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Bankruptcy does not have to be the end of your business. Sometimes you can continue your business, or make a new start.
Continuation during the bankruptcyThe curator or receiver can opt to let your business continue, for instance because you still have revenues. One risk you run in this instance is that creditors may demand swift payment, whereas your company needs some time to settle. The examining magistrate can determine a cooling-off period of at most 2 months. During this cooling-off period, most creditors have fewer rights.
Making a new start after bankruptcyWhen you are making a new start, you shut down the parts that were costing you money, and continue with the ones that bring in a profit. You have to take into consideration what your customers will make of this; if you think they may leave when you close down a certain activity, it might not be a good idea to do so. You can also sell the healthy parts of your company. You can only make a new start if your company is a legal entity, such as a private limited company (bv), because then, only the legal entity will be bankrupt, and not the director(s). If your business structure is not a legal entity, for instance if you are a sole trader, you are personally liable for your debts.
What happens to your staff when you make a new start?Did you employ staff when your company went bankrupt? When you make a new start, you won’t have to rehire these employees. If a person or company takes over your company to make a fresh start, they don’t have to rehire your staff either.
Financing your new startYou need financing for your new start. If your bank or investor is also a creditor, you must find other sources of financing.
You cannot make a new start if:
- the curator or receiver fights the new start on the grounds that it harms the claims of your creditors;
- you want to make a new start before the bankruptcy has been pronounced; the interests of the old and the new company may be conflicting;
- as director of the ‘old’ company, you are held accountable for the bankruptcy.