1: When are you declared bankrupt?

In the Netherlands, bankruptcy is declared if the debtor is in the position that he has ceased to pay. That is assumed as soon as at least two debts are left unpaid. A creditor can petition the court for the bankruptcy of the legal entity or private person. The debtor may also submit an own petition for bankruptcy.

2: How long does it take to process a petition for bankruptcy?

No fixed time periods apply. As a rule, an own petition for bankruptcy is dealt with within one week of filing. If the petition comes from a creditor, the debtor must be summoned to appear so that he knows that a petition for bankruptcy has been filed against him. The petition for bankruptcy is then often handled after two or three weeks.

3: What can you do if you disagree with the bankruptcy order by the court?

If you did not appear during the handling of the petition for bankruptcy, you can lodge an application to set aside with the court. If you have appeared, you can appeal to the court of appeal, where you must be represented by a lawyer.

4: What happens if you are declared bankrupt?

The bankruptcy is declared by the court that appoints a trustee and a delegated judge. The bankrupt loses control and management of his assets by operation of law. The trustee will sell the assets and distribute the proceeds in accordance with the legal rules. Mail will be intercepted at the address of the bankrupt and be forwarded to the office of the trustee.

5: What duties and powers does the trustee have?

The task of the trustee is to sell the assets of the bankrupt for the highest possible proceeds and to distribute the income correctly to the creditors in the manner prescribed by law. The trustee is paid from the proceeds of the assets. The trustee performs his task primarily for the benefit of the joint creditors. The bankrupt can engage a lawyer or adviser to represent his interests. The trustee falls under the supervision of the delegated judge appointed by the court issuing the bankruptcy order. For many actions, such as the sale of assets or the opening of proceedings, the trustee must first obtain permission from the delegated judge.

The trustee will not only sell the assets, but will also investigate legal acts that occurred prior to the bankruptcy order and, in the case of a legal entity, possible mismanagement in the three years prior to the bankruptcy.

6: What kind of obligations do I have as a bankrupt?

The bankrupt has several statutory obligations, including a duty to provide information to the trustee. If the bankrupt does not cooperate sufficiently, a court hearing may take place before the supervisory judge or the bankrupt may not be allowed to leave his domicile, he may have to surrender his passport. If these obligations are not met, he can be committed to prison for debt.

7: How can I monitor the progress of the bankruptcy?

Th bankruptcy order is published by the court. On the website www.rechtspraak.nl you can find the insolvency register on which the trustee will publish bankruptcy reports of legal entities only. The first report will be published after one month, followed by a subsequent report every three or six months. The report of private individuals can be obtained from the court that gave the bankruptcy order.

8: How long does a bankruptcy last?

Every bankruptcy is different. In practice, bankruptcy lasts for at least 12 months. If legal proceedings are involved, the bankruptcy may last longer. In the end, the bankruptcy generally ends due to insufficient funds or a (partial) payment of the creditors and the legal entity is dissolved.

9: Can I make arrangements with my creditors?

Both before and during the bankruptcy, the debtor can offer a composition with creditors whereby they are paid a percentage of their claims. During the bankruptcy, a composition with creditors is discussed at the verification meeting. The creditors must vote on this composition agreement. This agreement is submitted to the court, which may or may not approve it.

10: How can an employee collect outstanding salary from his bankrupt employer?

The industrial insurance board takes over the salary obligations from the date of bankruptcy. This includes part of the outstanding salary, as well as overtime hours and holiday entitlement. The trustee ensures that the industrial insurance board is brought into contact with the employees. The employees are dismissed by the trustee with permission of the delegated judge, whereby the trustee generally observes a notice period of 4 to 6 weeks. After that period, the employment contract ends. Dismissal protection rules do not apply in the event of bankruptcy.

11: What important advice can be given to a company director in the event of imminent bankruptcy?

It is important that a proper administration has been kept and can be provided to the trustee. Additionally, it is important that the annual accounts are filed with the Chamber of Commerce in good time. If this has not been complied with, the director of the company is guilty of mismanagement and may be held liable for all debts in the liquidation.
If the tax debts and social insurance premiums cannot be paid, this must be reported in good time to the relevant authorities, failing which the director can be held privately liable for the company’s failure to pay these debts.

12: Is there a special arrangement for a private person who is in danger of going bankrupt?

Yes, the debtor can invoke the Debt Restructuring Natural Persons Act (WSNP). This law allows natural persons and owners of sole proprietorships to reschedule their debts within a period of three years. During that period, the debtor must try to obtain as much income as possible and, if this is not possible, the debtor must apply for a job. In addition, all the debtor’s assets, with the exception of normal household goods, are sold. During those three years, the debtor must live at social assistance benefit level. Admission to the debt restructuring scheme is conditional on debts arising in good faith and the absence of new debts during the term of the scheme. Debt rescheduling is declared applicable by the court that appoints an administrator and a delegated judge.

For questions you can contact one of our insolvency specialists,
Bas Jacobs, Egbert van Ewijk, Ward Welage or Jeannette Roefs