Dutch insolvency law: the questions entrepreneurs and creditors ask most

Dutch insolvency law is contained in the Faillissementswet (Bankruptcy Act) and offers four routes. Bankruptcy (faillissement) liquidates the estate under a court-appointed curator. Suspension of payments (surseance van betaling) gives a business temporary protection against unsecured creditors. The WHOA allows a company to force a restructuring plan on dissenting creditors with the court’s approval. The Wsnp gives a private individual a clean slate after a court-supervised repayment period that has lasted eighteen months since 1 July 2023.

The questions below are the ones entrepreneurs, directors and creditors put to us most often. The answers set out what the statute actually requires, which deadlines are hard, and where the practical risk sits. Where a point is developed further elsewhere on this site, we link to it rather than repeat it.

What does Dutch insolvency law cover, and who is it for

The Bankruptcy Act governs the position of a debtor who can no longer pay, and it does so by collectivising the problem. Once a procedure opens, individual creditors lose the ability to enforce separately and are dealt with according to a statutory order of priority. That is the whole point of the system: without it, the fastest and best-informed creditor takes the assets and the rest receive nothing.

Three of the four procedures are open to businesses. Bankruptcy applies to both legal persons and individuals. Suspension of payments is available to any debtor other than a natural person who does not carry on a profession or business. The WHOA is designed for enterprises with a viable core and an unsustainable balance sheet. Only the Wsnp is reserved for private individuals, including former sole traders who have ceased trading.

Choosing between them is a commercial decision as much as a legal one, and it is time-sensitive. The realistic options narrow sharply once payments have stopped, once security has been enforced, or once a creditor has filed a petition. Our introduction to insolvency and restructuring in the Netherlands sets out the same landscape from a strategic angle.

When will a Dutch court declare a company bankrupt

A court declares bankruptcy when it appears summarily that the debtor has ceased to pay, and that requires more than one unpaid creditor. Article 1 of the Bankruptcy Act sets the test, and settled case law adds the requirement of plurality: the petitioning creditor must point to at least one other claim that is also unpaid, the so-called steunvordering. Being loss-making is not enough, and neither is a single disputed invoice. What matters is whether payments have stopped.

A petition can be filed by the debtor itself, by a creditor, or by the Public Prosecution Service on grounds of public interest. The petition goes to the district court in the district where the debtor is established. The hearing usually follows within a few weeks and is short; the court is not deciding the merits of the underlying claim, only whether the statutory test is met. If the debtor pays or reaches an arrangement before the hearing, the petition is normally withdrawn.

If the court grants the petition it appoints a curator and a supervisory judge (rechter-commissaris) in the same order, and the judgment is published in the Central Insolvency Register and in the trade register. From that moment the debtor loses the power to dispose of the estate. The official government guidance on bankruptcy summarises the administrative consequences.

The deadlines for challenging the order are unforgiving. A party that appeared at the hearing has eight days from the date of the judgment to appeal under article 8 of the Bankruptcy Act. A party that did not appear, typically a debtor declared bankrupt in its absence, has fourteen days to lodge opposition under article 10. Both periods run from the day of the judgment, not from the day you hear about it, and both require a lawyer. Missing them ends the discussion.

What does the curator do, and who supervises

The curator is an independent insolvency practitioner, in practice almost always a lawyer, appointed by the court to administer and realise the estate for the benefit of the general body of creditors. The curator is not the creditors’ representative and not the debtor’s adviser. That independence is often misunderstood, and it is the reason a cooperative debtor tends to do better than an obstructive one: the curator has statutory information powers, and refusing to cooperate is itself a ground for personal consequences.

Day to day, the curator secures the assets, examines the administration, decides whether continuing the business will produce a better return than immediate liquidation, verifies the claims submitted, and reports periodically to the supervisory judge. Significant decisions, including the sale of assets, the continuation of the business and the dismissal of staff, require the supervisory judge’s authorisation.

Distribution follows a fixed order. Estate debts incurred by the curator after the bankruptcy date rank first. Preferential claims, notably those of the tax authorities and the employee insurance agency, come next. Ordinary unsecured creditors share whatever is left, which in most bankruptcies is nothing. Holders of a pledge or mortgage stand outside that queue altogether: article 57 of the Bankruptcy Act allows them to enforce as if there were no bankruptcy, which is why security taken before trouble began is worth far more than any argument made afterwards. Creditors facing a customer in difficulty will find the practical steps in our guide to a contract partner’s bankruptcy.

What does a suspension of payments actually achieve

Suspension of payments buys time against ordinary unsecured creditors and nothing more. Under article 214 of the Bankruptcy Act a debtor who foresees being unable to continue paying may ask the court for a moratorium. The court grants a provisional suspension almost immediately and appoints an administrator (bewindvoerder), who must consent to the debtor’s acts. A definitive suspension follows only if the creditors do not oppose it in sufficient numbers, and it is granted for a maximum of eighteen months, which the court can extend.

The limitation is decisive and is the reason many suspensions fail. A moratorium does not bind secured creditors, who can still enforce their pledge or mortgage, and it does not bind preferential creditors, so the tax authorities and wage claims continue to run. If the business depends on bank finance secured over its receivables and stock, a suspension will not stop the bank. Where a suspension cannot realistically lead to a composition, the court converts it into a bankruptcy. Our article on suspension of payments in the Netherlands works through when the procedure is worth attempting, and the government guidance on suspension of payment covers the filing formalities.

Used properly, the moratorium is a bridge to something else: a sale of the business, a composition with unsecured creditors, or a WHOA plan. It is not a restructuring in itself, and going into one without a plan for the exit generally wastes the only period of protection the business will get.

How does a WHOA restructuring plan work

The WHOA, the Dutch scheme for court confirmation of a private restructuring plan, has applied since 1 January 2021 and is set out in articles 369 and following of the Bankruptcy Act. It allows a company that is heading for insolvency but has a viable core to propose a plan to its creditors and shareholders, and to have the court confirm it even though some of them vote against.

The mechanics matter. Creditors and shareholders are divided into classes according to their rank and their rights, and each class votes separately. A class has accepted the plan if creditors representing at least two-thirds of the total amount of the claims of those who actually voted in that class are in favour. If at least one class in the money accepts, the court can confirm the plan against the others, subject to safeguards: no creditor may be worse off than in a liquidation, and value must be distributed in accordance with rank unless there is a good reason to depart from it.

Supporting measures make the process workable. The court can order a cooling-off period of up to four months, extendable to a maximum of eight months in total, during which creditors cannot enforce and pending petitions are stayed. The company keeps control of its business throughout; there is no curator. Contracts can be modified or terminated with the court’s permission, although employment contracts are expressly excluded from the plan. Our explanation of the WHOA scheme goes through the class composition in detail, and the government summary of the WHOA gives the outline.

The practical constraint is preparation. A plan stands or falls on a defensible valuation showing what creditors would receive in a liquidation, and on class composition that survives challenge. Companies that start the process when cash has already run out rarely have time to build either.

What happens to employees when the employer goes bankrupt

Employment does not end automatically on the bankruptcy order. The curator may terminate employment contracts with the authorisation of the supervisory judge, and when doing so is bound by a notice period that is capped at six weeks under article 40 of the Bankruptcy Act. The ordinary dismissal protections, including the requirement of a permit from the employee insurance agency or the subdistrict court, do not apply in that situation.

Wages and holiday pay that remain unpaid are taken over by the employee insurance agency under the wage guarantee scheme. It covers a limited period of arrears before the end of the employment, the wages over the notice period and outstanding holiday allowance, within statutory limits. It does not cover everything: there is no entitlement to a transitievergoeding (statutory severance payment) in a bankruptcy, and the wage guarantee scheme does not make good that gap. Employees who want to understand their position will find it set out in our article on what happens when your Dutch employer is bankrupt.

Where the business or a viable part of it is sold out of the bankruptcy, the ordinary rules on transfer of undertaking do not apply in full, which is precisely why a sale out of bankruptcy is attractive to buyers and painful for staff. That advantage is not unlimited, and a sale prepared in advance that is in substance an ordinary transfer can be treated as one. The risks on both sides are set out in our article on restarting a business out of a Dutch bankruptcy.

When are directors personally liable

Directors are not automatically liable for the company’s debts, and the assumption that they are causes a great deal of unnecessary panic. Liability requires fault. The principal route in a bankruptcy is article 2:248 of the Civil Code: the curator can hold the board liable for the deficit in the estate if the board performed its duties manifestly improperly and that failure was an important cause of the bankruptcy. Only conduct in the three years before the bankruptcy counts.

The provision has teeth because of its presumptions. If the company failed to keep a proper administration, or filed its annual accounts late, the board is deemed to have performed its duties improperly, and that improper performance is presumed to be an important cause of the bankruptcy. The board can rebut the second presumption by showing another cause, but the first is close to unassailable. In practice, most successful claims against directors begin with a bookkeeping or a filing failure rather than with a bad commercial decision.

Two other routes matter. Article 2:9 of the Civil Code governs liability towards the company itself for improper performance of duties. And under the general law of tort, a director who enters into an obligation on behalf of the company knowing that it will not be able to perform and will offer no recourse can be held personally liable by the creditor concerned. Where the conduct goes further, for example assets are moved out of reach before the filing, the matter can become criminal; see our article on bankruptcy fraud. The practical thresholds are worked through in our guide to directors’ liability for Dutch BV directors.

The defensive lesson is dull but effective: keep the administration in order, file the accounts on time, minute the reasoning behind decisions taken under pressure, and stop incurring new obligations once it is clear they cannot be met.

Can the curator unwind transactions from before the bankruptcy

Yes. The actio pauliana allows the curator to annul acts performed before the bankruptcy that prejudiced the general body of creditors. Article 42 of the Bankruptcy Act covers voluntary acts the debtor was not obliged to perform, such as a sale at an undervalue, a gift, or the late grant of security for an existing debt. The curator must show that both the debtor and the counterparty knew, or should have known, that creditors would be prejudiced. Article 43 makes that knowledge presumed for a list of suspect transactions performed within a year of the bankruptcy, including dealings with related parties, which reverses the burden of proof.

Payments of debts that were actually due are treated more leniently, because paying what you owe is normally lawful. Article 47 allows such a payment to be annulled only in two situations: where the recipient knew a bankruptcy petition had already been filed, or where the payment resulted from consultation between debtor and creditor aimed at favouring that creditor over the others. Group companies, shareholders and directors who take payment in the final weeks are the usual targets.

The consequence of a successful claim is that the transaction is unwound and the asset or the money comes back into the estate. For counterparties, the point to take away is that a payment received from a business in difficulty is not necessarily yours to keep, and that a request for extra security from a wobbling debtor can be worse than useless.

How long does the Wsnp last, and who qualifies

The Wsnp is the statutory debt restructuring scheme for private individuals, and it ends in a clean slate: debts that remain after the scheme can no longer be enforced. Since 1 July 2023 the scheme runs for eighteen months as a rule, rather than the three years that applied before, although the court can extend it to a maximum of five years where the debtor does not meet the obligations of the scheme.

Admission is not automatic. The applicant must normally have attempted an out-of-court arrangement with creditors through municipal debt assistance first, and must produce a declaration to that effect; where an arrangement is plainly impossible, that attempt can be dispensed with. The court also examines good faith, and since 2023 it looks at the five years preceding the application in respect of criminal convictions and at a shorter period in respect of how the debts arose. The bar on reapplying within ten years of an earlier scheme has been abolished.

During the scheme the debtor lives on an amount for essential costs and pays the surplus into the estate, under the supervision of an administrator. Obligations include an effort to obtain and keep work, full disclosure of income and assets, and not incurring new debts. Failure to comply can end the scheme without a clean slate, which leaves the debtor worse off than before. Creditors sometimes ask what is left to them afterwards; our article on recovery after a Dutch Wsnp clean slate answers that in detail.

Can a company simply be dissolved instead

A company that has no assets can be dissolved by a shareholders’ resolution and ceases to exist immediately, without a liquidation. This is the turboliquidatie. The criterion is the absence of assets, not the absence of debts, which is why the route remains available to a company that still owes money. Transparency rules introduced in 2023 and since extended require the board to file a financial account for the final period with the trade register, together with any annual accounts not yet filed, and to notify known creditors that this has been done.

A turboliquidatie is not a way to escape scrutiny. A creditor who believes assets were present, or were removed shortly before the dissolution, can ask the court to reopen the liquidation and to appoint a liquidator, and the ordinary rules on directors’ liability continue to apply. Where there is any doubt about whether assets existed, the safer course is a formal liquidation or a bankruptcy filing.

What should you do at the first sign of trouble

Act while you still have options. The recurring pattern in insolvency practice is that the legal instruments are most powerful early, when there is still cash to fund a process and still assets that are unencumbered, and least powerful late, when the only remaining question is who bears the loss. A director who takes advice three months before running out of money can usually choose the route; a director who takes advice three days before cannot.

Concretely: prepare a realistic short-term cash forecast, establish which creditors hold security and over what, check that the annual accounts have been filed and that the administration is complete, and stop entering into obligations that cannot be met. Speak to the tax authorities before the arrears build, and, if the company cannot pay payroll taxes or VAT, report the inability to pay within the statutory period, because failing to do so exposes directors personally.

Creditors should be equally prompt. Submit your claim to the curator with the underlying documents, check whether you have retention of title, a right of pledge or a right of suspension, and consider whether the payments you received in the final weeks are vulnerable. In many cases the strongest position is created by contract terms agreed long before any of this happens.

How Law and More can help

Law and More advises companies, directors, self-employed professionals and creditors on Dutch insolvency law. We assess which procedure fits the situation, prepare and defend bankruptcy petitions, structure WHOA plans and suspensions of payment, act for creditors in verification and pauliana disputes, and defend directors against liability claims. Where a business can be saved, we work on the sale or the plan; where it cannot, we work on limiting personal exposure. You can reach our insolvency lawyers for a confidential assessment of your position, and our guide to bankruptcy for entrepreneurs and creditors covers the procedure step by step.