When is turboliquidation allowed?
Turboliquidation can only be done at the time when there are no more assets in the company. How many debts there are does not matter. If the company actually has no assets, there is no disadvantage in turboliquidation. It is then the most appropriate way to terminate a company. However, in practice turboliquidation is also regularly abused. The purpose of turboliquidation is to throw sand in your eyes as a creditor in an attempt by the debtor to get out of a payment obligation.
An abuse of turboliquidation occurs, for example, when there are still assets in the company or when the board has deliberately drained all the assets just before the turboliquidation. Consider, for example, paying the last liquid assets to the board itself in order to "empty" the company. It is up to the creditor to prove abuse of turboliquidation and/or that there are still assets present.
So how do you ensure that you still get your claim terminated when faced with a debtor who has been turbocharged?
Options for the creditor: towards the company
First, you can address the company, even if it has been turboliquidated. In brief, you have two options: 1) (re)opening the liquidation as provided for in Article 2:23c of the Civil Code, or 2) filing for bankruptcy of the company.
1. Reopening of liquidation
You have the option of (re)opening the liquidation of the company if you suspect that there are still assets. A petition to this effect can be filed with the court by an attorney on your behalf.
When the company is (re)opened, the court will appoint a liquidator. The liquidator will distribute the company's assets to all parties entitled to them, including you. In doing so, the liquidator has the power to reclaim overpayments from third parties. This ensures that extra money becomes available for possible distribution to you. To control who becomes liquidator, you can nominate a liquidator in the petition.
2. Bankruptcy petition
Instead of (re)opening the liquidation, you can also file for the debtor's bankruptcy. This is also done by having your lawyer file a petition with the court. For this to succeed, you must be able to prove that the company has stopped paying and there must be at least two different claims.
When bankruptcy is declared, a receiver is appointed, whose main task is to liquidate the company's assets. Another task of the trustee is to investigate whether there is manifestly improper management within the meaning of Article 2:248 of the Dutch Civil Code. If this is the case, then the board of directors will be liable in private for the estate deficit and your claim will thus be settled indirectly.
A trustee can also sue the directors on other grounds, such as unlawful selective payments or dividend payments that should not have been made. This too can result in amounts flowing into the estate with which you can then be paid.
Finally, a trustee can also annul legal transactions that are detrimental to creditors. You can think of selling assets for too low an amount. As a result, the assets fall back into the estate and the trustee can sell them to distribute the proceeds among the creditors, including you.
Proof of benefits present
For both the liquidation petition and the bankruptcy petition, you must be able to prove that there are still assets in the now-turboliquidated company. For proving benefits, it is sufficient that their existence is made plausible by the creditor. Potential benefits are also sufficient. In this context, it may be useful, for example, to verify whether the directors have filed the annual accounts in a timely manner, as a violation of this obligation is assumed under circumstances to be a potential benefit.
Options for the creditor: towards the board
Even if the liquidation of the turboliquidated company is reopened or if bankruptcy is declared, there is a significant chance that you will not be paid anything on your claim. This is because liquidation, whether by a liquidator or a receiver, takes place according to the legal order of priority. If your claim has no priority under the law, then there is a risk that you will see nothing or little return on your claim. For this reason, it may be attractive to sue the director of the liquidated company privately if there are grounds to do so. You then have an additional recourse.
Directors' liability
The legal basis for directors' liability is Section 6:162 of the Dutch Civil Code, the tort. To hold a director liable on this ground, you must be able to prove that a personal, serious reproach can be made against him. This personal, serious accusation can be colored in different ways. The Supreme Court offers a number of tools, one of which we will discuss, namely recourse frustration, as this is frequently the case with improper turboliquidation.
HR Receiver/Roelofsen
In this ruling, the Supreme Court determined that a director is liable privately, in addition to the company, if;
- who has brought about or permitted a breach of an obligation assumed by the company; and
- That no recourse is provided for the resulting damages.
This may be the case with abuse of turboliquidation.
Evidence problem?
With all three options described above, it is up to you to prove that a director is liable and/or that there are still assets in the company. With the entry into force of the search.officielebekendmakingen.nl/stb-2023-244.html search.officielebekendmakingen.nl/stb-2023-244.html, a director is subject to a filing obligation and a corresponding disclosure obligation that significantly strengthen your (proof) position as a creditor.
Filing and disclosure requirements
Under the filing requirement, a director must file various financial documents within 14 days of dissolution, such as a balance sheet, financial statements and a description of causes for lack of assets. Under the disclosure requirement, a director must promptly notify you of the filing. Thus, you will receive notice from the director when he has filed the documents. The newly introduced filing and disclosure obligation gives you, as a creditor, a better insight into the financial position of the company prior to the turboliquidation and allows you to better assess than before whether there are (or were) assets present, whether there are support claims and whether there has been mismanagement.
Temporary law on transparency turboliquidation: also the solution in case of a reluctant director?
Now what if a director does not file documents and does not inform you as a creditor? What can you do then? You have several options since the introduction of the Turboliquidation Transparency Act. In short, you can 1) request access to documents, 2) invoke the right of inspection under article 843a Rv, or 3) request an increased duty of disclosure.
1. Inspection of documents
First, you can ask the court for insight into the debtor's books, records or other data carriers if the debtor's management violates its filing obligation. This is stated in article 2:24 paragraph 4 of the Civil Code. You only get this right at the moment that the documents have not been filed at all, or are obviously incorrect or incomplete. Therefore, if you have a suspicion that the documents are incomplete but cannot prove this directly, article 2:24 paragraph 4 BW does not offer a way out.
2. Appeal to right of inspection
Secondly, you can invoke the right of inspection provided in article 843a Rv. This right of inspection also has high requirements. You must have a legitimate interest in inspecting the documents. The information requested must have a direct bearing on the legal relationship between the parties, in order to prevent so-called fishing expeditions. The article is intended to give a party a right to inspect documents that he knows exist, but does not have access to. You cannot use it to find out whether there are records you can use.
3. Request for aggravated disclosure
Third, if you have already started proceedings, you can ask the court to impose an aggravated duty of disclosure on the other party, or even to reverse the burden of proof. While the latter option will only be granted under special circumstances, the same is not true of the weighted duty of information. You would be wise to always request this because of the information imbalance inherent in the procedure. You can use the violation of the disclosure obligation from Article 2:19b of the Dutch Civil Code in proceedings against the company or the board, such as a director's liability case or a bankruptcy petition.
Strengthened creditor's position to collect claim
In summary, as creditors you have three different tools to challenge abuse of turboliquidation; a request for (re)opening of the liquidation, a bankruptcy petition and/or holding the board liable. The introduction of the Temporary Act on Transparency Turboliquidation has strengthened your (evidence) position as a creditor. For example, there is a new filing and disclosure obligation for the board and you have a new right of inspection in case of violation of that filing obligation. If the duty of disclosure is violated, you can enforce access to financial information in court. You can also use violation of the filing and disclosure obligation in other proceedings against the board or the liquidated company.
