If a company has payment problems, suspension of payment can be applied for. During suspension of payment, a company cannot be forced to pay certain amounts owed. This does not apply to amounts owed with priority, amounts owed for costs of living or upbringing and education and installments on a hire-purchase. The goal of suspension of payment is to solve, if possible, problems of liquidity, through rationalization or restructuring or otherwise. Suspension of payment can be terminated if all creditors are paid, a private or judicial agreement is reached, or if the company is declared bankrupt.
A Dutch attorney has to file a petition for suspension of payment. The suspension of payment is then granted provisionally. Immediately, one or more receivers are appointed to investigate the viability of the company. Without the cooperation, authorization or assistance of the receiver, the board of management of the company is not authorized to implement any actions of management or disposal concerning the assets of the company.
Because the suspension of payment gives the company some breathing space, there is sometimes enough time to implement debt restructuring. This can be done by offering the creditors a composition. So-called preferential creditors, such as the tax authorities and the Employee Insurance Agency (UWV), fall outside this composition and in principle have to be paid in full. The composition does apply to pari passu ranking creditors, mostly the normal trade creditors. If the ordinary majority of the creditors appearing at the meeting, jointly representing at least half of the acknowledged and allowed creditors, vote for the composition, it is accepted.
In spite of the fact that suspension of payment has as its main goal to provide a company with the opportunity to solve its payment problems, suspension of payment is mostly converted into bankruptcy. Often the activities are not viable enough and/or there is no feasible rationalization plan.
Dutch Law firm AMS in Amsterdam has insolvency lawyers that are very experienced in insolvency law. They themselves are regularly appointed as trustees in bankruptcies, and as receivers in suspension of payment, so they know very well what issues are of interest in a company dealing with liquidity problems. Our lawyers are therefore very well equipped to advise a company in need on the possibilities to save the company and, if necessary, assist the company in petitioning for suspension of payment or its own petition for bankruptcy.