentally, a bankruptcy petition is regularly used by creditors as a means of collection.
Sometimes parties therefore want to first negotiate about the payment (im)possibilities of the debtor. In such a case, only the applicant/creditor may ask the court to postpone the hearing of the bankruptcy petition. The debtor is not allowed to do this.
Limited right key
In principle, bankruptcy proceedings are not extensive proceedings. The court only assesses whether:
- there are at least two claims against the BV, of which at least one claim is due and payable;
- there are at least two different creditors; and
- the BV is in a situation in which it has ceased to pay.
If, after a brief investigation, the court is of the opinion that all the above requirements have been met, the court will declare the BV bankrupt. It is possible to appeal against the decision of the court. On appeal, the Court of Appeal will independently assess whether the requirements for a bankruptcy order have been met. In doing so, account is taken of facts and circumstances that occurred after the bankruptcy was declared. Please note: the term for lodging an appeal is very short, namely eight days from the day of the court’s decision.
Declared bankrupt, and then?
From the day the bankruptcy is declared, the company loses the disposal and management of the assets belonging to the bankruptcy. If the bankruptcy order is overturned on appeal, the BV will regain control over the assets. When declaring bankruptcy, the court appoints a trustee who will be responsible for the management and liquidation of the assets of the bankrupt company on behalf of the joint creditors. At the same time, a supervisory judge is appointed to supervise the activities of the curator. You can read about the exact consequences of a bankruptcy in my next blog .