Pre-packaged insolvency introduced in the Netherlands
Pre-packs are used in the Netherlands now and new steps are being taken to formalise this by introducing provisions into the Bankruptcy Act.
The concept of pre-packaged insolvency (or ‘pre-pack’) has been developed in the Dutch insolvency practice for quite some time. It is modelled after the ‘pre-packaged sale in administration’ (pre-pack) concept available in UK insolvency law. In practice, courts were petitioned to introduce a similar concept in Dutch law in order to improve the restructuring options offered by insolvency proceedings through a relaunch or debt rescheduling.
Entrepreneurs strongly resist the possibility of starting insolvency proceedings. The (negative) publicity and uncertainty for the parties involved (such as suppliers and employees) will, by definition, result in a loss in value and complicate the sale of the company. Entrepreneurs are furthermore often deterred by the complete loss of control that accompanies an insolvency, not knowing in advance how an administrator will handle the situation and the acquisition candidates that come forward…
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