In a constantly changing economic environment, companies may face financial challenges that threaten their survival.
In a constantly changing economic environment, companies may face financial challenges that threaten their survival.
Cash flow problems, mounting debt or a lender unwilling to continue: financial pressure calls for timely decisions. Guldemond Advocaten advises businesses, directors, shareholders and creditors on restructuring and insolvency. We help assess the available options, reach agreements and clarify the legal risks of continuing or winding down a business.
Restructuring starts with up-to-date information. Which payments are due shortly, what security has been granted and which activities can generate sufficient income? We assess the legal position with the business and its financial advisers. We distinguish between temporary cash flow pressure, an unsustainable debt burden and activities with no realistic prospects.
A payment arrangement, new financing, sale of activities or organisational changes may provide breathing space. The solution that is feasible depends, among other things, on available funds, contracts and the cooperation of those involved. Read more about restructuring.
A bank, landlord or key supplier may have considerable influence over the time available. We assess financing terms, guarantees, pledges and mortgages, and the scope for changing existing arrangements. The position of group companies and personal sureties may also be relevant.
Where financing is terminated or restricted, we examine the agreements and circumstances. A termination is not necessarily beyond challenge, but proceedings do not automatically secure continued funding either. Our article on termination of business credit explains the principal considerations. In urgent cases, we coordinate negotiations with any procedural steps.
A private composition may offer a solution if creditors are willing to agree on payment or a reduction of their claims. If not everyone consents, the Dutch Act on Court Confirmation of Extrajudicial Restructuring Plans (WHOA) may help, subject to its requirements. These include a carefully prepared proposal, appropriate classification of creditors and a substantiated valuation.
The WHOA provides for public and private proceedings. A process is therefore not automatically confidential. Nor does filing a commencement declaration automatically protect against bankruptcy petitions or enforcement by creditors. A court-ordered cooling-off period may offer protection within its statutory scope. We assess which measures are actually needed; see also the Dutch judiciary’s explanation of the WHOA.
Financial difficulties do not automatically make a director personally liable. However, the way decisions are taken and obligations incurred may raise liability issues. Examples include incurring obligations the business may be unable to meet, selective payments, distributions to shareholders and the handling of records and information.
We advise on the opportunities and limits of continuing the business, recording decisions and involving advisers in good time. Our page on directors facing financial difficulties explores these issues further. See also dividend distributions and liability and directors’ liability in bankruptcy.
A bankruptcy petition calls for a prompt assessment of the claim, the other circumstances and possible defences. If bankruptcy can no longer be avoided, directors need to understand their obligations and carefully preserve information for disclosure. We provide bankruptcy advice and assist those involved in their dealings with the bankruptcy trustee and other parties.
Early action also matters for creditors. We assess your claim, security, retention of title and the options for exercising your rights. Contractual security does not mean it can be enforced immediately in every situation; a cooling-off period or bankruptcy may affect your position.
If you wish to acquire activities from a business in difficulty, we examine what is being sold and the relevant risks and consents. Software rights, contracts, employees and third-party claims require separate attention. Where necessary, we involve our specialists in acquisitions and employment law.
An up-to-date schedule of debts, cash flow forecast, financing documents and correspondence with key creditors provide an initial picture. Also identify any imminent deadlines, guarantees or security. Contact us to discuss which actions are immediately necessary and which restructuring options can be explored.
