NETHERLANDS Law and Practice Contributed by: Marcel Willems and Rowan Hamer, Fieldfisher
1. Overview of Legal and Regulatory System for Insolvency/Restructuring/ Liquidation 1.1 Legal Framework The main source of national insolvency law in the Netherlands is the Bankruptcy Act ( Faillissementswet ). In addition, many company law (but also some insol - vency law) matters are laid down in Book 2 of the Civil Code. Furthermore, an important source of inter - national insolvency law is the Insolvency Regulation (recast). For banks, insurance companies and investment firms there are specific proceedings contained in the Bank - ruptcy Act as well as the Financial Supervision Act ( Wet op het Financieel Toezicht ). 1.2 Types of Insolvency If a company debtor is not wound up out of court (liq - uidated or turbo liquidated) or restructured by way of a court-approved private restructuring plan, it may be declared bankrupt ( failliet ) and granted a suspension of payments ( surseance van betaling ). Natural persons (individuals) can be declared bankrupt or be allowed a statutory debt restructuring ( toegelaten tot de WSNP ). Suspension of payment is granted to natural persons only if they exercise an independent profession or business. Liquidation Outside bankruptcy situations, a legal entity is usually dissolved by a resolution of the general meeting, or the board if it is a foundation. In addition, a legal entity can be dissolved: • by an event that, according to its articles of asso - ciation, results in dissolution; • if the legal entity is an association, by the complete absence of members; • by the court in the instances provided by law; or • by an order of the chamber of commerce and industry, for instance, if during at least one year no directors of the legal entity are on record as registered in the register and the legal entity is in default, for at least one year, in performing its obli - gation to publish its annual accounts.
If the legal entity has any assets, they must be liqui - dated (monetised) and the proceeds used to pay the creditors; any liquidation surplus may be distributed to the shareholders or members (or, in the event of a foundation, used for a goal similar to that of the liquidated foundation). Usually, the board will act as liquidator, but, for example, in the case of dissolution by the court, the court may appoint a third party as a liquidator. Turbo Liquidation In the event that the legal entity has no assets and also no assets are expected at the time of dissolution, the entity immediately ceases to exist; this is called a “turbo liquidation”. In this case, the board must file various documents with the trade register where the company is registered, such as: • a balance sheet and statement of income and expenditures relating to the financial year of dis - solution; • a description of the cause for the lack of assets at the time of dissolution; and • the annual accounts for the financial years preced - ing the financial year in which the legal entity is dissolved. After the filing, the board notifies the legal entity’s creditors thereof. When a legal entity has liabilities but (virtually) no assets, and it is not expected that assets will be gen - erated, filing for bankruptcy by the board may, in prin - ciple, be considered abuse of power. Instead, the legal entity should be dissolved. Confirmation of a Private Restructuring Plan Under this scheme ( Wet Homologatie Onderhands Akkoord , or WHOA), a debtor may offer (some of) their creditors and/or their shareholders a restructur - ing plan that provides for a modification of their rights. The debtor has this option if they are in a situation in which it is reasonably plausible that they will not be able to continue to pay their debts. If at least one class of creditors has accepted the proposed restructuring plan, the court can confirm this restructuring plan, by which it becomes binding on all creditors and share - holders with voting rights, even if they have voted
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