Bankruptcy application
Bankruptcy can be applied for by a creditor who does not receive his payment, but also by a company that can file for bankruptcy on its own behalf when it can no longer pay its debts. After the bankruptcy application has been submitted to the court, a hearing is planned whereby the judge examines the known debts and judges whether it is a situation in which debt is definitely not going to be paid. In order to qualify for bankruptcy, the situation would generally require that at least two creditors cannot be paid.

If you have a claim against a debtor that is not paid, it may be wise to apply for bankruptcy. Employees who have not received their salary on time as well as pension funds regularly ask for bankruptcy of a company. Wage claims by employees and pension claims are actually preferred in bankruptcy as these creditors are paid with priority over most other creditors.

A bankruptcy petition can also be interesting for 'normal' creditors without priority (like outstanding invoices). A bankruptcy petition may serve as a lever to ensure that the borrower still pays to avoid bankruptcy.

In addition to legal persons (such as a private limited liability company), natural persons may be declared bankrupt. They typically involve people who have a business (sole proprietorship). Individuals who do not own a company will then fall under schuldsanering (WSNP) [debt restructuring].

Bankruptcy result
If a person or company is bankrupt, there is an automatic seizure of all possessions. The court appoints a receiver. The bankrupt company (and the director) then have no more authority. The director is obliged to provide the receiver with information so that bankruptcy can be brought to a successful conclusion.

The receiver's role is to identify all assets and sell them. The proceeds are distributed to creditors. The receiver takes a critical look at the company’s records (examining whether - for example - any goods suddenly ‘disappeared’ before bankruptcy). In some cases, the receiver holds the director(s) personally liable for the debt.

Course and termination of bankruptcy
During bankruptcy, the receiver incurs expenses. These bankruptcy costs (also called estate claims) are paid from the proceeds. These costs are paid before creditors receive any payment. These costs include the salary of the receiver, the salaries of the employees from the date of bankruptcy to the date of dismissal and the rent after the bankruptcy date.

Most bankruptcies are terminated because there is not enough money available to pay for bankruptcy costs. The receiver then proposes to the court to lift bankruptcy for lack of income. In all other cases, creditors are paid. As a general rule, only the creditors (called preferential creditors: employees and tax authorities) benefit. Other creditors (the unsecured creditors) will only be paid if something remains. Bankruptcy also ends as an agreement which can be offered to the creditors.

Bankruptcy usually takes at least a year, often longer. During the course of bankruptcy, a public bankruptcy report is set up (usually every three months) and published on www.rechtspraak.nlCreditors can read in this report to find out whether they can expect a payment at the end of bankruptcy. For a status update on the bankruptcies our receivers are dealing with, please refer to the overview that includes bankruptcy reports.

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