19 April 2023 Guido Portier  -  Marleen Wessel Restructuring and Insolvency

Temporary act transparency turbo liquidations adopted in the Netherlands

The Dutch legislative proposal for the temporary act regarding transparency of turbo liquidations (the “Turbo Liquidation Act”) was adopted on 14 March 2023. The objective of the Turbo Liquidation Act is to increase transparency, improve the legal position of creditors and combat abuse of turbo liquidations. The Turbo Liquidation Act is expected to go into effect on 1 July 2023.

The so-called ‘turbo liquidation’ facilitates voluntary liquidation of a Dutch legal entity that no longer has any assets at the time of the adoption of the dissolution resolution. In such case, as under current law, the legal entity ceases to exist immediately, without a process of winding-up, and consequently no liquidators are appointed. The Turbo Liquidation Act introduces additional requirements in respect of the turbo liquidation process, including consequences in case of non-compliance with such requirements.

The Turbo Liquidation Act will expire two years after its effective date. During this term the Turbo Liquidation Act will be evaluated to determine whether the Turbo Liquidation Act should be implemented permanently.

Key additional requirements

A high-level outline of the additional requirements under the Turbo Liquidation Act is set out in the below table:

TopicKey changes
Deposit (financial) information

Deposit of documents with the Dutch Trade Register within fourteen days after the dissolution:

 

  • balance sheets and statements of income and expenditure;
  • description of the reason for lack of assets, the way of realisation and distribution of assets and, if applicable, the reason why unpaid creditors remain; and
  • certain annual accounts which have not yet been deposited.
Notification of creditorsCreditors must be notified in writing of the deposit of the required documents without delay.
Inspection right of creditorsIf there are grounds to assume that the disclosure requirements above have not been duly complied with, creditors may inspect the administration of the legal entity with authorisation from the competent court.
Disqualification of managing directors (bestuursverbod)

New grounds for disqualification to act as managing director are introduced in case of a turbo liquidation with unpaid creditors:

 

  • failure to deposit the required documents;
  • acts or omissions to act on behalf of the dissolved entity that significantly disadvantaged creditors; or
  • repeated involvement with and personal fault for the bankruptcy of a legal entity or turbo liquidation with unpaid creditors.
Economic offenseFailure to deposit the required documents qualifies as an economic offense (economisch delict).
Transitional provisionsThe laws applicable to turbo liquidations at the time of the dissolution will continue to apply to that dissolution.