Ending a legal entity through fast-track liquidation

What is a fast-track liquidation?

Fast-track liquidation, also known as turbo-liquidation, is a way to end a legal entity in the Netherlands. For example, a private limited company (BV), a public limited company (NV), a cooperative, a mutual insurance association, a foundation, or an association. You cannot use a fast-track liquidation to end a sole proprietorship (eenmanszaak) or a general partnership (VOF).

Ending a business immediately if there are no assets

Fast-track liquidation has one important requirement: there must be no assets left at the time of dissolution. This is the moment when a decision to dissolve the company is made. If there are no assets at that time, the company is ended immediately. 

Do you want to deregister a BV zonder baten (BV without assets) via turbo liquidation? Use My KVK. Do you want to deregister another type of legal entity without assets? Then fill in form 17a, Dissolution of a legal entity and send it to KVK.

If a business still has assets, the company is not immediately ended. Instead, you must follow the legal liquidation procedure. You need to follow the steps set out in the law. If the debts are larger than the assets, the creditors or the business owner may file for bankruptcy.

What are assets?

Assets include various items within a business, such as:

• money in the bank
• inventory and stock
• property
• shares in other companies.

Claims are also assets. This applies to claims you are sure will be paid. But also to claims you could collect. For example, money you only get after you speak to a debtor or take legal action. Examples of claims are:

• an amount you are owed from debtors
• a deposit that you get back after a rental period
• an amount you will get after cancelling an agreement

The term ‘assets’ covers more than you might think. So be careful when deciding if your business still has any assets. Seek advice from a legal professional and accountant before making a decision to dissolve the company.

What if there are assets?

Fast-track liquidation is possible when there are no assets at the time of dissolution. This is often the case for ‘empty’ legal entities that have no assets. Such as an inactive holding company.

However, active legal entities with assets can also use fast-track liquidation. To do so, you must first liquidate or clear the remaining assets before the dissolution. You sell all assets and pay off creditors as much as possible. When doing so, you must consider the interests and priority of creditors. Liquidation is followed by the decision to dissolve and fast-track liquidation.

Does your company have debts?

Fast-track liquidation is possible even if a business still has some debts. Are there significant debts? It may be better to file for bankruptcy. In a bankruptcy, you appoint a trustee who has experience in handling debts correctly.

Ongoing (employment) agreements

It is not usually advisable to choose fast-track liquidation if there are debts or ongoing agreements. For example, rental or employment contracts that cannot be easily ended. If you do then choose for fast-track liquidation, you run the risk of being personally liable as director. 

Transparency Fast-track LiquidationAct

On 15 November 2023, the Temporary Act Transparency Fast-track Liquidation came into effect  This law makes fast-track liquidation more transparent for creditors than before. And prevents misuse or abuse of a fast-track liquidation.

What does the law say?

According to the rules in the Transparency Fast-track Liquidation Act, the board of the legal entity is financially accountable in a fast-track liquidation. Within 14 days of the dissolution decision, the board must submit various (financial) documents to KVK. Read more about the process of fast-track liquidation at KVK. For example, which documents to use and submit.

After everything has been filed, the board notifies creditors of the fast-track liquidation in writing. A copy of the filed accountability information can be requested from us via the Service Centre. This allows creditors to better assess whether they agree with the fast-track liquidation.

The new law is temporary; it may become permanent.

Risks of using fast-track liquidation

Fast-track liquidation may seem like a quick and simple process, but it also has risks. Is it later discovered that the business still has an asset? Creditors can request that the liquidation process is reopened through the courts. This is also the case if the fast-track liquidation was applied incorrectly, either intentionally or unintentionally. Creditors can also apply for the bankruptcy of the already terminated legal entity.

Personal liability

In some cases, creditors can hold a former director personally liable via legal action. The director must have acted unlawfully with intent. For example, by prioritising certain creditors when others should have been paid first. This means the order of priority among creditors was not considered. Another example is when a director intentionally hides assets and still continues with the fast-track liquidation.

Ban on directorship

The new law also carries risks for business owners. In certain situations, the Public Prosecution Service can request a ban on directorship. If this happens, the person is banned from holding any directorial positions for a maximum of 5 years. Intentionally failing to comply with the new accountability requirements can also lead to criminal liability.

Consequences for (financial) institutions

Note that dissolving and deregistering a legal entity can affect several things. Think about your bank account, financing, insurance, pension fund, and municipal permits. For example, you will no longer be able to access your business bank account. So make sure you close the bank account first and only then dissolve the legal entity.

Always check for any consequences with the organisation you are dealing with. Then deregister the legal entity from KVK's Business Register.

Checklist for ending your business

Are you planning to end your business? There are several things to consider before and after you formally make the decision. This checklist for ending your business offers a step-by-step explanation of the key steps.