The Bottom Line
- Dissolution Isn’t Proof of Insolvency: A Dutch court has affirmed that simply registering a company’s dissolution is not sufficient evidence to prove it has multiple creditors, a key requirement for a successful bankruptcy petition.
- Asset Sales Can Defer Bankruptcy: Even when multiple creditors are proven, a court may reject a bankruptcy petition if the debtor is in the process of selling a significant asset (like real estate) that could foreseeably cover the outstanding debts.
- Context is King: The court will scrutinize the entire situation, including the size of the petitioner’s claim and any partial payments made, before resorting to the drastic measure of bankruptcy.
The Details
In a recent case, food supplier Bidfood B.V. filed a bankruptcy petition against a general partnership (a V.O.F. in Dutch) and its two individual partners over an unpaid debt. Under Dutch law, a creditor filing for bankruptcy must prove not only their own claim but also that the debtor has at least one other creditor (the plurality of creditors rule) and has effectively “ceased to pay.”
Bidfood argued that the partnership’s recent dissolution, recorded in the commercial register, implied the existence of other debts. The court flatly rejected this assumption, stating that a business can be dissolved for many reasons, not just insolvency. Lacking any other concrete evidence of a second creditor, the bankruptcy petition against the partnership and one of its partners was dismissed.
The case took an interesting turn when considering the second partner. For this individual, Bidfood successfully proved the existence of other creditors by presenting a land registry extract showing a mortgage and several attachments placed on his home. The plurality requirement was met. This highlights a critical procedural point: even in a partnership context, the financial situation of each partner and the partnership itself are assessed individually, and evidence must be presented for each entity you wish to bankrupt.
Despite clearing the plurality hurdle for the second partner, the court still denied the bankruptcy request. It then assessed whether the partner had truly “ceased to pay.” The court noted that Bidfood’s claim was relatively small (around €5,700), and a significant portion had already been repaid. More importantly, the partner’s home was actively being sold, creating a clear path to potential repayment for all creditors. The court ruled that the partner should be given the opportunity to settle his debts from the proceeds of the sale, concluding that he had not yet reached a state of having ceased to pay. This decision serves as a strong reminder that bankruptcy is viewed as a last resort, not a standard tool for debt collection when other recovery options are on the horizon.
Source
Rechtbank Midden-Nederland
