In case of a suspension of payments a debtor is given temporary relief against its creditors. The objective of the proceeding is to provide an instrument for reorganisation and continuation of (partially) viable businesses in financial distress. No suspension of payments shall be granted to a natural person who does not conduct an independent profession or business.
Suspension of payments can only be granted by the court at the request of a debtor, not at the request of a creditor. There is no legal obligation for the debtor to request a suspension of payments. The court automatically and immediately grants a provisional suspension of payments to a debtor who anticipates that he will not be able to continue to meet his liabilities as they become due. During the period of suspension of payments the debtor’s business will be managed by the debtor and a court appointed administrator jointly. Creditors whose claims have not been secured or have only been granted a security interest after the declaration of the suspension of payments, will not be able to pursue their claims against the debtor. Pursuant to Dutch law secured creditors (separatisten) may immediately enforce the security interest granted to them from the debtor’s estate and execute the secured asset, regardless of the suspension of payments of their debtor.
The period of the definitive suspension of payments may last several months up to a maximum period of 1 1/2 years, and may be extended an unlimited number of times for 1 1/2 years at the request of the debtor, depending on whether the court, after hearing the administrator, the debtor and any of its creditors who wish to be heard, considers that the debtor’s business still has a good chance of becoming profitable in due time.
However, both in the case of a suspension of payments and a bankruptcy, the competent court may for a period of two months with a possible extension of another two months, order a Cooling Down Period of all creditor’s actions, including foreclosure by secured and privileged creditors.
Publisher: Van Ewijk advocaten mediators