[BANKRUPTCY, INSOLVENCY & REHABILITATION PROCEEDINGS IN THE NETHERLANDS] 56
KEY FACTS OF BANKRUPTCY, INSOLVENCY & REHABILITATION PROCEEDINGS UNDER DUTCH LAW
I. Insolvency proceedings in The Netherlands
Directive (EU 2019/1023). The WHOA is a pre- insolvency procedure and allows a debtor to restructure its debts outside of the above- mentioned formal insolvency procedures. The WHOA is a debtor in possession-procedure. It is similar to the American Chapter 11-procedure and the UK Scheme and is therefore often referred to as the Dutch Scheme. Both bankruptcy, suspension of payments and the WHOA are opened by a district court. Bankruptcy can be filed either by the debtor itself or requested by a creditor. Suspension of payments can only be filed by the debtor. A WHOA procedure can be filed by the debtor, a creditor, a shareholder, the debtor’s work council or the debtor’s workplace representation. I. Insolvency officers When opening a bankruptcy, the district court appoints one or more insolvency administrators ( curator ). These administrators are generally speaking attorneys at law, but there is no legal requirement for this capacity. One sees that the district court will sometimes co-appoint a banker, an accountant, or a real estate agent as an administrator with an attorney. When opening a suspension of payments, the district court appoints one or more insolvency administrators ( bewindvoerder ). Alongside these insolvency administrators, the district court always appoints a supervisory judge ( rechter-commissaris ) who is in charge of supervising the insolvency proceedings and the administrator. The aforementioned insolvency officials in a suspension of payment ( bewindvoerder and rechter-commissaris ) almost always serve as an insolvency official in
There are four law-regulated insolvency proceedings in The Netherlands: bankruptcy ( faillissement 3 ), suspensions of payment ( surseance van betaling 4 ), debt adjustment for natural persons ( schuldsanering natuurlijke personen 5 ) and the confirmation of private plans ( homologatie onderhands akkoord (WHOA) 6 ) . Since the scope of this paper focusses on corporate entities, the debt adjustment for natural persons will not be discussed here. A bankruptcy is generally described as a liquidation of all the debtor’s assets whereas a suspension of payments should – theoretically – seek continuation of the activities of the debtor after a period of moratorium. In theory the suspension of payment should be ended after restructuring, after which the debtor can commence his business as usual. In practice a suspension of payments often ends in bankruptcy after which reorganization will proceed under bankruptcy. The reason for this lies with the absence of certain restructuring rules regarding employees (especially with regard to the transfer of a going concern business) in bankruptcy. Obviously it should be noted that under Dutch law pursuing a bankruptcy with the sole object to get rid of employees, results in abuse of (bankruptcy)law. Both bankruptcy and suspension of payment are proceedings in which the debtor loses its power of disposition and capacity in relation to its assets. On 1 January 2021 the Act on Confirmation of Private Restructuring Plans ( Wet homologatie onderhands akkoord (“WHOA”) ) came into force. The WHOA gives effect to the EU Restructuring
3 Article 1 – 213kk Dutch Bankruptcy Code ( Faillissementswet )
5 Article 284-362 Dutch Bankruptcy Code
4 Article 214-283 Dutch Bankruptcy Code
6 Article 369 – 387 Dutch Bankruptcy Code
ILN Restructuring & Insolvency Group – Bankruptcy, Insolvency & Rehabilitation Series
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