Bankruptcy

In accordance with the Bankruptcy Act, a debtor, who is in the situation that he has failed to pay, shall be declared bankrupt by court order. The purpose of bankruptcy is to divide the debtor’s assets among the creditors. The debtor could be a private person, such as a natural person, a one-man business or a general partnership, but also a legal entity, such as a B.V. or a N.V. A debtor can be declared bankrupt if there are at least two creditors.

Additionally, at least one debt must be unpaid, while it should have been. In that case, there is a claimable debt. Bankruptcy can be filed for both on the applicant’s own declaration and at the request of one or more of the creditors. If there are reasons relating to the public interest, the Public Prosecutor’s Office can also file for bankruptcy.

After a declaration of bankruptcy, the insolvent party loses the disposal and management of its assets belonging to the bankruptcy. The insolvent party will then no longer be able to exercise any influence on these assets. A trustee will be appointed; this is a judicial trustee who will be charged with the management and liquidation of the insolvent estate. The trustee will therefore decide on what will happen with the assets of the bankrupt. It is possible that the trustee will reach an arrangement with the creditors. In this context, it can be agreed that at least part of their debt will be paid off. If such an agreement cannot be reached, the trustee will proceed to complete the bankruptcy. The estate will be sold and the proceeds will be divided among the creditors. After settlement, a legal entity that has been declared bankrupt will be dissolved.

Do you have to deal with insolvency law and would you like to receive legal support? Please contact Law & More.