Is bankruptcy the solution?

When entrepreneurs can no longer pay their debts, they often think that bankruptcy is the solution. Unfortunately that is not the case. We are happy to explain why. According to the law, bankruptcy is a total seizure of all your assets. This means that you cannot freely dispose of your belongings, such as machines and car. You are also not allowed to do anything that has to do with your finances. The court appoints a trustee (often a lawyer) who checks whether your creditors can be paid by selling your properties and the money you have in your account. If there is nothing to sell or if the sale is insufficient, the trustee will, in consultation with the court, lift your bankruptcy after some time. In that case nothing has been arranged to resolve the debts and so they still exist. Debts have even increased due to interest and costs. The trustee must also be paid for his work and this claim is in addition to the rest of the debts. The debts are now even higher than before the bankruptcy. That is why we say: "Bankrupt, better not!"

If you have a BV, as a director you are only liable for the debts if you have not acted as it should. For example, you entered into obligations that you knew or could have known you could not fulfill. If you do business from a sole proprietorship or VOF, you are personally liable after bankruptcy for all business and private debts when the bankruptcy is lifted due to lack of income.

With a successful debt restructuring, however, you will be off your debts within a few years. This term is five years for entrepreneurs who restart. For entrepreneurs who quit for three years. In the event of bankruptcy, there is usually no solution and you remain liable for your debts. This liability can last up to 20 years and feel like a life sentence. Therefore, if you have financial problems, it is important to act quickly. Only then can the damage be limited and bankruptcy prevented.

In this video, Jacqueline therefore answers frequently asked questions from entrepreneurs with financial problems. One of these is: 'am I bankrupt?':

When are you bankrupt?

This is the case when the court pronounces the bankruptcy judgment on you or your company. It is also possible that you are technically bankrupt: that it already appears on paper that you are in a situation where you have stopped paying. What are you doing then? Is filing for bankruptcy before the court a solution? This is only the case if you have a BV, where you have not co-signed for anything privately and you have arranged everything with the Tax and Customs Administration.

Do not file for bankruptcy if you are personally liable, i.e. if you have a sole proprietorship, are a self-employed person without employees or are a partner in a general partnership. If you are personally liable for your debts and there is nothing to be achieved, the bankruptcy will eventually be lifted due to a lack of assets in the estate. In that case, the trustee has demonstrated that there is nothing to be gained, and therefore that debts cannot be paid. This does not release you from your liability! The claims persist for up to twenty years. What should you do if you are personally liable for your debts and you cannot pay? Make a debt settlement. We'll discuss exactly how that works in the next video.

What is bankruptcy?

For an entrepreneur, bankruptcy is often the culmination of several failed attempts to overcome financial problems. Often actions have already been taken to increase turnover, restructuring attempts have been made and additional financial resources have been sought. If none of that has worked and the entrepreneur - be it a private person (through a sole proprietorship) or a legal person (usually a BV) - forcibly ceases to meet his or her financial obligations, bankruptcy becomes inevitable.

The entrepreneur can file for bankruptcy himself or one or more creditors can do so. The bankruptcy is decided by the judge. He also appoints a curator immediately. The trustee takes over the management and disposal of everything that belongs to the company from the entrepreneur. He or she will inventory the assets, sell them and distribute the proceeds among the creditors.

Those assets consist of inventory and stocks, but also accounts receivable, work in progress, trade name, website, other intellectual property rights and the like. The bankruptcy trustee prefers to sell all those assets at once; in that case we speak of a restart. The bankruptcy trustee often manages to retain employment for some of the staff. If a restart is unsuccessful, there is usually nothing for the curator to do but sell 'the tables, chairs and laptops' at an auction or privately.

Another task of the bankruptcy trustee, in addition to selling the assets, is to initiate a legality investigation. Especially for the director of a legal person in severe weather, it is important to take this into account well before the bankruptcy and to ensure that he or she gets through that investigation unscathed, when it comes to that. Sometimes this can be done by taking a critical look at the accounting itself, but in many cases further advice is desirable about the obligation to publish, current account relationships, (settlement of) securities, payments in the face of bankruptcy, and so on.

Tip: Finally, if you, as a director or shareholder, aspire to a restart yourself, it is wise to have your plan ready before the receiver makes his entrance. For example, bankruptcy does not always have to mean the end of entrepreneurship. Peter Bos, Wieringa lawyers

Bankruptcy filing and continue?

We were recently approached by an entrepreneur with a private company (bv). Over time, various payment arrears have arisen, including in premium payments to the employees' pension fund. The pension fund is now threatening to file for bankruptcy. By filing for bankruptcy, there is a good chance that the pension fund will be fully compensated in the pension payment. The UWV will then take over the payment obligation for the overdue premium up to one year prior to the bankruptcy.

This can make it attractive for both the pension fund and the employees to file for bankruptcy. However, bankruptcy does not seem to be the best solution for all parties involved in this case. The company is still running well and generates sufficient income to meet all current payment obligations in due course. This situation requires a creative approach. The advisors at Zuidweg Bedrijfsherstel are happy to lend a helping hand.

In this case, the arrears with the pension fund will have to be paid in full. This means that before the other creditors are approached, an arrangement is made with the pension fund. This can be in the form of a payment arrangement in installments, but also by means of a credit. Once agreement has been reached on the method of payment of the pension fund's claim, work can be done on a solution for the rest of the debt position. Naturally, the required payment margin for these other creditors has already been taken into account when determining the payment arrangement with the pension fund.

Threats of bankruptcy do not necessarily mean an end to the company, but can be the start of a new build.

WSNP as an alternative?

To prevent you from remaining liable for your debts for life, there is the Natural Persons Debt Rescheduling Act (WSNP). A condition for an appeal to the WSNP is that amicable debt counseling is not possible. So if amicable debt counseling is successful, three years of WSNP will no longer be necessary. With our years of experience and expertise in debt assistance, we are your partner for a successful amicable process. More than 36.000 entrepreneurs preceded you.

If an amicable process is not possible, we will assist the entrepreneur with the application for the WSNP. All information about this petition to the court can be found here.

The WSNP lasts three years. You will be assigned an administrator who has a role similar to that of the trustee in the bankruptcy. The administrator ensures that your creditors receive as much money as possible. If you adhere to the rules of the WSNP, you will be rid of your debts after 3 years. Your creditors must agree with the money they will receive. We take care of the application for the WSNP.

Get to know the debt counseling of Zuidweg & Partners

Are you an entrepreneur with (increasingly serious) financial problems? Is it uncertain whether you can continue with your business or have you perhaps already stopped? Then we can help you. Since 1994, Zuidweg & Partners has been the leading organization in the field of debt assistance for entrepreneurs.

Being in debt is a heavy burden. Dealing with bailiffs and collection agencies puts a heavy burden on your time and energy and is at the expense of your strength and focus. By calling in Zuidweg Schuldhulp, you break this vicious circle. You calm down again and you start to concentrate on the things you are good at.

If you apply for debt assistance, you do not have to file for bankruptcy. The consequences of bankruptcy are often detrimental because there are no means to pay your creditors. You can be liable for your debts for twenty years. You are not alone. You will be assisted from start to finish by the experienced advisors of Zuidweg Schuldhulp. At the end of our cooperation you have created a good situation for a financially much healthier future.

What are the costs for debt counseling?

The costs for our guidance are often reimbursed by municipalities. We work together with almost 140 municipalities in the Netherlands. Chances are that you live in a municipality that reimburses the costs for you. Do you live in a municipality with which we do not yet have a partnership? Then we will look for a solution together with you:

Request help here

Continue reading or bankruptcy and the WSNP?

Where should I apply for debt assistance? – National government
https://www.rijksoverheid.nl/onderwerpen/schulden/vraag-en-antwoord/schuldhulpverlening-aanvragen

Statutory debt restructuring (Wsnp) – The Judiciary
https://www.rechtspraak.nl/Onderwerpen/Schulden/Wet-schuldsanering-natuurlijke-perzone

Wetten.nl – Scheme – Debt restructuring natural persons
https://wetten.overheid.nl/BWBR0011874/

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