Your counterparty becomes insolvent: what happens to your court case?

If your counterparty is declared bankrupt during proceedings, your claim for payment of money is stayed by operation of law and your claim is then established through the trustee in bankruptcy instead. In a suspension of payments or in a Dutch scheme procedure under the WHOA, your proceedings in principle continue; what is affected there is not the case itself but your ability to enforce.

In this article you will read what the main statutory rules are for litigating against an insolvent counterparty under Dutch law, which exceptions apply and which steps you can take.

The main rule: first establish which regime applies, and from what date

The consequences differ considerably per regime and per the exact moment of the court’s decision. In bankruptcy, liquidation and the equal treatment of creditors come first, and the law intervenes directly in pending proceedings. In a suspension of payments, your proceedings in principle continue and it is mainly enforcement that is restricted. In a WHOA procedure your proceedings likewise continue in principle, but a cooling-off period can temporarily freeze your ability to enforce.

So always check first what exactly has been ordered, on what date, and whether a suspension of payments or a WHOA procedure has since converted into bankruptcy. That date later serves as the reference date for set-off, for avoidance of transactions and for the question which acts are still valid.

Bankruptcy: the consequences depend on your position

In bankruptcy the law intervenes directly in pending and future proceedings, but the precise consequence differs per situation. Five situations should be distinguished.

You are the claimant and you claim payment. What matters is whether your claim seeks performance of an obligation out of the estate. Those proceedings are stayed by operation of law (section 29 of the Dutch Bankruptcy Act, Fw). You submit your claim to the trustee for verification. Only if the claim is disputed during verification are the proceedings continued; the party disputing the claim then takes the place of the bankrupt party. Bringing a new, separate action for that estate claim is excluded by law (section 26 Fw). For a claim for payment, the route through the trustee and the verification procedure is therefore the designated one.

You are the claimant and you claim something other than payment. Claims for a declaratory judgment, for rescission, for performance other than payment, or for the return of goods that belong to you fall outside section 29 Fw. Those proceedings in principle continue. As claimant you can request a stay in order to summon the trustee to join the proceedings (section 28 Fw). If the trustee does not take over the case, you can continue against the bankrupt party itself, but a judgment will then have no effect against the estate (section 25(2) Fw).

The bankrupt party is the claimant. Here the stay does not follow automatically. As defendant you must request a stay, after which you can call upon the trustee to take over the proceedings (section 27 Fw). If the trustee does not respond, you can ask to be discharged from the instance. If you do not, the case may be continued against the bankrupt party without prejudice to the estate. The trustee may also take over the proceedings on his own initiative.

The case was already ready for judgment. If the documents had already been submitted to the court for a decision before the bankruptcy order, the rules on stay do not apply and the court simply gives judgment (section 30 Fw). If the case is continued afterwards, the rules of sections 27 to 29 Fw revive. Note the difference between obtaining a judgment and being able to use it: such a judgment must also be brought into the winding-up through verification in order to be invoked against the estate. Separate enforcement against the estate is not possible (section 33 Fw).

You already had a judgment from before the bankruptcy. An enforceable title obtained before the bankruptcy no longer helps you against the estate: pending enforcement ends and attachments lapse (section 33 Fw). The title does remain useful to support your verification and against third parties, such as a guarantor or a joint debtor.

No proceedings started yet: verification, renvoi and the size of the estate

For claims that burden the estate, bringing a new action against the bankrupt company is excluded by law (section 26 Fw). You submit your claim, with supporting documents, to the trustee (section 110 Fw). If the trustee or a fellow creditor continues to dispute the claim, the supervisory judge first attempts a settlement and then refers the parties to the renvoi procedure for a decision on the merits (section 122 Fw). If your proceedings were already pending and stayed under section 29 Fw, no new action is needed: those proceedings are continued in the state they were in.

A decision on the merits is not, however, guaranteed in every winding-up. Renvoi presupposes a verification meeting, and that meeting only takes place if there are sufficient assets in the estate. If it is clear in advance that ordinary unsecured creditors will receive nothing, a simplified winding-up follows without a verification meeting (section 137a Fw), and no decision on the merits of your claim is made.

Weigh that up in advance. With an empty or nearly empty estate you run the risk of incurring costs in a renvoi procedure without any distribution or any decision on the merits in return. Ask the trustee about the expected size of the estate before you start renvoi, and factor the expected rate of distribution into your decision whether to continue.

Limitation and forfeiture periods that come under pressure because of the bankruptcy are extended where necessary (section 36 Fw).

Suspension of payments: less effect on the case, more on enforcement

A suspension of payments is a breathing space intended to make restructuring possible. A different regime applies to pending and new proceedings than in bankruptcy, but that does not mean a suspension leaves your litigation strategy untouched.

What does not happen: a suspension of payments does not stay pending proceedings and does not prevent new ones from being brought (section 231(1) Fw). So you can in principle continue and obtain a judgment. Only in the case of a bare claim for payment of a debt acknowledged by the debtor, where you have no interest in a judgment in order to invoke rights against third parties, may the court postpone its decision until after the suspension has ended (section 231(2) Fw).

What does happen, along five lines. Enforcement is blocked: the debtor cannot be compelled to pay, enforcement already commenced remains stayed and attachments lapse (sections 230(1) and (2) Fw), in principle for ordinary unsecured claims (sections 232 and 233 Fw). Preferential creditors and secured creditors with a right of pledge or mortgage in principle remain outside that block. If the court orders a cooling-off period, that position can nevertheless be restricted temporarily (section 241a Fw). If a composition is offered, you submit your claim to the administrator (section 257 Fw) and it is placed on the list of creditors (section 259 Fw); a claim may also be disputed at the meeting (section 266 Fw), after which the supervisory judge, or failing that the court, determines whether and for what amount you are admitted to the vote (section 267 Fw). And if the restructuring fails, the suspension can convert into bankruptcy, in which case your claim enters the bankruptcy regime in full, including verification and renvoi, even if you had already been admitted to the vote.

Keep one distinction sharp: being admitted to the vote on a composition is not the same as a final determination of your claim. Unlike bankruptcy, a suspension of payments has no verification and renvoi procedure, so your claim is not finally established within the suspension itself.

Continuing to litigate during a suspension therefore does not produce payment, but it can still be worthwhile: you keep your evidentiary position current, you obtain a title you can use against guarantors and joint debtors, and you are in a stronger position if the suspension ends or converts into bankruptcy.

WHOA: your position requires active assessment

Increasingly, what follows is not a suspension of payments but a scheme procedure under the WHOA, the Dutch Act on Court Confirmation of Extrajudicial Restructuring Plans (sections 369 et seq. Fw). Your proceedings in principle continue, but the court may order a cooling-off period. During that period you can only enforce against the assets with the court’s authorisation, attachments may be lifted, and the handling of bankruptcy and suspension petitions is stayed (section 376 Fw).

As a creditor it is not enough to wait and see whether, and which, plan is offered. Assess the class composition: in which class is your claim placed, and is that placement tenable given the nature and ranking of your claim? Assess the information provided: have you received what you need to evaluate the plan, including the valuation and the comparison with a bankruptcy scenario? Assess the voting procedure: has your claim been correctly included in the vote and has the result within your class been correctly determined? And assess confirmation: does the plan meet the statutory requirements, including the rules on the distribution of value between classes?

Whether you are bound by a confirmed plan depends on whether, and how, your claim falls within the scope of that plan and to which class it belongs. If the plan is confirmed and your claim falls within the relevant class, you are bound by it even if you voted against.

Objections to confirmation must be raised in time and within the statutory procedural framework; the consequences of missing a moment depend on the type of objection and on the stage of the process. So do not wait until shortly before the hearing: assess the proposal as soon as it becomes available and determine at what moment and by what route your objection must be brought.

Important exceptions and nuances: the routes alongside the estate

If litigating against the insolvent party leads nowhere, or if you want to explore other routes alongside the estate, the following subjects matter.

Set-off

If you also owe something to your counterparty, set-off can be an important means of recovery, because it does not depend on a distribution from the estate. Set-off is permitted if both the claim and the debt arose before the bankruptcy order, or result from acts performed with the bankrupt party before that moment (section 53 Fw).

Whether set-off is actually possible and attractive depends among other things on when the claim and the debt arose, on the legal relationship between the parties, on any pledge or assignment of the claim to a third party, on good faith in the event of a transfer of the claim or the debt, transfer in bad faith being excluded (section 54 Fw), and on the contractual and factual context. Do not suspend payment without a reasoned basis, but do map out your set-off position immediately and have it assessed.

Security rights and proprietary claims

Not every claim gives the same position; the legal consequences differ per type of security.

Retention of title: as long as the purchase price has not been paid in full, the goods remain your property and you can in principle reclaim them, provided you can demonstrate this and the goods are still identifiable.

Right of reclamation: under the statutory conditions you can reclaim goods delivered but not paid for (sections 7:39 et seq. of the Dutch Civil Code). This right has its own short periods and grounds for lapse and must therefore be invoked in good time.

Right of retention: this entitles you to suspend delivery of goods until payment has been made, but it does not give you ownership and, unlike a pledge or mortgage, it does not automatically give you the position of a separatist in the distribution of the estate.

Pledge and mortgage: holders of a pledge or mortgage can enforce as separatists, outside the ordinary verification procedure (section 57 Fw).

During a cooling-off period you cannot exercise these rights without authorisation, but the scope and duration of that restriction differ per regime: section 63a Fw in bankruptcy, section 241a Fw in a suspension of payments and section 376 Fw in the WHOA. So check, per security right and per regime, whether and how you can still act.

Ongoing contracts

If you have an ongoing contract with your counterparty, the trustee is not automatically obliged to perform it. You can give the trustee a reasonable period in which to declare his position (section 37 Fw), but setting that period does not automatically lead to performance: the trustee may refuse to affirm the contract, or state that he is not willing or able to provide security for performance.

Distinguish between performance you have already delivered, which usually falls under ordinary verification as an unsecured claim unless a specific priority applies; future performance, on which the trustee decides whether the contract is continued; estate claims, meaning obligations that arose after the bankruptcy order at the trustee’s request and that are usually borne by the estate; and damages for non-performance or termination, the classification of which depends on the basis of the damage and on when the claim arose. A claim for damages is therefore not automatically an ordinary unsecured claim in every case.

Third parties

A parent company, a guarantor, a jointly and severally liable co-debtor, a bank guarantee or a credit insurer stands outside the bankruptcy, the suspension of payments or the WHOA procedure. Against those parties you can in principle simply litigate or continue to litigate, regardless of what happens to the principal claim against your counterparty.

Directors’ liability

Directors’ liability is not an automatic consequence of a bankruptcy or of a debt left unpaid. An individual creditor cannot hold a director liable merely because the company has gone bankrupt. What is required is a separate wrongful act by the director towards that specific creditor, with sufficient substantiation of the applicable standard (section 6:162 of the Dutch Civil Code). That may be the case, for example, where the director entered into obligations while knowing or having to know that the company would not be able to perform them and would offer no recourse, or where he frustrated payment through selective payment.

Distinguish this from the claim for manifestly improper management (section 2:248 of the Dutch Civil Code). That provision concerns liability towards the estate and does not automatically give an individual creditor a claim; that estate claim belongs exclusively to the trustee, as does the bankruptcy avoidance action. Alongside and independently of it, you can as an individual creditor bring your own claim in tort, provided you can substantiate the separate standard for it. Outside bankruptcy, the avoidance action of section 3:45 of the Dutch Civil Code is available to you.

Dissolution without assets, the Dutch turboliquidatie

If your counterparty disappears without a bankruptcy through dissolution without assets (section 2:19(4) of the Dutch Civil Code), additional obligations have applied since 15 November 2023 under the Temporary Act on Transparency in Turbo Liquidation. Within fourteen days of the dissolution, the management board must file a closing balance sheet and a description of the cause of the absence of assets with the trade register, and must then inform unpaid creditors in writing without delay that those documents have been filed (section 2:19b of the Dutch Civil Code).

If the board fails to do so, you can as a creditor ask the cantonal court judge for authorisation to inspect the books and records of the dissolved legal entity (section 2:24(4) of the Dutch Civil Code). Non-compliance can also lead to a civil-law director disqualification (section 2:19c of the Dutch Civil Code). If the required documents are missing, or if assets turn out to exist after all, you can still petition for bankruptcy or request that the liquidation be reopened (section 2:23c of the Dutch Civil Code).

The scheme is temporary. It has been extended by royal decree and, as matters currently stand, expires on 15 November 2027, with the possibility of further extension or of replacement by a permanent scheme.

Cross-border situations

If your counterparty has assets or creditors in other EU member states, if the insolvency proceedings themselves were opened in another country, or if the question arises which court has jurisdiction and which law applies, a different framework applies. Within the European Union, the Insolvency Regulation, Regulation (EU) 2015/848, is in principle relevant. It contains rules on, among other things, the recognition of insolvency proceedings from other member states, the place where main proceedings may be opened and the interaction with any secondary proceedings. Separate rules apply to cross-border security rights and to the enforcement of judgments across borders.

Which rules apply in your situation depends on where your counterparty is established and where the assets and the creditors involved are located. That cannot be derived from a general overview and requires a separate assessment.

The three regimes side by side

Action plan: the first week after the decision

As soon as you hear of the insolvency, record the following; it saves time when you have to take decisions afterwards.

The date and type of decision, so bankruptcy, suspension of payments or WHOA procedure, with the case or procedure number.

The identity and contact details of the trustee, the administrator or the restructuring expert.

The nature and ranking of your claim: unsecured, preferential or an estate claim.

The periods running, both in your own proceedings and in the insolvency proceedings, so filing periods, periods for objection and the confirmation hearing.

The attachments and enforcement measures in place, with their status after the decision.

The security rights, guarantees and co-debtors you may be able to rely on.

The possibility of setting off a debt you yourself owe to the counterparty.

The expected costs of continuing, for example of a renvoi procedure or an objection to confirmation.

The expected distribution or plan value, if possible after enquiring with the trustee or administrator.

Then submit your claim to the trustee or administrator immediately and in full, with the contract, invoices, correspondence and case documents. Map out security rights, set-off possibilities and claims against third parties before assets are liquidated. And only then decide whether continuing to litigate makes sense.

Common mistakes in practice

Assuming the court roll takes care of itself. A stay or removal from the roll does not happen automatically. You can request it, but not without weighing it up: it can limit costs, but it can also affect your evidentiary position, running limitation or forfeiture periods, or negotiating interests.

Starting renvoi without asking about the estate. Without sufficient assets there is no verification meeting and therefore no decision on the merits, while you still incur the costs.

Relying on an old judgment. A title from before the bankruptcy yields nothing against the estate; attachments lapse and enforcement ends.

Confusing admission to the vote with determination of the claim. In a suspension of payments your claim is not finally established.

Suspending payment without a substantiated set-off position. Set-off is not automatic and must be tested against the statutory conditions.

Assuming the director will be liable. A bankruptcy in itself does not create directors’ liability, and the claim for manifestly improper management belongs to the trustee, not to you.

Waiting until shortly before the confirmation hearing. An objection to a WHOA plan requires preparation and must be brought within the procedural framework.

Looking only in hindsight. Where possible, work in advance with retention of title, group guarantees, security rights and credit insurance, and bear in mind that an insolvency clause does not automatically take effect in a WHOA procedure. Monitor your debtors through the trade register and the central insolvency register; the first days after a decision are often decisive.

Frequently asked questions

Can I still bring an action against the bankrupt company?

Not for claims that burden the estate: that is excluded by law (section 26 Fw). You submit your claim to the trustee. That prohibition does not apply to claims that do not seek payment out of the estate, such as a declaratory judgment or the return of goods that belong to you.

Is a judgment from before the bankruptcy still of any use?

Not directly against the estate: pending enforcement ends and attachments lapse (section 33 Fw). The judgment does remain useful in the verification procedure and against third parties, such as a guarantor or a joint debtor.

Is my claim finally established in a suspension of payments?

No. A suspension of payments has no verification and renvoi procedure. You are only admitted, after assessment by the supervisory judge or the court, to the vote on any composition (section 267 Fw).

Am I bound by a confirmed WHOA plan if I voted against it?

Yes, where your claim falls within the class covered by the plan and the plan has been confirmed. So check in advance whether, and how, your claim has been included in the plan.

May I set off if I also owe money myself?

Possibly, if both the claim and the debt arose before the bankruptcy order or result from earlier acts with the bankrupt party (section 53 Fw) and there is no transfer in bad faith (section 54 Fw). This has to be assessed case by case.

Insolvency lawyers in Eindhoven and Amsterdam

Law & More assists creditors when a counterparty goes bankrupt, applies for a suspension of payments or starts a WHOA procedure. In the first days after the decision we assess which regime applies, what that means for your pending proceedings and which routes are open alongside the estate: set-off, security rights, claims against third parties and, where possible, directors’ liability. Our lawyers work from Eindhoven and Amsterdam and assist clients throughout the Netherlands. Feel free to contact us for an initial assessment of your position.

Sources

Dutch Bankruptcy Act (Faillissementswet): sections 25 to 30, 33, 36, 37, 53, 54, 57, 63a, 110, 122, 137a, 230 to 233, 241a, 257, 259, 266, 267, 369 et seq. and 376.

Dutch Civil Code (Burgerlijk Wetboek): sections 2:19(4), 2:19b, 2:19c, 2:23c, 2:24(4), 2:248, 3:45, 6:162 and 7:39 et seq.

Temporary Act on Transparency in Turbo Liquidation, in force since 15 November 2023, extended by royal decree until 15 November 2027.

Regulation (EU) 2015/848 on insolvency proceedings.

Last substantive review: 18 August 2026. This article concerns proceedings before the Dutch civil courts against a counterparty established in the Netherlands and provides general information, not legal advice on a specific situation. Legislation and case law change periodically; where a cross-border element is present, a different framework applies.