When a Netherlands company has payment problems, it can ask the Court to grant suspension of payment. During the period the suspension of payment is granted, the company cannot be forced to pay certain amounts owed. Suspension of payment will end once all creditors are paid, a private or judicial agreement is reached, or when the company is declared bankrupt.
Suspension of payment is a deferment of payment for a company in temporary financial difficulties. Suspension of payment is requested through a petition from the District Court. Are you considering applying for a moratorium? Then consult a lawyer in advance who can advise you and submit the petition on your behalf.
Suspension of payment means "deferred payment" and is aimed at the survival of a company.
For a moratorium, there must be temporary and financial problems to be solved in the short term.
If it turns out that the financial problems are not temporary and the company can no longer structurally pay its bills, bankruptcy usually follows. It is for this reason that the legislator has started looking for a better functioning reorganization scheme for companies that are over-indebted, such as the Chaper 11 procedure in the United States. That has become the law called 'WHOA', which is expected to be introduced in 2020.
The WHOA makes it possible for companies with over-indebtedness to restructure debts by concluding a private agreement with their creditors and shareholders. If the conditions are met and the court approves the agreement, all creditors and shareholders are bound by it, even if they have not agreed to the agreement. This new coercion agreement provided for in the WHOA should make it possible for companies, that are over-indebted but are viable, to restructure outside the bankruptcy situation.
A shareholders' resolution is required for a bankruptcy application. The management is entitled to apply for a moratorium. If the shareholders do not want bankruptcy and the management sees no other option, applying for a moratorium is often the option. The administrator can still apply for the bankruptcy.
If you would like to discuss a possible moratorium on payments or the new WHOA with a lawyer, you can of course contact us to discuss this with us. It is not without reason that our motto is "Your problem, our concern."
Marcel van den Ende will gladly help you further.