Statutory provision for appointing future curator sent to the Lower House

Soon it will be legally possible for courts to specify who is to be appointed as curator, if asked by an organisation, even before a bankruptcy has been declared. This is apparent from a legislative proposal of Minister Van der Steur of Security and Justice. The Cabinet agreed to submit the legislative proposal to the Lower House. The measure is a part of the legislative programme on Reviewing Bankruptcy Law.

Soon it will be legally possible for courts to specify who is to be appointed as curator, if asked by an organisation, even before a bankruptcy has been declared. This is apparent from a legislative proposal of Minister Van der Steur of Security and Justice. The Cabinet agreed to submit the legislative proposal to the Lower House. The measure is a part of the legislative programme on Reviewing Bankruptcy Law.

The objective is to prepare for bankruptcy in relative peace and under the watchful eye of the future curator. This is to limit the damage as far as possible and increase the chance of selling profitable company parts - with a view to a relaunch - at the highest possible price and retaining as much employment as possible. The term pre-pack is also used to describe this working method.

Where possible the Cabinet wants to avoid companies grinding to a halt after a bankruptcy, due to the immediate refusal of suppliers to supply and customers and personnel immediately leaving in search of another supplier or other work. This results in a business losing its value in a short space of time and reduces the chance of a relaunch of healthy parts of the company.

In order to avoid abuse of the pre-pack, the rules have been tightened up in comparison with an earlier version of the legislative proposal. For instance, it will become easier for the curator to declare directors liable if they make improper use of the "silent preparatory phase". He can also ask the court to declare a director disqualified. Furthermore, the curator must publish the bankruptcy statement within 7 days after bankruptcy has been declared. This gives creditors an opportunity to act rapidly if they feel that the executive board of a company has behaved improperly. It also provides better protection of the interests of employees.

In order to be eligible for appointing a proposed curator, a creditor will shortly have to prove the added value - in comparison with a regular (unprepared) bankruptcy - of a "silent preparatory phase" for creditors (including employees) and other persons involved. Moreover, the court can stipulate additional conditions to ensure that the "silent preparatory phase" is carried out properly. For example, by calling in experts who can support the proposed curator, or by involving the works council or trade union in the preparatory stage.

Courts can also determine that the relaunch may only be completed after it has been announced and creditors and other potential purchasers have been given an opportunity to respond to this. This condition could be stipulated, for instance, if a relaunch is being prepared that involves the former owner or the former executive board. This should lead to more transparency about what took place prior to the bankruptcy and about any resulting relaunch. Furthermore, the court can appoint a creditors' committee that advises the curator about a possible relaunch.

The task of a future curator is to keep an eye on the interests of the creditors jointly. He is not a supervisor or advisor of the company. Nor does he take charge of managing the company: before bankruptcy, the proprietor himself continues to manage the company and retains control of the company's capital. The future curator is expected to follow the preparatory stage critically and ensure that the proprietor takes action if it there is a threat of this phase 'heading in the wrong direction'. This is part of his task in promoting the interests of the creditors jointly.