Ranking of creditors
After a bankruptcy, the trustee (curator) determines in which order the creditors will be paid. The trustee does this according to the law. Read how this ranking is determined.
Money to pay creditors
When declaring bankruptcy, the court appoints a trustee. The trustee takes over the management of the company and tries to raise as much money as possible. For example, by selling the bankrupt company's assets and making sure that outstanding bills are paid. With this money, the trustee can pay as many creditors as possible.
Trustee determines order of payment
The trustee determines the order in which the creditors are paid based on agreements in the Bankruptcy Act (Faillissementswet, in Dutch). The order depends on the type of debt the creditor claims. This is also known as the ranking of creditors. The higher in the ranking, the more likely a creditor will be paid.
1st ranking creditors: estate claims
Claims against the estate (boedelvordeningen) are paid first. These are debts that arise during the period of the bankruptcy (also called estate debts) and which the law defines as estate claims. For example:
- salary of the trustee
- rent starting from the day of the bankruptcy
- employees wages from the day of the bankruptcy
Debts arising after bankruptcy are not claimable
Debts arising after the bankruptcy date are not verifiable (cannot be checked). For example, an ongoing subscription. This means that the bankrupt company does not have to pay these debts. These debts are also called non-recoverable debts.
2nd ranking creditors: preferential claims
After the estate debts have been paid, creditors with a preferential or priority claim (preferente vordering) will have their turn. Preferential creditors are, for example:
- The Netherlands Tax Administration (payroll tax and turnover tax)
- The Employee Insurance Agency UWV (wage claim)
- Employees owed unpaid wages from before the bankruptcy
The ranking of preferential creditors depends on the type of debt and how and when it arose.
3rd ranking creditors: unsecured claims
Once the preferential claims have been settled, the unsecured claims (concurrente vorderingen) will be paid if there is enough money available. These are debts that arise after a product or service has been delivered and has not been paid for. For example, outstanding invoices from product suppliers, but also energy suppliers or health insurance companies. If there is not enough money, unsecured creditors will only be paid a percentage of the amount claimed.
Post-competitive and subordinated creditors come last
Post-competitive creditors such as shareholders are only repaid their invested capital if there is still money after unsecured debts have been paid.
A subordinated creditor is, for example, a lender other than the bank. Such as a family member. The condition of the loan states that other creditors can claim first in the event of bankruptcy. So, the lender takes a risk. In a bankruptcy, this creditor will get money only after all other creditors have been paid and there is money left over.
Special creditors
Separatists
Separatists are creditors with special rights to the business's assets. This often enables them to claim a debt immediately without first seeking the administrator’s consent. The administrator may, however, ask them to wait.
There are two common types of separatist creditors:
- Creditors with mortgage rights. For example, a bank that holds a mortgage on commercial premises or a residential property. If you are unable to repay the loan, the bank is entitled to sell the property.
- Creditors with the right of pledge. For example, a bank that holds a right of pledge over a business’s fixtures and fittings or stock. If the loan is not repaid, the bank is entitled to sell these assets.
Separatists are not part of the ranking
Separatists usually do not have to deal with other creditors. But they do have to deal with other separatists. For example, a 1st mortgage holder may claim first, before a 2nd mortgage holder.
Security holders
In the case of a security guarantee (borgtocht), someone other than the borrower has undertaken to repay the debt if the borrower is unable to do so themselves. A security guarantee gives the creditor greater certainty that they will be repaid (in full or in part).
Importance of a business security guarantee fee
If, as a manager director or major shareholder (DGA), you act as guarantor for a loan to your BV, you are taking a risk. A business security guarantee fee reduces that risk, because:
- you avoid problems with the Netherlands Tax Administration
- you can claim the loss as a tax deduction
- you demonstrate that you are acting in a businesslike manner
- you receive fair compensation for the risk
- it helps in the event of a tax audit or the sale of your business
Debts remain
During a bankruptcy, the trustee pays off as many debts as possible. If there is not enough money to pay off all debts, these debts remain. Creditors can still come forward in the future to claim money. Does the bankruptcy end with a creditors' agreement or court approval? Then creditors cannot claim any money after that.