Parties involved when a business is in debt

Banks and other lenders

Do you have a business loan or line of credit with a bank? And are you unable to repay or pay the interest? Prevent the bank from becoming a creditor. Reach out to the bank as soon as possible to discuss your situation. Even if you are only temporarily unable to repay what ypu owe them.

There are several solutions you can discuss with the bank:

• Deferred payment of debt.
• Debt restructuring. Perhaps you have several lines of credit and loans. Discuss whether you can pay them off by taking out a new loan with better terms.
• You can also give your bank additional collateral. For example, by giving the bank the mortgage rights to your premises. You can also ask someone else to guarantee that your debt will be repaid. This can increase your chances of getting a deferment or a new loan.

Investors and shareholders

Does your business have shareholders? They are entitled to information about the financial situation of the business. After all, they may lose their investment if the business fails to perform. Notify your shareholders that you are having financial problems in time. You can organise a shareholder meeting for this purpose.

Accountant

An accountant can help provide insight into the financial situation of your business. For example, by drawing up an overview of your current income, expenses, and debts.

Together, you can look for ways to restructure your debts and explore whether your business has a future. On top of that, you can try to find other solutions to your financial struggles. Such as:

• asking the court for suspension of payments
• debt restructuring
• initiating a WHOA procedure that allows you to come to an agreement with creditors through the courts
• filing for bankruptcy

Tax Administration

You may also have debts with the Tax Administration. For example, because you are unable to pay your VAT return. Explore whether you are eligible for a payment plan, deferred payment or remittance.

Debt collection agency

If you fail to pay an invoice after one or more reminders, creditors may bring in a debt collection agency(incassobureau). Debt collection agencies are only allowed to send letters requesting payment: they are not allowed to seize your property or garnish your wages.

Court

If your business is in debt, you may face the courts in several situations:

• A creditor or debt collection agency can ask the court to order you to pay your debt. Then they will engage a bailiff (deurwaarder) who will officially summon you to a court hearing. This is called a subpoena (dagvaarding)
• If the court orders you to pay the debt, the creditor can ask the bailiff to enforce the judgment.
• Your creditor can petition the court to declare your business bankrupt.
• You can also request the court for suspension of payment (sureseance van betaling). This suspension, or deferral, gives you time to settle your debts and avoid bankruptcy.
• If you choose to start a WHOA procedure, the court will have to approve the proposed agreement. Under the WHOA (Court Approval of a Private Composition (Prevention of Insolvency) Act) through the court you can agree to a payment arrangement if you cannot reach an agreement with your creditors yourself.

Bailiff

A bailiff can summon you to appear at a court hearing by serving a subpoena. Does the court order you to pay the debt, but you are unable to pay? Then the bailiff can seize your assets. The seized property will be sold publicly in an estate sale. The proceeds are then used to repay your debt. If you rent your premises and stop paying the rent, a bailiff can vacate the premises.

Lawyer

If your business has debts, chances are that you will have to deal with a lawyer.

• Has a creditor petitioned the court to declare your business bankrupt? A lawyer specialising in bankruptcy or insolvency law can provide advice and guidance on bankruptcy and the Central Insolvency Register (Centraal Insolventieregister, in Dutch).
• A lawyer may also ask the court for permission to seize your property on behalf of a creditor. This process is carried out by the bailiff.
• If you choose to offer creditors a payment agreement under the WHOA, you will need a lawyer to submit various documents to the court.

Curator

If you are declared bankrupt by the court, you will be assigned a curator (also referred to as the receiver, liquidator, trustee, or administrator). From that point forward, the curator is in charge of your business and ensure that the bankruptcy process goes smoothly.

The curator also determines the order in which creditors are paid by ranking creditors under the Bankruptcy Act.

Notary

In some cases, you need a notary to help deal with business debt. For example, you need a notarial deed to sell shares of a bv. Or if you want to give a creditor mortgage rights or a right of pledge (pandrecht). With mortgage rights, you give your creditor the right to sell your commercial property if you fail to meet your payment obligations. With a right of pledge you give your creditor the right to sell your assets other than a building. For example, your inventory, company cars or shares.

Municipal debt assistance

Your municipality can provide advice on and assist you with applying for debt mediation or debt restructuring. By means of an 'amicable settlement', the municipality can try to help you settle your debts with all creditors.

If not all your creditors want to cooperate, you can apply through the court for statutory debt restructuring under the Natural Persons Debt Restructuring Act (Wet schuldsanering natuurlijke personen, Wsnp)

Your local municipality may also recommend considering a WHOA procedure, then the court can approve a proposed payment agreement if you cannot reach an agreement with your creditors yourself.

Seek help

Do you have debt problems? Talk to others and take action as soon as possible. Check out KVK’s debt roadmap for more information.