10 November 2020

Closing your business? Don’t wait until it’s too late

By Mechteld van Veen-Oudenaarden

In the NRC of November 3, Camil Driessen wrote a good article (in Dutch) about entrepreneurs closing their company.

You can read the article of Camil Driessen here. It has always been the case that companies get into financial difficulties. This has far-reaching consequences for the entrepreneur. Financial difficulties are often the reason why an entrepreneur wants to stop their business. They don’t like it anymore. However, it’s not that easy to quit. In addition to the mental step that has to be taken, an entrepreneur often postpones the decision: “maybe it will still work” or “I can still…”

Far too late, an entrepreneur comes to the conclusion that things are no longer working, and by then the situation is often impossible to oversee. The debts are so high that bankruptcy can no longer be averted. Are there other options? There certainly are.

Private company (BV)

If a director wants to terminate their private company, it must be liquidated. The benefits and costs must be identified. The assets must be sold, accounts receivable and claims collected. The total assets must be distributed among the creditors by an appointed liquidator.
If there are no longer enough revenues to satisfy the creditors, then a company is in the condition that it has ceased to pay and must file for bankruptcy. People often want to avoid the latter, and a creditors’ agreement is certainly a possibility. For this, I refer you to the blog about the creditors’ agreement. This is also a possibility since the inception of the WHOA.

As a director, one should not wait too long. This does not reach a solution. As Driessen’s article rightly points out, entrepreneurs often raise the alarm too late. The sooner the problems are identified, the sooner we can look for a (suitable) solution that might save the company. It should not be forgotten that bankruptcy could also be a solution.

Sole proprietorship

Those entrepreneurs wanting to end a sole proprietorship should be aware that a sole proprietorship is nothing more than a natural person who runs a business. The debts do not disappear with the collapse of the company. They always follow a person. This often results in bankruptcy or a request for authorisation of debt restructuring.

Here too, a creditors’ agreement can offer a solution. By offering all creditors a percentage against final discharge, it can be ensured that the company becomes debt-free and can continue with its life, without being chased by creditors. If a creditors’ agreement is one of the solutions, this is a faster solution than a debt restructuring.

Do you have a question?

If you still have questions about your own situation, do not hesitate and contact me. Leave your details here; I will call you back as soon as possible.

Mechteld van Veen-Oudenaarden

Mechteld van Veen-Oudenaarden

Lawyer

Mechteld van Veen-Oudenaarden started her career as a lawyer in Rotterdam, where besides practicing maritime law, she became acquainted with insolvency law.

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