Netherlands

A look at corporate, personal and, where relevant, partnership insolvency proceedings in Netherlands, with a brief description to explain key features, as part of our Dictionary of Insolvency Terms in EU Member States. In particular, we highlight who controls the procedure and whether it is likely to be accompanied by a moratorium to prevent enforcement.


Surseance van betaling

Suspension of payments

  • A court-ordered procedure for companies and natural persons, commenced at the debtor's request when they anticipate they will be unable to continue to pay debts as they fall due.
  • The debtor may choose to present a draft restructuring plan when it files for the suspension of payments order or at a later date.
  • The court grants a preliminary suspension of payments immediately after the request has been filed. Approximately two months later, creditors will vote to decide whether the suspension of payments becomes permanent – for a maximum period of one and a half years, renewable at the end of each term.
  • The procedure is aimed at implementing a restructuring or reorganisation agreement with unsecured creditors. The court-selected and court-appointed administrator and the debtor (or its directors or partners respectively) must act collectively.
  • Secured creditors are generally not affected by these proceedings and may continue to enforce their security over secured assets. However, a moratorium for a maximum period of four months may be declared, during which enforcement by a secured creditor is not permitted (unless the supervisory judge has authorised such enforcement).
  • Suspension of payments may be (immediately) converted into bankruptcy if the administrator determines that the debtor has insufficient means to continue its business and ultimately (partly via composition or wholly) to pay its creditors.

Faillissement

Bankruptcy
Liquidation
Winding up

  • A court-ordered procedure for companies and natural persons that can be commenced at the request of the debtor or any of its creditors.
  • The court will make an order if it is satisfied that the debtor has ceased paying its debts. With retrospective effect from midnight on the date of the bankruptcy order, directors of the debtor company are no longer entitled to dispose of the debtor's assets, provide security over the debtor's assets, pay its creditors or enter into any agreements. All such rights transfer to the court-selected and court-appointed trustee who then takes control of the entity.
  • The trustee has a wide range of powers including selling assets or continuing the debtor’s business (if it is in creditors' interests to do so).
  • Secured creditors are generally not affected and may continue to enforce their security over secured assets. However, a moratorium for a maximum period of four months may be declared, during which enforcement by a secured creditor is not permitted (unless authorised by the supervisory judge). Furthermore, the trustee may set a reasonable deadline for enforcement by a secured creditor, after which the secured creditor’s authority to enforce will lapse and the trustee is simultaneously authorised to claim the secured assets and sell them. Upon such sale by the trustee, the secured creditor will be entitled to the proceeds after deduction of the bankruptcy costs (which are usually substantial). This usually results in the secured creditor receiving a substantially smaller return (if at all) on its outstanding claim.

Schuldsanering natuurlijke personen
WSNP

Debt restructuring for natural persons

  • A court-ordered procedure commenced at the request of a debtor who cannot pay their debts as they fall due.
  • Only the court-selected and court-appointed administrator are entitled to dispose of assets that belong to the restructuring estate.
  • The procedure is intended to provide a "clean slate," pursuant to which, claims that could not be paid out of available assets are no longer enforceable.
  • Secured creditors are generally not affected and may continue to enforce their security over secured assets.
  • However, a moratorium for a maximum period of four months may be declared, during which enforcement by a secured creditor is not permitted (unless authorised by the supervisory judge). Furthermore, the administrator may set a reasonable deadline for enforcement by a secured creditor, after which the secured creditor’s authority to enforce will lapse.

Executeren van een hypotheekrecht

Enforcing rights under a mortgage

  • Appropriation is prohibited under Dutch law. Therefore, a secured creditor will need to enforce its rights as mortgagee by means of a sale of the collateral. The general rule is that collateral is sold at a public auction according to local customs and applicable standard terms and conditions.
  • It is possible for alternative procedures to be used such as a court-approved private sale. The court will usually allow the use of such an alternative procedure if the proceeds of the private sale are likely to be higher than if the collateral were sold at public auction.

Executeren van een pandrecht op vorderingen

Enforcing rights under a pledge over receivables

  • The most common way to enforce a right of pledge over receivables is by notifying the relevant contract debtor that the receivable has been pledged.
  • Following such notice, the contract debtor is obliged to pay the relevant pledged receivable to the secured creditor instead of the pledgor, i.e. the secured creditor can directly collect the relevant receivable. Alternatively, the receivables may be sold by the secured creditor to a third party by: (i) public auction; (ii) a court-approved private sale; or (iii) a private sale with the consent of the pledgor.

Executeren van een pandrecht op goederen

Enforcing rights under a pledge over assets

  • Appropriation is prohibited under Dutch law. Therefore, a secured creditor will need to enforce its right of pledge by means of a sale of the secured assets. Such sale may be effected by means of: (i) public auction; (ii) a court-approved private sale to either the secured creditor or a third party; or (iii) a private sale to a third party with the consent of the pledgor.
  • Upon the request of the secured creditor, the court will usually order the use of such an alternative procedure if the proceeds of the private sale are likely to be higher than if the collateral were sold at public auction.

Anticipated changes in the next two years

The introduction of a procedure that will facilitate a binding composition with creditors, outside of bankruptcy, is pending approval by the Dutch parliament.

The EU Directive on Restructuring and Insolvency1 requires Member States to incorporate minimum common standards into their national restructuring and insolvency laws by 17 July 2021. The intention of the Directive is to reduce barriers to the free flow of capital stemming from differences in Member States' restructuring and insolvency frameworks, and to enhance the rescue culture in the EU.

Notable features required to be included in Member States' national laws include:

  • An effective preventive restructuring framework to enable debtors experiencing financial difficulties to restructure at an early stage, with a view to preventing insolvency and ensuring their viability.
  • A stay of up to four months extendable to up to 12 months to support negotiations of a restructuring proposal, which should prevent individual enforcement action and include rules preventing the withholding of performance, termination, acceleration or modification of essential contracts.
  • An ability to cram down dissenting classes of creditors.
  • Adequate protection for financing needed to allow the business to survive or to preserve the value of the business pending a restructuring, and for new financing necessary to implement a restructuring plan.
  • Provision for honest, insolvent entrepreneurs to have access to a procedure that can lead to a full discharge of their debts (subject to limited exceptions) within three years.

Contact: Marc Molhuysen


1 Directive (EU) 2019/1023 of the European Parliament and of the Council of 20 June 2019 on preventive restructuring frameworks, on discharge of debt and disqualifications, and on measures to increase the efficiency of procedures concerning restructuring, insolvency and discharge of debt, and amending Directive (EU) 2017/1132.