Are you temporarily unable to pay your taxes and do you want to apply for a moratorium? Or do you feel that bankruptcy is imminent and do you want to request a pre-pack? We can help you!
We are regularly appointed as a curator for bankruptcies. Due to our experience, we are well able to advise businesses on preventing bankruptcy through - for example - refinancing, a reorganisation, creditors’ agreement or restructuring. If no other options are left, it is sometimes necessary to ask for a moratorium or pre-pack.
One of the ways to avoid bankruptcy is the request for deferral or suspension of payment (moratorium). If a company temporarily can’t pay its creditors, requesting deferral of payment can sometimes offer a solution. This could work if, for example, funds are to be expected soon which can pay the debt.
Moratorium means that creditors are temporarily unable to seize anything or request bankruptcy. The latter will possibly mean the end of the company, while a restart is most favourable to all parties, even for the creditors.
During a moratorium, an administrator is appointed by the court. The director of the company must give the administrator full access to the company and cooperate with the administrator. During the moratorium, the aim is for additional revenue to be generated.
Some courts offer the possibility to designate a silent administrator. This is also called a pre-pack. A pre-pack is available on request by the company itself, if it expects a bankruptcy is imminent.
A pre-pack is sometimes used in the preliminary stages of (larger) bankruptcies. The aim is that when it comes to bankruptcy, the company gets sold as soon as possible with a minimum loss of value.
Unlike a moratorium, the silent administrator works in secret and explores the possibilities of a restart or sale of the company beforehand. If the company still goes bankrupt, then the silent administrator is usually appointed as liquidator.
Another way in which companies or individuals may try to avoid bankruptcy is to ask creditors to agree to a certain percentage of the debt to be paid (restructuring). The remainder of the debt would be waived.
In some cases it is better for creditors to agree to such an agreement than to wait and see if they receive compensation should bankruptcy be declared. An agreement is usually financed by external funds, so that creditors get paid more often than without an agreement.
At present, there is no legal basis for an agreement with creditors outside bankruptcy or moratorium. Such agreements are often used in practice.
During a moratorium or bankruptcy, the debtor may also offer an agreement. Creditors who do not accept the offered agreement could still be forced by the judge to agree if at least half of the creditors (collectively representing half of the debt) agree. This is called a compulsory settlement.
Examples of recent questions to our lawyers in the field of bankruptcy prevention:
- Can I also force a minority of creditors to agree (to conclude a compulsory settlement) outside of bankruptcy or moratorium?
A compulsory settlement is strictly speaking only possible in case of bankruptcy or moratorium. If you want to offer a compulsory settlement to your creditors, and a minority of your creditors will not cooperate, applying for a moratorium may offer a solution. A moratorium could then offer a compulsory settlement. Considering the circumstances it is also possible to start summary proceedings against an uncooperative creditor to force acceptance of an agreement. If that’s successful, bankruptcy can still be avoided.
- May I offer an agreement without bankruptcy or moratorium?
You may, of course, but creditors who do not cooperate can’t simply be forced. Depending on the circumstances of the case, summary proceedings may provide the desired outcome.
- The Tax Office has seized the assets of my company. What can I do?
Debts to the Tax Office can also be included in an agreement. As a general rule, the tax authorities will join in an agreement in which the Tax Office gets twice the percentage of what the remaining creditors get. If the tax authorities do not accept the offered agreement, the creditors’ agreement is then cancelled.