Bankruptcy application

Bankruptcy application

As a creditor, bankruptcy of the debtor can be applied for as a last resort. The assistance of a lawyer is required to apply for bankruptcy. In addition, certain conditions must be met before bankruptcy is declared by the court. First, the debtor must have ceased making payments. Second, the debtor must have two or more outstanding debts with different creditors. For at least one of these claims, the payment term must have expired.

To file for bankruptcy, a lawyer must submit a petition to the court. Subsequently, the hearing will take place. The bankruptcy petitioners and the debtor will receive an invitation to the hearing. The debtor may submit a defense against the petition before the hearing takes place. After this, the hearing will take place, and the bankruptcy petitioners are required to be present. The debtor is not obliged to attend the hearing. If the debtor is not present, he will be declared bankrupt by default judgment. A ruling following the hearing will be issued within one to two weeks after the hearing. We have in-house lawyers who provide legal support for the bankruptcy application.

It is also possible to file for personal bankruptcy. The same conditions must be met to file for personal bankruptcy. The petitioner must therefore have ceased making payments and have two creditors, with at least one of whom has a payment term that has expired. No lawyer is required to file for personal bankruptcy. As a natural person, it can in many cases be beneficial to make use of the Debt Restructuring Act for Natural Persons (Wsnp). If the conditions are met, this can lead to a so-called “clean slate” for the debtor.

A voluntary bankruptcy application is filed using the Self-Declaration of Bankruptcy Form. Subsequently, a hearing will take place. The petitioner for bankruptcy must be present at this hearing if they receive a summons. A person who co-signed the application must also appear. The judge will then issue a ruling within one to two weeks. When filing for voluntary bankruptcy, it is advisable to engage one of our legal specialists. We are happy to review the options and risks involved in filing for voluntary bankruptcy together with the client.

Questions regarding filing for bankruptcy? Contact us.

When can you file for bankruptcy? The legal conditions

The court only declares a debtor bankrupt if it is summarily evident that two core requirements have been met (Article 1 and Article 6, paragraph 3 of the Bankruptcy Act). First, the debtor must be in a state of having “ceased to pay”: it must not concern a single incidental default, but a structural inability to satisfy the due debts. Second, the so-called plurality requirement applies. There must be at least two creditors; one creditor is insufficient, even if that creditor has multiple claims against the debtor.

To demonstrate this plurality, the requesting creditor adds a so-called supporting claim alongside their own enforceable claim: a claim from another creditor. This supporting claim does not itself need to be enforceable or established; it is sufficient that its existence is summarily plausible. In practice, therefore, a bankruptcy application stands or falls on whether you can substantiate a suitable supporting claim. Our lawyers and in-house counsel assess in advance whether your case file is strong enough, ensuring you do not appear at the hearing empty-handed.

The bankruptcy application as a means of pressure in debt collection

A bankruptcy petition is one of the most severe debt collection tools available. The mere threat of a bankruptcy petition immediately mobilizes many debtors: the risk of a declaration of bankruptcy is so significant that the outstanding debt is often settled in a single lump sum or a payment arrangement is reached. Consequently, in debt collection practice, the petition serves primarily as a means of pressure, and not always as an end in itself.

Nevertheless, caution is advised. Anyone filing for bankruptcy while the substantive claim is disputed or while the debtor is in fact solvent runs the risk of rejection resulting in an order to pay legal costs, and in exceptional cases, liability for abuse of power. We therefore always assess whether filing for bankruptcy is the right instrument or whether summary proceedings or attachment would be more effective. Whether you are an international group or the baker on the corner with a single persistent defaulter: we choose the remedy that suits your situation.

Costs of a bankruptcy application

The costs of a bankruptcy application consist of three components. First, the lawyer's fees for drafting the petition, correspondence with the debtor, and the proceedings at the hearing. Second, the court fees payable to the court; for legal entities, these are considerably higher than for natural persons. Third, the costs of the bailiff for summoning the debtor to the hearing. We provide you with a clear estimate of the expected costs in advance, so that you can make an informed decision before the proceedings begin.

Defense, opposition, and appeal against the declaration of bankruptcy

The debtor may defend against the application, either in writing or orally at the hearing. If the debtor fails to appear, the declaration of bankruptcy may be pronounced in absentia. Legal remedies are available against a declaration of bankruptcy. If the bankruptcy has been pronounced in absentia, the debtor may lodge an objection within fourteen days (Article 8, paragraph 2 of the Bankruptcy Act). If the bankruptcy has been pronounced in contested proceedings, the debtor may lodge an appeal with the Court of Appeal within eight days (Article 8, paragraph 1 of the Bankruptcy Act). The rejected petitioning creditor may also lodge an appeal within eight days. These deadlines are short and fatal; therefore, acting quickly with a lawyer is essential. Our lawyers assist both petitioning creditors and debtors in these proceedings.

What happens after the declaration of bankruptcy?

Upon the declaration of bankruptcy, the debtor loses control and management of his assets. The court appoints a trustee, who liquidates the assets for the benefit of the collective creditors, and a supervisory judge, who oversees the management and liquidation of the estate. The trustee inventories the assets, assesses the submitted claims, and investigates, among other things, whether fraudulent transactions or directors' liability have occurred. For creditors, bankruptcy means submitting their claims for verification and, in principle, being paid proportionally, insofar as the estate is sufficient. If you wish to avert an impending bankruptcy, a suspension of payments or a creditors' agreement offer a solution.

Bankruptcy application within restructuring and insolvency

A bankruptcy application rarely stands alone. Whether it concerns a creditor seeking to collect a debt, a director considering voluntary bankruptcy, or a company wishing to reorganize: the bankruptcy application is part of the broader landscape of restructuring and insolvency. Often, there are alternatives that can prevent bankruptcy, such as a reorganization, a restart , or, for natural persons, debt restructuring. At MKB Juristen, lawyers and in-house counsel work together so that we not only conduct the proceedings in court but also make the associated strategic and commercial assessments. From an international group to the entrepreneur with a single location: we help determine the route that best suits your interests.

Frequently asked questions about filing for bankruptcy

Do I need a lawyer to file for bankruptcy? Legal assistance is mandatory for filing for the bankruptcy of another party (your debtor); the petition must be filed by a lawyer. A lawyer is not mandatory for filing for your own bankruptcy (self-declaration), although legal guidance is advisable even then.

How long does a bankruptcy application take? After the petition is filed, a hearing usually follows within a few weeks. The court usually issues a ruling within one to two weeks after the hearing, and sometimes even on the day of the hearing itself.

What is a supporting claim? A supporting claim is the claim of another creditor that you assert to demonstrate that the debtor has more than one creditor (the plurality requirement). The supporting claim does not need to be due or undisputed; its existence only needs to be summarily plausible.

Can the debtor still prevent the bankruptcy? Yes. The debtor can present a defense at the hearing and, after the declaration of bankruptcy, lodge an objection or appeal within the statutory time limits. Moreover, bankruptcy is often averted because the debtor pays or reaches a settlement before or during the proceedings.