A bankruptcy petition is a powerful tool for debt collection. If your debtor is not paying and the claim is undisputed, asking the court to declare bankruptcy (faillissement) can often be faster and cheaper than a regular collection procedure. The exception: the court will only grant the request if it can be shown that there is more than one creditor.
Why file for a debtor’s bankruptcy?
If your debtor does not pay and settlement looks unlikely, filing for bankruptcy increases the chance that the debt is paid, at least in part. A company in financial trouble usually still holds some value, for example inventory, receivables or property, and in a bankruptcy this is sold off to pay creditors.
A bankruptcy petition is handled by a lawyer, who asks the court to declare your debtor bankrupt under the Dutch Bankruptcy Act (Faillissementswet). In most cases the court decides at the hearing itself whether your debtor is declared bankrupt.
When can you file for bankruptcy?
You can ask the court to declare your debtor bankrupt if the debtor:
- has two or more debts, at least one of which is due and payable;
- has two or more creditors; and
- has stopped paying its debts.
A single creditor can file the petition. This is known as the plurality requirement (pluraliteitsvereiste): the court will only declare the bankruptcy if it is shown that there is more than one creditor. Those other creditors do not need to join the petition themselves.
Plurality is usually shown through supporting statements from other creditors (steunvorderingen), or through the debtor’s own admission that it can no longer pay its creditors. Next to your own claim, you will therefore normally need at least one supporting claim. The court checks this briefly during the hearing.
How long does a bankruptcy petition take?
Once the petition is filed, your lawyer is invited to a hearing; timing depends on the court’s schedule and the urgency of the case, and can range from a few days to several weeks. The court usually decides during or shortly after the hearing. What matters for your planning: a bankruptcy petition is generally faster than ordinary collection proceedings.
What does a bankruptcy petition cost?
Alongside your lawyer’s fee, you pay court fees (griffierecht) for the petition. The amount depends on whether you file as a private individual or as a company, and the courts update these fees periodically, so ask your lawyer for the current rate before filing.
How does the procedure work?
The procedure starts when your lawyer submits the petition to the court, on your behalf as the petitioner. The petition must go to the court in the region where the debtor is domiciled. As a creditor, before filing you will normally have summoned the debtor for payment more than once and put the debtor in default.
Your lawyer then receives an invitation to the hearing, stating when and where it takes place; the debtor is notified too. If the debtor disagrees with the petition, it can respond with a written or oral defence at the hearing.
What happens at the hearing?
The debtor does not have to attend, though it is advisable. If the debtor does not appear, the court can still declare bankruptcy by default. You or your lawyer do need to appear: if nobody shows up on your side, the court can reject the request. The hearing is not public, and the order is later sent to you, the debtor and the lawyers involved.
What if the request is rejected?
If the court rejects your petition, you can appeal that decision.
What happens once bankruptcy is granted?
If the court grants the request, the debtor is declared bankrupt immediately, even if the debtor appeals. The court’s decision also means:
- the debtor is bankrupt from that moment;
- the court appoints a liquidator (curator); and
- the court appoints a supervisory judge (rechter-commissaris).
From the declaration of bankruptcy, the bankrupt party loses the right to manage and dispose of its own assets; only the liquidator may act on the estate’s behalf from that point. The liquidator manages the winding-up of the bankruptcy estate and represents the interests of the creditors as a whole.
In larger bankruptcies, the court can appoint several liquidators. For certain steps, such as dismissing staff or selling business assets, the liquidator needs permission from the supervisory judge.
As a rule, income the debtor receives during the bankruptcy falls into the estate, though in practice the liquidator and debtor often agree on this. For a private individual, basic necessities and part of the income stay outside the bankruptcy; the debtor can still carry out ordinary legal acts, but these do not bind the estate.
The liquidator publishes the court’s decision by registering it with the bankruptcy registry and the Chamber of Commerce (Kamer van Koophandel), and through a notice in a national newspaper. The bankruptcy is also entered in the Central Insolvency Register (Centraal Insolventieregister) and published in the Government Gazette (Staatscourant), so that other creditors can come forward and submit their claims to the liquidator.
The supervisory judge oversees how the liquidator manages and winds up the estate, and can, on the liquidator’s recommendation, ask the court to detain the bankrupt party or to summon and hear witnesses. Together with the liquidator, the supervisory judge organises the verification meeting (verificatievergadering), held at the court, where the list of debts drawn up by the liquidator is established.
How are the estate’s assets distributed?
The liquidator determines the ranking of creditors: the higher your ranking, the greater your chance of being paid. Ranking depends on the type of claim you hold.
The estate’s own costs are paid first, including the liquidator’s fee and rent or wages that fall due after the bankruptcy date. What remains goes to preferential claims, such as tax and social security debts, then to unsecured (“ordinary”) creditors, and only after that to subordinated creditors.
If anything is left after all creditors, it goes to the shareholders in the case of an NV or BV, or to the bankrupt individual in the case of a natural person – in practice an unusual outcome, since unsecured creditors are often left with little or nothing.
What is a separatist creditor?
Separatists are creditors holding:
- a mortgage right (hypotheekrecht); or
- a right of pledge (pandrecht).
With a mortgage, the business or residential property serves as collateral, which the mortgage holder can enforce if the debtor does not pay. With a right of pledge, the bank has typically granted credit on condition that it can fall back on collateral, such as business inventory or stock, if payment stops.
As the name suggests, a separatist’s claim stands apart from the bankruptcy: it can usually be enforced directly, without going through the liquidator first, though the liquidator may ask the separatist to wait a reasonable period.
What are the consequences of bankruptcy?
For you as a creditor, the court’s decision means:
- you can no longer seize the debtor’s assets yourself;
- you or your lawyer submit your claim, with supporting documents, to the liquidator;
- the final list of claims is established at the verification meeting;
- you are paid according to the liquidator’s list of debts; and
- any remaining debt can still be pursued after the bankruptcy ends.
If the debtor is a natural person, it is in some cases possible to convert the bankruptcy into a debt restructuring arrangement (schuldsaneringsregeling) by request to the court.
For the debtor, the court’s decision means:
- seizure of all assets, except basic necessities;
- losing the right to manage and dispose of those assets; and
- correspondence going directly to the liquidator.
How does a bankruptcy end?
A bankruptcy can end in several ways:
- liquidation for lack of assets, when there is not enough in the estate to pay anything beyond its own costs;
- a composition agreement with creditors (akkoord), where the bankrupt pays creditors an agreed percentage of their claim in exchange for release from the remaining debt;
- closure once the final distribution list becomes binding, where preferential creditors are paid (in part) but nothing remains for unsecured creditors;
- a Court of Appeal decision that overturns the bankruptcy; or
- closure at the bankrupt’s own request, combined with an application for debt restructuring.
Note: a natural person can still be sued for outstanding debts after the bankruptcy ends. If a verification meeting took place, the record of that meeting can itself serve as an enforceable title, so you would not need a fresh court judgment to enforce payment. What can realistically still be recovered after a bankruptcy, however, depends heavily on the individual case.
What if the debtor does not cooperate?
The debtor must cooperate with the liquidator and provide all relevant information; this is the debtor’s obligation to inform (inlichtingenplicht). If the debtor obstructs the liquidator, enforcement measures are available, including questioning under oath or detention.
If the debtor carried out acts before the bankruptcy that reduced what creditors could recover, and knew or should have known this would disadvantage creditors, the liquidator can undo those acts. This is known as the actio pauliana (faillissementspauliana): it requires that the act was not something the debtor was obliged to do, and that the debtor was, or should have been, aware of the resulting disadvantage to creditors.
Where a legal entity’s directors have misused the company before bankruptcy, the liquidator may also hold them personally liable. You can read more on this in our earlier article: Liability of directors in The Netherlands.
In summary
- A bankruptcy petition can be a faster, cheaper way to collect an undisputed debt than ordinary proceedings.
- The court only grants it if the debtor has stopped paying and there is more than one creditor (the plurality requirement).
- Once granted, a liquidator takes over management of the debtor’s assets under a supervisory judge.
- Creditors are paid in a fixed order of ranking, and separatists such as mortgage or pledge holders can often enforce their security directly.
- A bankruptcy can end through lack of assets, a composition agreement, a binding distribution list, or an appeal – and debts can sometimes still be pursued afterwards.
Frequently asked questions
Do I need other creditors to join my petition?
No. You can file alone, but you will need to show the court that at least one other creditor exists, for example through a supporting statement.
Can my debtor still appeal after being declared bankrupt?
Yes, but the bankruptcy takes effect immediately regardless of an appeal.
What happens to my claim if I am not a separatist?
You submit it to the liquidator, who lists it for the verification meeting and pays it according to its ranking, if funds remain.
Can I still get paid if the estate has no money left?
In many bankruptcies, unsecured creditors receive little or nothing once the estate’s own costs and preferential claims are covered. Your lawyer can help you assess, before filing, how realistic full or partial recovery is in your specific case.
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