Counterparty insolvency: what happens to your court case?

If your counterparty is declared bankrupt during a Dutch court case, your claim for payment is stayed by law and you must file it with the trustee in bankruptcy instead (Article 29 of the Dutch Bankruptcy Act, Faillissementswet, Fw). In a suspension of payments (surseance van betaling) or a WHOA restructuring, your case in principle continues; what is restricted there is mainly your ability to enforce a judgment.

Below we explain the rules per regime, the routes alongside the estate such as set-off and security rights, and the steps to take in the first week.

Why do the type and date of the decision matter?

The three regimes affect your case in different ways, and the date of the decision is the reference point for set-off, avoidance actions and the validity of acts. Check first what exactly was ordered, on which date, and whether a suspension or WHOA procedure has since turned into bankruptcy.

The Central Insolvency Register (Centraal Insolventieregister) and the Trade Register of the Chamber of Commerce (KVK) show the decision, the date and the name of the trustee or administrator.

What happens to your case in bankruptcy?

That depends on your position in the case. In bankruptcy the trustee (curator) takes over the estate, and claims concerning the estate are brought by or against the trustee (Article 25 Fw). Our guide to bankruptcy for entrepreneurs and creditors describes the winding-up itself.

You are the claimant and claim payment

Your case is stayed by law (Article 29 Fw). You file your claim with the trustee for verification, with supporting documents (Article 110 Fw), and the case only resumes if the claim is disputed in verification; the party disputing it then takes the bankrupt party’s place.

A new action for payment from the estate is excluded during the bankruptcy (Article 26 Fw). The verification procedure is the designated route.

You are the claimant and claim something other than payment

Claims for a declaratory judgment, termination, performance other than payment or return of your own goods fall outside Article 29 Fw and in principle continue. You may ask for a stay to summon the trustee into the case (Article 28 Fw).

If the trustee does not take over the case, you can continue against the bankrupt party, but a judgment against it then has no effect against the estate (Article 25(2) Fw).

The bankrupt party is the claimant

The case is not stayed automatically. As the defendant you must ask the court for a stay, so you can summon the trustee to take over the case within a period set by the court (Article 27 Fw).

The case was already ready for judgment

If the documents were submitted to the court for a decision before the bankruptcy order, the stay rules do not apply and the court gives judgment (Article 30 Fw). That judgment still has to be brought into the verification procedure; it cannot be enforced separately against the estate (Article 33 Fw).

You already had a judgment before the bankruptcy

Then enforcement against the estate ends immediately and attachments lapse (Article 33 Fw). The judgment remains useful to support your claim in verification and against third parties, such as a guarantor or joint debtor.

How is your claim established in bankruptcy?

Through verification and, if the claim stays disputed, the renvoi procedure. The supervisory judge (rechter-commissaris) first tries to reach a settlement and otherwise refers the parties to a court hearing without a writ of summons (Article 122 Fw).

Renvoi requires a verification meeting, and that only takes place if there are enough assets. If it is likely that unsecured creditors will receive nothing, the supervisory judge can decide that no verification meeting is held (Article 137a Fw), and your claim is not decided on the merits. Ask the trustee about the expected size of the estate before you start or continue renvoi.

A limitation period for a claim against the estate that would expire during the bankruptcy, or within six months after it ends, continues until six months after the bankruptcy has ended (Article 36 Fw).

What happens to your case in a suspension of payments?

A suspension of payments does not stop pending cases and does not prevent new ones (Article 231(1) Fw). Only where the case concerns a bare claim for payment of a debt the debtor acknowledges, and you need no judgment against third parties, may the court postpone its decision until after the suspension (Article 231(2) Fw).

Enforcement is blocked: the debtor cannot be forced to pay ordinary claims, enforcement already started is suspended, and attachments lapse once the suspension is granted definitively (Article 230 Fw). Preferential claims and claims secured by pledge or mortgage are in principle outside the suspension (Article 232 Fw), unless the court declares a cooling-off period of up to two months, extendable once by up to two months (Article 241a Fw).

Is your claim finally established in a suspension?

No. If a composition (akkoord) is offered, you file your claim with the administrator (bewindvoerder) (Article 257 Fw) and it is placed on a list of acknowledged and disputed claims (Article 259 Fw). For a disputed claim, the supervisory judge decides whether and for what amount you may vote (Article 267 Fw).

Admission to the vote is not a final decision on the claim. Continuing the case during a suspension can still be useful: it preserves your evidence, gives you a judgment against guarantors and co-debtors, and strengthens your position if the suspension turns into bankruptcy.

What happens to your case in a WHOA procedure?

Under the Act on Court Confirmation of Extrajudicial Restructuring Plans (WHOA, Articles 369 and following Fw) your case in principle continues. The court may, however, declare a cooling-off period of up to four months, during which you can only take recourse against the debtor’s assets with court permission, attachments can be lifted, and bankruptcy and suspension petitions are stayed (Article 376 Fw).

As a creditor you need to assess the WHOA plan actively: the class in which your claim is placed, the information provided including the valuation and the comparison with bankruptcy, the voting and the conditions for confirmation. If the plan is confirmed and your claim falls within it, you are bound even if you voted against. Raise objections early and by the route the procedure prescribes.

Which routes are open alongside the estate?

If litigating against the insolvent party yields little, look at set-off, security rights, third parties and directors. These routes do not depend on a distribution from the estate.

Can you set off what you owe?

Yes, in bankruptcy, if both your claim and your debt arose before the bankruptcy order or result from acts with the bankrupt party before that moment (Article 53 Fw). Set-off is excluded if you took over the claim or debt from a third party in bad faith (Article 54 Fw). Map out your set-off position immediately, but do not suspend payment without a reasoned basis.

What about retention of title and other security?

Holders of a pledge or mortgage can enforce as if there were no bankruptcy (Article 57 Fw), but the supervisory judge can declare a cooling-off period of up to two months, extendable once by two months (Article 63a Fw). With retention of title you can in principle reclaim goods that are still identifiable and not paid for.

A seller of movable goods can also reclaim delivered but unpaid goods by written notice (right of reclamation, Article 7:39 of the Dutch Civil Code, BW). That right lapses once both six weeks have passed since the price became due and sixty days since the goods were stored with the buyer (Article 7:44 BW).

What happens to ongoing contracts?

The trustee is not obliged to perform. You can set the trustee a reasonable period in writing to confirm whether the contract will be performed (Article 37 Fw); if the trustee does not confirm in time, the trustee loses the right to claim performance.

Performance you delivered before the bankruptcy is usually an ordinary unsecured claim. Obligations the trustee enters into after the bankruptcy are estate debts, paid before ordinary creditors.

Can you claim from third parties or directors?

A parent company, guarantor, joint debtor, bank guarantee or credit insurer is outside the insolvency, and you can continue to claim against them. A director is not liable just because the company went bankrupt; you must show a separate wrongful act towards you (Article 6:162 BW), for example entering into obligations knowing the company could not pay and offered no recourse.

Liability for manifestly improper management (Article 2:248 BW) is liability towards the estate, which only the trustee can pursue. Read more in our article on directors’ liability.

What if the company is dissolved without assets?

If the company is dissolved and ceases to exist immediately because it has no assets (turboliquidatie), the board must file a balance sheet and an explanation of the lack of assets with the Trade Register within fourteen days and then inform creditors in writing without delay (Article 2:19b BW, in force since 15 November 2023). If the board fails to do so, a creditor can ask the subdistrict court (kantonrechter) for permission to inspect the books (Article 2:24(4) BW).

At the request of the Public Prosecution Service, the court can impose a director disqualification (Article 2:19c BW). If assets turn up after all, the court can reopen the liquidation on request of an interested party (Article 2:23c BW).

What if the insolvency is cross-border?

Within the EU, the Insolvency Regulation (Regulation (EU) 2015/848) governs recognition of insolvency proceedings opened in another Member State and the relation between main and secondary proceedings. Which rules apply depends on where the debtor has its centre of main interests and where the assets and creditors are located.

What should you check as a claimant against an insolvent party?

Record these points in the first week after the decision:

• The type and date of the decision and the case number.
• The name and contact details of the trustee, administrator or restructuring expert.
• Whether your claim is for payment (stayed in bankruptcy) or for something else.
• The nature and ranking of your claim: ordinary, preferential, secured or an estate claim.
• Your set-off position, security rights, guarantees and co-debtors.
• The expected size of the estate before you start renvoi.

What should you check if the insolvent party sued you?

As a defendant, check these points:

• Whether to request a stay to summon the trustee (Article 27 Fw).
• Whether the trustee takes over the case or you can ask to be released from the proceedings.
• Whether you have a counterclaim that you can set off under Article 53 Fw.
• Whether a judgment in your favour has any value against the estate.
• The costs of continuing compared with the expected outcome.

What can we do for you when your counterparty becomes insolvent?

Our corporate and insolvency lawyers in Eindhoven and Amsterdam assist creditors. We can:

• Determine which regime applies and what it means for your pending case.
• File your claim with the trustee or administrator, with supporting documents.
• Assess your set-off position, retention of title and other security rights.
• Conduct the renvoi procedure or object to a WHOA plan.
• Pursue guarantors, co-debtors and, where substantiated, directors.

Summary

• In bankruptcy, a pending payment claim is stayed and must be filed with the trustee (Articles 26, 29 and 110 Fw).
• Non-payment claims continue; you can summon the trustee into the case (Articles 27 and 28 Fw).
• A suspension of payments does not stop cases but blocks enforcement of ordinary claims (Articles 230 and 231 Fw).
• In a WHOA procedure cases continue, but a cooling-off period of up to four months can freeze enforcement (Article 376 Fw).
• Set-off, security rights and claims against third parties often yield more than the estate.

Frequently asked questions