Bankruptcy in The Netherlands

In the following article please find some general answers to some frequently asked questions about bankruptcy in The Netherlands.

How is bankruptcy declared?

A debtor can either request to be declared bankrupt himself or a creditor may petition the courts to declare a debtor bankrupt. If the debtor requests bankruptcy himself, then the court will typically hear the request within a week. If a creditor requests bankruptcy, then the petition must be served on the debtor before the hearing. The bankruptcy court will typically hear the petition within a few weeks of the petition.

When can a debtor be declared bankrupt by request of a creditor?

A debtor can be declared bankrupt in The Netherlands if proven that the debtor has ceased payment to at least two creditors. A bankruptcy petition can therefore easily be used to put pressure on the debtor if payment is not made on time. However, the debts cited in the petition must still exist at the time of the bankruptcy hearing. If the debtor has paid the other debts the creditor has cited, then the petition will be rejected, even if no payment has been made to the main creditor/ plaintiff.

What types of bankruptcy procedures are there in The Netherlands?

Apart from bankruptcy, it is also possible for the debtor to request a moratorium on payments ('surseance van betaling'). This provides temporary relief from normal creditors, but not from preferential creditors, such as employees or the tax authorities. A moratorium therefore usually leads on to bankruptcy rather than debt restructuring. Requesting a moratorium is usually only beneficial if a restructuring plan is already in place with consent of the secured and preferred creditors.

Natural persons can also request for protection under the Dutch Natural Persons Debt Rescheduling act (WSNP). Debt rescheduling can be applied for as a defence against a bankruptcy petition by a creditor. The bankruptcy petition is then postponed until the debtor has either fulfilled the statutory terms for debt rescheduling or the court has ruled that the debtor is not eligible for debt reschedule. If debts have been incurred recklessly, fraudulently or otherwise in a manner that is deemed irresponsible the court will reject rescheduling and revisit the original bankruptcy petition. Debt rescheduling entails a three year austerity programme for the debtor which results in a clean slate.

Can I appeal a ruling for bankruptcy?

Yes, you can appeal a ruling within 8 days either as the party declared bankrupt or as a creditor. If the bankrupt was not heard at the original hearing, the bankrupt can oppose the ruling within 14 days and subsequently retains a right to further appeal.

What happens after bankruptcy?

Upon declaring bankruptcy the court will appoint a trustee and a dedicated judge to oversee the winding up of assets and to ascertain debts. If a creditor has requested bankruptcy, then the creditor may submit the costs of the petition as a preferential debt. The original debt retains its original priority. The trustee creates a list of all creditors taking into account secured and preferred creditors according to Dutch bankruptcy law. In most cases the preferred and secured creditors are the only creditors that receive any payment.

How long does bankruptcy usually last?

The minimum amount of time for most bankruptcies to last is one year. Depending on what needs to be done, a bankruptcy may last a lot longer. Bankruptcies taking 25 years are not unknown when multiple court proceedings are needed. However, most bankruptcies are completed within one to three years.

How can Veldhuijzen & Nuiten help you?

Our team of experienced insolvency lawyers can help with requests for bankruptcy and advise how best to deal with the trustee. Often foreign creditors do not receive correct information on time to best serve their interests. Therefore, it is important to have local advice. We know exactly how the trustee operates as our lawyers are also regularly appointed as trustees by the court of Rotterdam.

For more information or queries on this article, please feel free to contact Maria Bowmer or Tim Haster.

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