Although an increase in the number of bankruptcies was noted in March 2021 compared to the previous months, the expected wave of bankruptcies due to the COVID-19 measures has not yet materialized. Unfortunately for many entrepreneurs, the expectation is still that that wave will arrive. I will tell you in this blog what it means if a company is declared bankrupt. I focus on the bankruptcy of a private company (BV).
Appointment of trustee and supervisory judge
As you could read in my previous blog about filing for bankruptcy , the court appoints a curator when the bankruptcy is declared. It is the trustee’s task to settle the bankruptcy and to pay as many creditors as possible. For this he will be given management of the company’s assets; he takes over the company, so to speak. In addition, the trustee investigates, among other things, the cause of the bankruptcy and checks whether there is any question of directors ‘ liability . Simultaneously with the appointment of the curator, the court appoints a supervisory judge. The supervisory judge supervises the actions of the curator and checks, among other things, whether the curator properly fulfills his duties.
Bankruptcy is a general judicial attachment of the company’s assets. This concerns both the assets of the company at the time of bankruptcy and the assets that are still acquired during the bankruptcy, for example because outstanding invoices are paid or by selling the assets of the company. As from the declaration of bankruptcy, individual creditors can in principle no longer recover from the assets of the company and any previously levied attachments will lapse.
The individual creditors can, however, submit their claim to the trustee for verification. In my next blog I will discuss the settlement of a bankruptcy and the order in which creditors receive their claim (if any). In practice, however, many creditors lose out in a bankruptcy. Incidentally, exceptions to this are conceivable, such as a bank with a mortgage right. In that case, the bank is a so-called ‘separatist’ and can exercise its rights as if there was no bankruptcy.
Management and decision-making authority
From the day the bankruptcy is pronounced, the board of the company loses the management and disposal of the assets that the bankruptcy. This rule ‘works back’ until 00:00 on the day of the bankruptcy order. From that moment on, only the trustee is authorized to manage and dispose of the property. Acts on the day of the bankruptcy order are therefore not legally valid and can be undone by the trustee, even if these acts were performed before the bankruptcy was declared.
Information and cooperation obligation
Directors are required by law to provide the trustee (or supervisory judge) with information of which he knows or should understand that it is important for the size, management or liquidation of the estate. In principle, directors must also cooperate in the management and liquidation of the estate. This also applies to de facto directors who have (partly) determined the policy of the company.
If you have any questions about a bankruptcy and what consequences this has for you specifically, please contact us. We are specialists in the field of bankruptcy law and are happy to help you.