Bankruptcy and restructuring

Creditors must be treated equally. Paying one creditor but not another is usually not allowed. However, sometimes there may be a good reason why a particular debt should still be paid.

Crowdfunding means you raise your funding from the public and don’t have to concern yourself with the conditions of a bank or other financial institution. Crowdfunding may seem ‘easy peasy’, but the reality is different. Raising capital from the public generally falls under the Dutch Financial Supervision Act (in Dutch: Wet op het financieel toezicht, Wft). To give an example: even the raising of money by a sports club from its members to build a new pitch is regarded as raising capital. The Wft and related regulations are exceptionally strict. Look before you leap.

There are a number of securities that are regularly used in financing a business. Common securities are mortgage rights on the business premises, pledges on shares/company inventory/stocks/trade receivables, joint and several liability, or a personal guarantee.

If your customer is bankrupt, you may still be able to rely on retention of title or the right of recovery in order to recover delivered goods. In addition, it is always worthwhile investigating whether there are other options to get your money back or limit further losses (e.g., by enforcing a right of pledge or invoking a right of retention).

Be aware that most financiers want to keep a grip on their financing as much as possible. That also means a grip on the borrower and their assets. For example, it is customary that you are not allowed to provide collateral to others or to drastically restructure your corporate structure without the financier’s permission.