If a legal entity is dissolved by a resolution of the general meeting of shareholders, then the liquidation of the company follows. This involves the liquidation of the company’s assets by the appointed liquidator and the satisfaction of creditors with the proceeds. However, there is the possibility that creditors of the dissolved company may not be satisfied with the liquidation because they believe that there are still assets present. Creditors may then – in addition to the possibility of filing a petition for the reopening of the liquidation on the basis of Article 2:23c of the Dutch Civil Code – try to provoke the bankruptcy of the dissolved company.
In the context of a bankruptcy petition, the creditor will then have to make it sufficiently plausible that the company still has a (potential) benefit. After all, bankruptcy is aimed at liquidation of the assets and distribution of the proceeds among the creditors. If there are (virtually) no assets to be expected, bankruptcy – in short – serves no purpose. Within the limited scope of handling the bankruptcy petition, however, there is little room for an investigation by the court into the presence of assets. Normally, therefore, bankruptcy is declared and the aforementioned investigation is left to the trustee. In recent years, however, a trend has emerged in some courts that bankruptcy petitions are rejected on the grounds that (virtually) no assets are to be expected.
In a case that runs up against this issue and was recently presented to the Supreme Court, an application to declare bankruptcy of a dissolved company had been dismissed in two instances. The court had examined – ex officio and – held that the bankruptcy petitioner had no reasonable interest in declaring the dissolved company bankrupt. This was because the only plausible (potential) benefit was a possible claim of the dissolved company against the applicant itself. At that state of affairs, no positive consequence for the applicant could be expected from the bankruptcy, so a reasonable interest in filing for bankruptcy was lacking.
One of the complaints in cassation was that the court should not have examined ex officio whether the applicant had a sufficient interest in declaring the dissolved company bankrupt.
In his opinion, the Attorney General – citing the necessary literature – reflects that it is a matter of public policy that bankruptcies are not declared lightly and without necessity. According to the Advocate General, the court should therefore reject a bankruptcy petition ex officio if it appears to him during the processing of the petition that the petitioner has no reasonable interest in declaring bankruptcy. It is therefore not necessary that a defense directed to this effect be raised. According to the court, in the present case it was impossible to see what reasonable interest the applicant would have in realizing and distributing the (possible) claim of the dissolved company against him in bankruptcy. After all: his own claim on the dissolved company would also be fully recoverable outside bankruptcy by means of set-off against this (possible) claim of the dissolved company on him. This did not require bankruptcy. The Supreme Court followed the conclusion of the Advocate General and dismissed the appeal in cassation.
Thus, having a reasonable interest in a bankruptcy petition is a substantial “threshold” for the applicant to cross that is/should be reviewed ex officio by the court. Applicants should realize this and it can be helpful if the bankruptcy petition already addresses substantiation thereof.
This contribution was written by Mr. Jeroen van der Pouw Kraan , affiliated with the Corporate and Insolvency Law practice groups.
