1 July 2024
The Expedited Liquidation Transparency (Interim Measures) Act (Tijdelijke wet transparantie turboliquidatie) entered into force on 15 November 2023.
An expedited liquidation is the quick and easy dissolution and winding up of businesses (companies), without liquidation and without bankruptcy. This is based on Article 2:19(4) of the Dutch Civil Code (Burgerlijk Wetboek). Expedited liquidation allows entrepreneurs to discontinue their business quickly and easily if it no longer contains anything of value. For businesses without assets, an expedited liquidation is the appropriate route to discontinue the business; such businesses are ineligible for a liquidation order (for example, see this judgment).
At times, the instrument of expedited liquidation is misused, for example if the company’s assets have been improperly divided or disposed of, or if there is potential director liability. In that case, the liquidation may still be ordered, or the director may be held personally liable. Personal liability arises, for example, if the director 1) despite the presence of assets, fails to conduct a liquidation after the dissolution of the company, 2) with regard to the dissolution, makes or causes selective payments to group companies or other persons directly involved in the company, or otherwise favours them over third parties, or 3) upon the dissolution of the company, causes or allows an asset belonging to a third party not to be returned or otherwise made available again to that third party.
Expedited liquidations are therefore prone to misuse, especially if debts are not paid. The new act introduces measures for more transparency, leading to more legal protection for creditors and the prevention of misuse. This makes an expedited liquidation a more convenient way for entrepreneurs to discontinue their business. Discontinuing the business in good time prevents debts from accumulating further, if they, for example, can no longer be paid due to the loss of income. The alternative is bankruptcy, in which case creditors get a lot less of their money back.
In the case of an expedited liquidation, the new law requires entrepreneurs to submit financial statements to the Chamber of Commerce (KvK), which has created a form for this purpose. This will clarify what the latest proceeds were spent on and why there weren’t more debts that could be paid. Greater transparency also makes it possible for creditors to take action against an expedited liquidation, for example by demanding access to records, holding directors liable or having the expedited liquidation reversed by the court. Misusing an expedited liquidation is punishable under the Economic Offences Act (Wet economische delicten) and can lead to a director disqualification for up to five years.
Find more information on expedited liquidation in our previous weblog on this topic and on the website of the Ministry of Justice and Security (Ministerie van Justitie en Veiligheid). Do you have any questions about this subject or need assistance with an expedited liquidation? Don’t hesitate to contact us.
