Suspension of payments

What we do

An organization experiencing temporary financial difficulties can apply for a suspension of payments. Applying for a suspension of payments is often done in an attempt to prevent bankruptcy. The application must be filed by a lawyer. If a suspension of payments is granted by the court, an organization can receive a deferment of payments for a maximum of 1.5 years.

The court grants a suspension of payments only if the organization's financial problems are temporary in nature and, in the court's opinion, the organization is viable. Our lawyers can provide support with the application for a suspension of payments.

Questions regarding suspension of payments? Contact us.

What is a suspension of payments?

Suspension of payments is a statutory provision under the Bankruptcy Act that grants a company facing temporary payment difficulties a deferral of payment. The aim is to create breathing space: time to restructure, negotiate with creditors, and thus prevent bankruptcy. The scheme is regulated in Title II of the Bankruptcy Act (Article 214 et seq.). Suspension of payments can be requested by legal entities (such as a private limited company (BV) or public limited company (NV)) and by natural persons operating a business (such as a general partnership (VOF) or a sole proprietorship with employees); for consumers without a business, debt restructuring applies instead .

Important to know: a suspension of payments only works against so-called concurrent (ordinary) creditors. Preferential creditors, such as the Tax Authorities, the UWV (Dutch Social Security Agency), and your employees regarding their wages, are excluded and can, in principle, continue to claim. This makes the regulation less powerful than it appears at first glance and explains why good preparation is crucial.

Conditions for suspension of payments

The court grants a moratorium only when two core conditions are met. First, you must currently be unable to pay your due debts. Second, it must be plausible that you will be able to meet your obligations again after a period of time: the problems must be temporary in nature and the company must be viable. If the company is in fact structurally loss-making, a bankruptcy application or a restart the more appropriate course of action. Our lawyers and corporate counsel will honestly assess in advance whether a moratorium is the right instrument for your situation, or whether another course of action is more promising.

The procedure: provisional and definitive suspension of payments

The application proceeds in two phases. The petition is filed with the court by a lawyer, accompanied by a current statement of assets and liabilities and a list of creditors. The court usually grants provisional suspension and appoints an administrator and a supervisory judge.

Within a few months, a creditors' meeting will follow in which the unsecured creditors vote on a definitive suspension of payments. If this is granted, the deferral can amount to a maximum of one and a half years, with the possibility of extension. We draft the petition and the supporting documents, prepare for the creditors' meeting, and assist you throughout the entire procedure.

The role of the administrator

Unlike in bankruptcy, where a trustee takes over the company, the management board remains authorized during a suspension of payments. However, the court appoints an administrator (usually an experienced insolvency lawyer) who makes decisions together with you. Without the cooperation, authorization, or assistance of the administrator, no legal transactions regarding the assets can be performed. A constructive relationship with the administrator is therefore crucial for the success of the process. We understand the dynamics involved and help you structure this collaboration effectively.

The agreement and the homologation

During the suspension of payments, you can offer the creditors a settlement agreement: often payment of a percentage of the claim in exchange for final discharge of the remainder. The agreement is adopted if at least half of the concurrent creditors present (recognized and conditionally admitted) vote in favor and those creditors together represent more than half of the concurrent debt amount. Subsequently, the court assesses whether to homologate (approve) the agreement. Once the agreement has been homologated, it is also binding on the concurrent creditors who voted against it. Drafting a feasible agreement, often with external financing as the final element, is precisely where our guidance makes the difference. Nowadays, an agreement outside of the suspension of payments can also be reached via a creditors' agreement under the WHOA, without an administrator and while retaining control.

Suspension of payments, bankruptcy, or WHOA?

Suspension of payments is not always the best choice. Because the tax authorities and employees fall outside the scope of the scheme and staff cannot be laid off more easily, a significant proportion of suspensions of payments ultimately result in bankruptcy. Since 2021, the WHOA (Dutch Act on the Homologation of Private Agreements) offers an alternative: it allows you to impose a compulsory agreement on all your creditors (including preferential creditors) without the need for a suspension of payments or bankruptcy, while retaining control over the company. Which route is appropriate depends on your debt position, the willingness of creditors, and the viability of your company. We weigh the options against each other within the broader framework of Insolvency Law and, together with you, choose the path with the highest chance of success, whether that be a suspension of payments, a reorganization, a restart, or the WHOA.

For whom we work

MKB Juristen works with mixed teams of lawyers and in-house counsel. This means that we not only conduct the legal proceedings but also consider the underlying financial and commercial reality. We assist both the international corporation seeking to rescue a struggling division and the local baker looking to save his business. The same approach applies to every entrepreneur: decisive, honest about the chances, and focused on preserving value.

Frequently asked questions about suspension of payments

Do I need a lawyer to apply for a moratorium? Yes. The petition must be filed with the court by a lawyer.

How long does a suspension of payments last? The definitive suspension can last up to a maximum of one and a half years, with the possibility of extension.

Does a moratorium also apply to the Tax and Customs Administration? No. The Tax and Customs Administration, the UWV (Dutch Social Security Agency), and employees are preferential creditors and fall outside the scope of the moratorium. If you wish to bind them as well, the WHOA (Dutch Act on the Restructuring of Companies) is often a better instrument.

What happens if the suspension of payments fails? If no agreement is reached or the company proves unviable, the suspension is revoked and bankruptcy usually follows. Early advice increases the chance that it will not come to that.

Questions about a suspension of payments? Contact us for a fair assessment of your situation.