It does happen: the creditor demands his money, but the debtor, a legal person, is no longer registered with the Chamber of Commerce. After an investigation, it turns out that this legal person has now been dissolved and liquidated. So what can you, the creditor, do?
There are many ways in which a legal person can cease to exist. On this page, we will discuss the dissolution of a legal person, as well as expedited liquidation.
Dissolution and winding-up
A legal person is usually terminated by means of a resolution to dissolve, followed by winding-up. The resolution to dissolve (usually) is a resolution of the shareholders’ meeting (in the case of a private or public limited company) or a members’ meeting (in the case of an association or cooperative). As a result of this resolution, the legal person is in liquidation. From now on, these words need to be added in communications on behalf of the legal person. Another consequence of the resolution is that the positions of the directors under the articles of association change to that of liquidators. The liquidator is expected to convert the assets of the legal person into cash (in other words, that the property is sold), and to pay the creditors (and shareholders, if possible) from the proceeds.
The legal person will cease to exist only when the winding-up/liquidation is complete. In the event that any income is discovered after that, the winding-up process is resumed to the extent needed to liquidate the subsequent income. When the balance closes at nil, the liquidator will notify the Chamber of Commerce, who will remove the legal person from its commercial register.
When the liquidator finds that the liabilities exceed income, he is obliged to apply for a liquidation order, unless the creditors agree with winding-up outside liquidation. When the liquidator does not do so, the law will not attach any consequences to it. During the first 10 months of 2016, approximately 20 (groups of) legal persons in the process of being wound up (private limited companies mainly) went into liquidation. The impression seems to be that many liquidators fail to apply for a liquidation order.
When the resolution to dissolve is taken at a time when no income is left, the law allows for winding-up to be held off. The directors notify the Chamber of Commerce accordingly and the legal person will cease to exist upon dissolution.
The dissolution of a legal person is regulated in Section 19 of Book 2 of the Dutch Civil Code [Burgerlijk Wetboek].
Is there anything you can do against dissolution/winding-up?
As a creditor, you may argue that there are still some assets left and ask the court to reopen the winding-up. An asset may be a claim against a third party that has not been collected yet, for instance, or a claim by virtue of liability of the director/liquidator.
The court will appoint a liquidator (again), who does not necessarily have to be the previous liquidator. This new liquidator will investigate and liquidate the capital of the legal person.
Another option is to file a winding-up petition for the legal person after all. One requirement, however, is that two or more creditors have not been paid. When the liquidation is ordered, the receiver can find out if there are still any assets to be liquidated.