NETHERLANDS Law and Practice Contributed by: Eduard Scheenstra, Etiënne Courbois and Jenny Noordermeer, CMS
able), during which even secured creditors cannot enforce their security. • Unsecured Creditors: Unsecured lenders must submit their claims in the bankruptcy estate and will be paid in accordance with the statutory order of priority, often receiving only a fraction of their claim. • Guarantees: The enforcement of Dutch law-gov- erned guarantees is also subject to the stay. The guarantee claim must be submitted in the bank- ruptcy, and enforcement outside the process is generally not permitted. Suspension of Payments (Surseance van Betaling) • Moratorium: A suspension of payments grants the debtor temporary relief from payment obligations. Creditors cannot enforce claims or security during this period. • Secured Creditors: Secured creditors are generally not affected by the moratorium and may enforce their security, unless the court orders a cooling-off period ( afkoelingsperiode ), which can temporarily restrict enforcement. • Unsecured Creditors: Unsecured lenders are subject to the moratorium and cannot enforce their claims during the suspension. Dutch Scheme (WHOA) • Restructuring Plan: The court may grant a stay ( afkoelingsperiode ) of up to four months (extenda- ble to eight months), during which creditors cannot enforce security or commence insolvency proceed- ings. • Secured Creditors: The stay can restrict enforce- ment of security, but secured creditors are gener- ally entitled to at least the value they would receive in bankruptcy. • Guarantees: Enforcement of guarantees may also Secured creditors are generally unaffected by bank- ruptcy and a secured claim is paid out of the enforce- ment proceeds of the security right (ie, not out of the bankruptcy estate). A bankruptcy trustee will first pay “estate claims” and thereafter the pre-insolvency claims, being preferential be restricted during the stay. 7.2 Waterfall of Payments
claims (the majority of which tend to be held by the tax authorities and social security board) and unsecured claims. Pre-insolvency creditors must submit their claims to the bankruptcy trustee. Payments to pre-insolvency creditors can only take place on a pro rata basis. Estate claims are generally claims incurred by the bankruptcy trustee in performing their duties, which, just like insolvency costs, have priority over the unse- cured (ordinary) and preferred claims against the debtor. In principle, the bankruptcy trustee may make pay- ments to estate creditors and critical vendors. Critical vendors, in the context of a bankruptcy, are credi- tors that have a strong position because the estate requires their services (for example, a supplier whose products or services are essential to continue the business). 7.3 Length of Insolvency Process and Recoveries In the Netherlands, the main insolvency procedures are bankruptcy ( faillissement ), suspension of pay- ments ( surseance van betaling ), and the Dutch scheme (WHOA). The duration of these processes can vary significantly depending on the complexity of the case, the size of the company, the nature of its assets, and the level of co-operation from stakeholders. • Bankruptcy ( Faillissement ): This is the most com- mon insolvency procedure. For straightforward cases, bankruptcy can be completed within approximately a year, especially if the company has few assets and creditors. However, for more com- plex cases involving significant assets, litigation, or disputes, the process can take several years – sometimes up to five years or more. • Suspension of Payments ( Surseance van Betal- ing ): This process is designed to give companies temporary relief from creditors to reorganise. If suc- cessful, it may last several months to a couple of years. If unsuccessful, it often leads to bankruptcy. • Dutch Scheme (WHOA): Introduced in 2021, the WHOA allows for restructuring outside formal bankruptcy. The process is designed to be swift,
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