International Law

MORATORIUM OF PAYMENTS IN THE DUTCH CARIBBEAN (I)

By Karel.Frielink

An opportunity to recover

Many companies face financial difficulties. Sometimes bankruptcy is the only option. The goal of the bankruptcy is the liquidation of the assets of the company and not to save the business, and therefore, this procedure is not always the best one to realize the full value of the company as a going concern.

Under the laws of the Netherlands Antilles, a temporary suspension or moratorium of payments (?surséance van betaling?) is a court-ordered general suspension of a debtor’s obligations. Only the debtor himself may request for a moratorium, on the ground that he will be unable to continue payments.

The purpose of such a moratorium is to avoid the debtor’s bankruptcy in the interest of both the debtor and his creditors. A moratorium gives the debtor an opportunity for recovery. It may lead to a normal resumption of payments or to a settlement. In many cases, however, a moratorium is followed by bankruptcy.

During the moratorium unsecured creditors cannot enforce their rights. However, secured creditors can exercise their rights despite the moratorium.

The moratorium trustee or administrator in a moratorium (’bewindvoerder‘) has less powers than a liquidator in bankruptcy. The administrator can only act with the cooperation of the debtor, i.e. the management in the case of a company, and vice versa.

Karel Frielink
Attorney (Lawyer) / Partner

Full post as published by Karel's Legal Blog on July 26, 2008 (boomark / email).