Why declaring your debtor bankrupt is useful. What requirements do you take into account?

Suppose your debtor does not pay your outstanding invoice. You can then start an expensive lawsuit to obtain a judgment against him, but you can also file for bankruptcy of your debtor in order to perhaps persuade him to pay. My colleague Erik Jansen has previously written blogs about the usefulness of filing for bankruptcy as a means of collection and the risks involved. However, it may also be the case that you do not (only) use the bankruptcy petition as a means of collection, but that you also have an interest in the court actually declaring the bankruptcy of your debtor.

Importance bankruptcy debtor

You may have an interest in the bankruptcy of your debtor. For example, if you suspect that (the management of) your debtor has withdrawn goods from your debtor so that you can no longer recover these goods. A receiver can then investigate these transactions and, if necessary, reverse them. A trustee can also - under circumstances - hold your debtor's board liable for the bankruptcy deficit (including your unpaid claim). Also, your debtor's bankruptcy may be a stepping stone for possible liability of your debtor's board for your unpaid claim.

In short, there are plenty of reasons why your debtor's bankruptcy can be useful so that it does pay off to file for your debtor's bankruptcy.
But when does the court declare bankruptcy? What requirements must be met?

Bankruptcy filing requirements

A successful bankruptcy filing requires that the debtor be in a state that it has stopped paying. This is the criterion a court uses to test whether a company or person should be declared bankrupt.
Now when is a debtor in the condition of having ceased to pay? If so, two requirements must generally be met:

1. You - as the applicant - must have a claim (due) against the debtor that is not paid;
2. there must be multiple creditors (the "plurality requirement");

It is sufficient for a court to find, after brief, simple examination, that both requirements are met.

Prerequisite

If you have agreed on a payment term with your debtor and he does not pay within this term, you can immediately file for bankruptcy. The first requirement is then met.
In general, however, it is useful to first give your debtor the opportunity to pay voluntarily, for example through a summons. This may lead to payment and avoid unnecessary additional costs.

Second requirement

Bankruptcy is declared only if your debtor leaves claims from multiple creditors unpaid. Thus, there must be so-called "support claims." When investigating any support claims, we can assist you.
The Supreme Court recently ruled (HR March 24, 2017, ECLI:NL:HR:2017:488) that the plurality requirement still applies because the purpose of a bankruptcy is to distribute the assets of the bankrupt among the joint creditors. If there is only one creditor, then bankruptcy cannot be declared and the creditor will have to initiate normal proceedings to obtain a judgment.

Conclusion

Under circumstances, it may be useful to declare your debtor's bankruptcy. The requirement here is that your debtor is in a condition that he has ceased to pay. The Supreme Court has recently confirmed that this is met if the debtor leaves your claim and claims of at least one other creditor unpaid.

Would you like to read more blogs on this topic? Then check out my colleague Erik's articles.

Collection through bankruptcy filing

Bankruptcy filing as leverage to get money faster