What is bankruptcy?

When a business is no longer able to pay its debts and there is no prospect of financial recovery, the Dutch court may declare bankruptcy. This means the business can no longer fulfill its obligations independently, and a bankruptcy trustee (curator) is appointed to manage the assets and distribute them among creditors as much as possible.

Who can file for bankruptcy?

• the business owner (self-declaration or with the help of an attorney)

• any creditor

• the Public Prosecutor’s Office

Bankruptcy Procedure

1. Filing the request – A bankruptcy petition is submitted to the court.
2. Court ruling – The court assesses whether the business can no longer pay its debts and declares bankruptcy.
3. Appointment of trustee and supervisory judge – A trustee takes control of the business, and a supervisory judge oversees the process.
4. Settlement – The trustee sells the assets and distributes the proceeds among creditors according to the legal ranking.
5. End of bankruptcy – Bankruptcy ends through dissolution due to insufficient assets, court approval of a settlement, or after full completion.

Consequences of bankruptcy

• The business loses control over its assets.
• The bankruptcy trustee decides whether to continue or terminate business operations.
• Ongoing contracts may be terminated by the trustee.
• Employees may lose their jobs and fall back on wage guarantee schemes.

Bankruptcy vs. Suspension of Payments

In a suspension of payments, a business is temporarily protected from creditors to reach an agreement. Bankruptcy, on the other hand, is a final measure where the business loses its assets, and creditors are repaid as much as possible.