Article 214 of the Dutch Bankruptcy Act (Faillissementswet) governs the application for a suspension of payments (surseance van betaling). A debtor that foresees it will not be able to continue paying its due and payable debts can ask the district court for a temporary moratorium towards its unsecured creditors, to gain time to restructure.
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Who can apply for a suspension of payments?
Only the debtor itself. The regime is available to companies and to natural persons who run a business or practise an independent profession. Private individuals with debt problems use the statutory debt rescheduling scheme (WSNP) instead. The application is filed by a lawyer at the district court of the place where the debtor is established.
What happens after the application?
The court grants a provisional suspension immediately and appoints one or more administrators (bewindvoerders) (Article 215 Bankruptcy Act). From then on, the debtor can only manage and dispose of its assets together with the administrator. A creditors’ meeting then decides on a definitive suspension. The court must refuse it if holders of more than one quarter of the unsecured claims by amount, or more than one third of the unsecured creditors, object (Article 218 Bankruptcy Act).
Which creditors are affected?
Unsecured (concurrent) creditors cannot enforce their claims during the suspension. Secured creditors, such as holders of a right of pledge or mortgage, are not bound and can still enforce (Article 232 Bankruptcy Act). The court may impose a cooling-off period that temporarily restricts them as well (Article 241a Bankruptcy Act).
Is a suspension of payments still useful?
Its practical value is limited. Because banks and other secured creditors keep their rights, the breathing space is often short, and many suspensions end in bankruptcy. Since 2021 the WHOA restructuring plan offers an alternative that can bind dissenting creditors. Choosing between suspension, a WHOA plan and filing for bankruptcy is a strategic decision best made before cash runs out.
Frequently asked questions
Can a supplier still demand payment?
Not for unsecured claims that arose before the suspension. New deliveries made with the administrator’s cooperation must be paid.
How long does a definitive suspension last?
The court sets the term, at most one and a half years, which can be extended.
Related terms
- Article 369 Dutch Bankruptcy Act (WHOA restructuring plan)
- Bankruptcy
- WHOA restructuring plan
- Retention of title
Our corporate lawyers help businesses in financial difficulty choose the right route and deal with administrators and creditors. Want to know what this means for your situation? Book a free introductory meeting.
