Debt restructuring: often you have to end your business

If you have problematic debts, you can make use of the Natural Persons Debt Restructuring Act (Wet schuldsanering natuurlijke personen, Wsnp). Debts are problematic when you can no longer pay your business and private bills. Debt collectors must also threaten to seize your house or property or file for bankruptcy.

Before you apply to a court for access to the Wsnp, you must first follow the procedure for an amicable settlement. During this process, you will receive help from your municipality in making payment arrangements with creditors. If this course of action fails, the judge can grant you access to the Wsnp. The judge will then appoint an administrator (bewindvoerder, in Dutch). They manage your income, pay you money to live on, and make agreements on payments with creditors.

After 18 months of Wsnp, you no longer have any debts. This is an important difference from personal bankruptcy (in Dutch). In that case, creditors can claim their money even after the bankruptcy is closed.

Wsnp and your business

You can apply for access to Wsnp when you or your business has problematic debts. Your company must then have a legal structure in which you are personally responsible for the debts. This applies to an eenmanszaak (sole proprietorship), vof (general partnership), maatschap (professional partnership), or cv (limited partnership). If the court gives you access to debt restructuring, you usually must end your business.

If you are a shareholder of a bv (private limited company) or a director of a vereniging (association), cooperatie (cooperative), or stichting (foundation), you are usually not personally responsible for debts of those organisations. Then you cannot use debt restructuring for those debts.

If you have problematic private debts, you can apply for access to the Wsnp. But the debt restructuring may cause you to lose your bv. The Wsnp can also affect your role as a director.

Wsnp and eenmanszaak

If you enter the Wsnp due to private debts or debts in your eenmanszaak, the court will usually decide that you must end your business. If you are allowed to continue your eenmanszaak, you use income from the business to pay off debts.

If the judge decides that the sole proprietorship must be discontinued, you will have to pay off as many debts as possible in another way. This can be done with income from a job, for example.

Wsnp and partner or associate

If you are in a debt restructuring procedure, you usually have to stop as a partner. At that moment the vof, cv or maatschap automatically ends as well. Unless other agreements were made about this at the start of the business. If only one partner or associate remains, the partnership always ends.

Sometimes the court allows you to remain a partner. Then the partnership also continues. The administrator must then give permission for every decision you make as a partner. For example, if the maatschap, vof, or cv starts a new assignment.

You can apply for debt restructuring because of problematic private debts. But also for debts of the maatschap, vof or cv. This is because you are personally liable for those debts. Each partner or associate can apply for Wsnp themselves.

Wsnp and bv

If you enter the Wsnp due to personal debts, you may lose your bv. This is because shares of your bv are private property. The administrator may sell these shares to repay your debts. If you are also a director of the bv, the new owners will decide if you can stay on.

Because a bv has its own legal personality, you are not privately liable for debts of the business. This is true for shareholders and usually also for directors. But if directors do not handle their responsibilities properly, they can be personally liable. The bv is not responsible for private debts.

Wsnp and director

If you are in the Wsnp, you may remain a director of a vereniging, cooperatie, or stichting. Unless the articles of association state that a director may not be in the Wsnp. Articles of association are the rules of a vereniging, cooperatie, or stichting.

Those legal structures are not responsible for your private debts. Does the vereniging, cooperatie, or stichting have problematic debts or does it go bankrupt? Then it will not affect you personally. However, if directors do not handle their responsibilities properly, they may be held personally liable.