What can you do if your customer goes bankrupt?

First check what is going on. Has your customer actually gone bankrupt? Or have they started a debt restructuring process, such as Msnp, Wsnp, or a WHOA process? Their situation determines what you can do and whether you, as a creditor, will get your money.

What is going on?

First, try to get a clear picture of your customer’s situation. This helps you take the right steps.

• Has a petition for bankruptcy been filed or has a bankruptcy order been issued?
• Has an amicable debt restructuring process (Msnp) started?
• Does statutory debt restructuring (Wsnp) apply?
• Is a WHOA agreement being prepared?

What you can do

How much influence you have on recovering your money depends on your customer’s situation.

Bankruptcy: report to the trustee

In the event of bankruptcy, a trustee takes control. This is usually also the person who informs you about your customer’s bankruptcy.

You can then do the following:

• Report to the trustee what your customer still owes you. For example, an amount of money or goods. This is your claim. Send proof, such as invoices and agreements.
• Have you taken out credit insurance for this customer? Report your customer’s bankruptcy to your insurer immediately. Wait for their instructions before taking further steps.
• Request the return, via the trustee, of any goods you have supplied under retention of title that are still at your customer’s premises.
• Check whether you still need to deliver anything. Ask whether the trustee will take over the delivery and confirm that the invoice will be paid from the estate.

The trustee looks at how much money is still available in the company. This is called the estate. Some creditors have priority when invoices are paid. These are preferred creditors, such as the Netherlands Tax Administration and UWV. There is a high chance that you, as an unsecured creditor, will receive nothing or only part of the amount.

Read more about how bankruptcy works.

Amicable process (Msnp): accept the proposal or not

In the amicable process, your customer makes arrangements with creditors. This happens without a court. You cannot see anywhere whether an amicable process has started. The entrepreneur approaches you themselves or via an adviser. You then receive a proposal. It states what portion of your claim you will receive. You can then choose whether or not to agree to the proposal.

Have you taken out credit insurance for this customer? Always ask your insurer for advice and permission before deciding on the proposal in an Msnp process.

If you agree, you usually receive part of your money. If you do not agree, but many other creditors do, a court can force you to agree anyway. This is called a compulsory agreement.

Your customer can also stop the amicable process and try to be admitted to statutory debt restructuring (Wsnp). Or to file for bankruptcy.

Read more about how the amicable settlement process works.

Wsnp: debt restructuring arrangement with an administrator

With the Wsnp, your customer asks the court for admission to this debt restructuring scheme. The court decides whether your customer is admitted. In principle, a Wsnp process lasts a maximum of 18 months. During that period, your customer tries to repay as much of their debts as possible. An administrator manages the income and makes arrangements with creditors. As a creditor, you have less influence on how the process proceeds. Often you only receive part of your claim.

You can do this:

• Submit your claim to the administrator.
• Have you taken out credit insurance for this customer? Report your customer’s admission to the Wsnp to your insurer immediately and wait for their response before taking further steps.

If your customer complies with the Wsnp conditions, the court can grant a ‘clean slate’ after 18 months. The remaining debts are then no longer enforceable.

Read more about how the Wsnp process works.

WHOA: vote on the proposal

With the Court Approval of a Private Composition (Prevention of Insolvency) Act (WHOA), your customer tries to prevent bankruptcy. In this process, the entrepreneur and an adviser assess what portion of the debts the entrepreneur can still pay. As a creditor, you receive a proposal to have part of the debt paid and the remainder will be written off. You will not be paid that part. Like every other creditor, you may vote on that proposal. If enough creditors agree, there is an agreement. A court reviews the agreement and can approve it. After that, it is binding on every creditor, even if you did not agree.

Important to know:

• Claims of creditors are divided into groups (classes). Creditors vote on the proposal per group.
• Have you taken out credit insurance for this customer? Consult with your insurer before voting on or responding to a WHOA proposal, as the agreement may also be binding if you do not consent.
• The court can approve the agreement per group.
• Even if you do not agree, it may still apply to you.

Read more about the WHOA.

Limit financial risks

You cannot always prevent problems with your customers. But you can take measures in advance to limit financial risks:

• Agree on clear payment terms in your quotation and general terms and conditions.
• Include a retention of title in your quotation and general terms and conditions if you supply goods.
• Ask for (partial) advance payment.
• Check the payment behaviour of new customers at a credit information agency.
• Consider credit insurance. For example, if the amount of a delivery is relatively high for your business, the risk with a customer is high. Or if you want extra certainty.
• Take action if customers do not pay on time.

VAT already paid for unpaid invoices

Is it certain that your debtor will not pay the invoice or will only pay part of it? Then the unpaid amount falls under irrecoverable claims. A claim is irrecoverable if it has not been paid within 1 year after the final payment date. You have already paid the VAT on the invoice amount to the Tax Administration. If no or only partial payment follows, you may reclaim the VAT on the unpaid amount (in Dutch).

Get help

Not sure what to do? Ask for advice. You can contact:

• your bookkeeper or accountant
• a legal adviser
• the KVK Advice Team via 088 585 22 22