5.2 Insolvency procedures
A Dutch company (BV and NV) is liquidated outside insolvency proceedings in the event of one of
• A resolution to that effect by the general meeting of shareholders;
• An event that automatically, pursuant to the articles of association, triggers the company’s
• An order to that effect by the Chamber of Commerce; or
• An order to that effect by the court (made in certain circumstances set out in statute).
In general the liquidation of a company takes place in three phases:
Phase 1: Appointment of liquidator (vereffenaar)
If the court does not appoint a liquidator, the liquidators are in most cases the managing director(s) of the company. Unless the articles of association provide otherwise, the liquidator has the same powers and duties as a managing director. The liquidator, owever, is required to keep a keen eye on the interests of the creditors.
After the appointment of a liquidator, the company continues to exist, but only for the purpose of the liquidation of its assets. In documents and announcements issued by the company, the Dutch words “in liquidatie” must be added to its name.
Phase 2: Liquidation phase
The liquidator handles the liquidation of the company. The liquidator must convert the company’s assets into cash and pay its debts. If the liquidator determines that the company’s liabilities exceed its available assets, the liquidator is obliged to file for bankruptcy. An exception to this obligation is made if all known creditors agree to a request by the liquidator for a continuation of the liquidation process outside the formal bankruptcy process. There is no formal possibility for the liquidator to present a restructuring plan to the creditors for a vote. Therefore, there is no formal procedure for the majority of the creditors to overrule a dissenting minority. Creditors can, however, collectively agree to accept a haircut on their respective claims.
Phase 3: Final phase
If there is a surplus after the company’s assets have been liquidated and all creditors have been paid, the liquidator distributes the surplus to the parties entitled to it pursuant to the company’s articles of association or otherwise to the shareholders. The liquidator prepares and issues a report on the allocation of such surplus (rekening en verantwoording). The liquidation of a company ends when there are – to the liquidator’s knowledge – no further assets. The company ceases to exist at this point and the liquidator submits a notice to that effect to the trade registry.
There are three main insolvency procedures in the Netherlands:
• Bankruptcy (faillissement);
• Suspension of payment (surseance van betaling); and
• Debt restructuring for natural persons (Schuldsaneringsregeling Natuurlijke Personen, not elaborated
Both natural persons and legal entities can be declared to be in a state of bankruptcy (in staat van faillissement). Bankruptcy in the Netherlands is governed by the Dutch Bankruptcy Act (Faillissementswet). The process requires the appointment of a supervisory judge (rechtercommissaris) and a bankruptcy trustee (curator), both of whom are appointed by the court.
Purpose and scope
In principle, the purpose of bankruptcy is to liquidate a debtor’s assets for the benefit of its creditors. The proceeds of the debtor’s assets are distributed amongst the creditors.
Even though there is a specific reorganisation process whose aim is the survival of the debtor as a legal entity (see “Suspension of payment” below), it is also possible for a debtor to offer its creditors a composition plan (akkoord) as part of the bankruptcy process. Such an offer for a composition plan is accepted if more than 50% of the general unsecured creditors present at the meeting vote in favour of the plan, and these creditors voting in favour represent at least 50% of the total amount of the recognised claims. Even if these criteria are not met, the supervisory judge can still rule that the plan of composition has been accepted by the creditors if:
• At least 75% of the number of the recognised creditors present at the meeting voted in favour of the composition; and
• The initial rejection of the composition plan was the consequence of a vote against the plan by one or more creditors that, in doing so, could not have been acting reasonably, taking into account all of the circumstances.
The bankruptcy estate includes all the debtor’s property at the time of the declaration of bankruptcy (whether in the Netherlands or not) and everything acquired during the bankruptcy process.
Last updated in September 2019