Bankruptcy Act

TITLE II MORATORIUM ON PAYMENT

Chapter 2 Final Arrangement with the Creditors (Composition)

Article 252 Final arrangement for payment with the creditors
The debtor is entitled to offer a final arrangement for payment (composition) to those who have a claim against him and who are affected by the moratorium on payment.

Article 253 Draft for a final arrangement deposited with the clerk of the court
- 1. If the draft for a final arrangement (composition) is not already deposited pursuant to Article 215 at the office of the clerk of the District Court, it shall be deposited there for public inspection free of charge.
- 2. A copy of that draft must be sent as soon as possible to the administrators and experts.

Article 254 Elapsing of the draft for a final arrangement
The draft for a final arrangement (composition) shall elapse if, prior to the moment on which the judgment sanctioning the final arrangement has become final and binding, a judicial decision to terminate the moratorium on payment has become final and binding.

Article 255 Determining the date and time of the hearing
- 1. If the draft for a final arrangement (composition) has been lodged (deposited) at the office of the clerk of the District Court at the same time as the request (petition) for the granting of a moratorium on payment, then the District Court may order, after having heard the magistrate ('rechter-commissaris'), if one is appointed, and the administrators, that the hearing of the request (petition) referred to in Article 218 shall not take place, in which case the court shall also specify:
1° the latest date on which the claims affected by the moratorium on payment must be submitted to the administrators;
2° the date and time on which the draft for a final arrangement (composition) will be discussed and decided upon in front of the magistrate (rechter-commissaris) or, if no such magistrate ('rechter-commissaris') has been appointed, in chambers.
- 2. There must be at least 14 days between the dates referred to under (1°) and (2°) of the preceding paragraph.
- 3. If the District Court does not use its power to render an order as meant in paragraph 1, or if the draft for a final arrangement (composition) with the creditors was not lodged (deposited) at the same time as the request (petition) for the granting of a moratorium on payment, then the District Court will specify, after having heard the magistrate ('rechter-commissaris'), if one is appointed, and the administrators, the dates and times referred to in paragraph 1 as soon as the order granting the definitive moratorium on payment has become final and binding or, if the draft for a final arrangement (composition) was lodged (deposited) at a later date, immediately after it has been lodged (deposited).

Article 256 Publication of the hearing and of the fact that a draft for a final arrangement has been deposited
- 1. The administrators shall immediately publish in the Government Gazette the court order referred to in the preceding Article as well as the fact that a draft for a final arrangement (composition) with the creditors has been deposited at the office of the clerk of the District Court, unless this has already been published in accordance with Article 216.
- 2. The administrators shall also notify by letter all known creditors of the facts mentioned in paragraph 1. This notice shall point to the provisions of Article 257, paragraph 2.
- 3. The creditors may appear either in person or through a representative authorised by written procuration (power of attorney) or through an advocate (solicitor who is a member of the Bar).
- 4. The administrators may demand that the debtor provides them in advance with an amount specified by them to cover the costs of these publications and notifications.

Article 257 Submission of claims
- 1. The claims must be submitted to the administrators by presentation of an invoice or other written statement specifying the nature and amount of the claim with supporting evidence or a copy thereof.
- 2. Claims which are not affected by the moratorium on payment may not be submitted. If they are submitted nevertheless, the moratorium on payment shall also affect these claims, and any priority (right of preference), right of retention, pledge or mortgage relating to such claims shall be lost. This does not apply if the claim is withdrawn prior to the voting on the final arrangement.
- 3. The creditors are entitled to ask the administrators for a receipt.

Article 258 The way in which a submitted claim is verified
The administrators shall compare the submitted invoices with the books, records and statements of the debtor; if they dispute the admission of a claim, they shall consult the involved creditor and ask for the submission of any missing documentation and the approval to inspect the books, records and supporting documents of that creditor.

Article 259 List of admitted claims and list of disputed claims
The administrators shall prepare a list of the claims submitted to them, with mention of the names and addresses of the creditors, the amount and description of the claims and whether and to what extent the claims are admitted or disputed by the administrators.

Article 260 Admission of interest accrued until the start of the moratorium
- 1. If the list referred to in the previous Article contains an interest-bearing claim, then the interest accrued until the start of the moratorium on payment shall be admitted also on the list.
- 2. Articles 129, 133 up to and including 135 and 136, paragraph 1 and 2, shall apply accordingly.

Article 261 Admission of a claim under a condition precedent
- 1. A claim under a condition precedent may be admitted on the list for its value at the start of the moratorium on payment.
- 2. If the administrators and the creditors cannot come to terms on the assessment of that value, then such claim shall be admitted provisionally for the full amount.

Article 262 Admission of claims that are not yet due and demandable
- 1. A claim with regard to which it is uncertain at which date it will become due and demandable, and a claim which entitles the creditor to receive periodic payments (by instalments) shall be admitted on the list for its value at the start of the moratorium on payment.
- 2. Claims which become due and demandable within one year after the start of the moratorium on payment shall be treated as if they were due and demandable already at that start. Claims which become due and demandable one year after the before mentioned moment shall be admitted for their value at the day on which one year since the start of the moratorium has expired.
- 3. When calculating the amount of a claim, account is taken only of the moment and the way of payment, any profit opportunity and, if the claim bears interest, the agreed rate of the interest.

Article 263 Publication of the list
- 1. The administrators shall lodge a copy of the list referred to in Article 259 at the office of the clerk of the court, where this list shall remain available for public inspection free of charge during seven days preceding the meeting meant in Article 255.
- 2. The lodging of this list is free of charge.

Article 264 Postponement of the voting on the final arrangement to a later date
- 1. The magistrate ('rechter-commissaris'), if one is appointed, or otherwise, the District Court may, upon the request of the administrators or of its own motion, postpone to a later date the consultation and voting on the final arrangement (composition) with the creditors.
- 2. In such event Article 256 shall apply accordingly.

Article 265 Written report of administrators disclosed at the meeting; admission of newly submitted claims
- 1. At the meeting, the administrators and, if they are appointed, the experts must, each for themselves, disclose a written opinion on the offered final arrangement with the creditors (composition). Article 144 shall apply accordingly.
- 2. Claims which are submitted to the administrators after expiry of the period referred to in Article 255, paragraph 1, but no later than two days before the day of the meeting, shall be admitted on in the list if so requested at the meeting, provided that neither the administrators nor any of the creditors objects to this.
- 3. Claims submitted thereafter shall not be admitted on the list.
- 4. The provisions of the two preceding paragraphs do not apply if a creditor lives outside the Netherlands and, for this reason, is unable to submit his claim on the moments referred to in the preceding two paragraphs.
- 5. If an objection as referred to in paragraph 2 has been raised or if there is a dispute as to whether there is an inability to submit claims as referred to in paragraph 4, the magistrate ('rechter-commissaris'), if one is appointed, or otherwise the District Court, shall decide on the matter, after consulting the meeting.

Article 266 Admitting or disputing claims at the meeting
- 1. At the meeting, the administrators may go back on any admission or dispute of a claim earlier made by them.
- 2. The debtor, and also each creditor present at the meeting, may dispute a claim which is recognized in full or in part by the administrators.
- 3 Disputes or admissions made during the meeting shall be annotated on the list.

Article 267 Voting right of creditors whose claims are disputed
The magistrate ('rechter-commissaris'), if one is appointed, or otherwise the District Court, shall decide whether, and if so, for what amount the creditors whose claims are disputed will be allowed to vote at the meeting on the final arrangement (composition).

Article 268 Acceptance of the draft for a final arrangement
In order to be accepted, the draft for the final arrangement with the creditors (composition) must be approved by a normal majority of all recognized and admitted creditors whose claims represent at least one-half of the total amount of the recognized and admitted claims. No approval is required of a recognized and admitted creditor to the extent that his claim against the debtor is based on a due and demandable non-compliance penalty imposed by the court.

Article 268a Adoption of the draft for a final arrangement by the District Court or magistrate
Upon the request of the debtor or the administrators, the District Court or, if one is appointed, the magistrate ('rechter-commissaris') may, in derogation from Article 268, adopt an offered final arrangement (composition) by means of a well-substantiated order as if it was accepted, if:
a. three-fourths of the recognized and admitted creditors present at the meeting have approved the draft for the final arrangement (composition), and;
b. the rejection of the draft for the final arrangement (composition) is the result of votes cast against it by one or more creditors who, taking into account all circumstances and in particular the percentage which they probably would receive on their claims if the debtor’s estate (property) would be wound-up, reasonable could not have come to such voting behaviour.

Article 269 Official record of the meeting on a final arrangement with the creditors
- 1. The official record of the meeting must contain the content of the final arrangement with the creditors (composition), the names of the creditors present at the meeting who are entitled to vote, a record of the votes cast by each of them, the outcome of the voting and a record of all further proceedings. The list of creditors as prepared by the administrators and as supplemented or amended during the meeting shall be signed by the magistrate ('rechter-commissaris'), if one is appointed, or otherwise by the provisional relief judge and the clerk of the court, and shall be attached to the official record of the meeting.
- 2. A copy of the official record meant I the previous paragraph shall be available for public inspection free of charge at the office of the clerk of the court for a period of eight days.

Article 269a Rejection of the final arrangement; request to correct the official record of the meeting
If the consultation (discussion) and voting on the final arrangement (composition) have taken place in front of a magistrate ('rechter-commissaris') and the final arrangement has been rejected, then the magistrate ('rechter-commissaris') shall immediately notify the District Court of this rejection by sending a copy of the draft of the final arrangement and of the official record referred to in Article 269. The creditors who have voted in favour of the final arrangement (composition) as well as the debtor may, within eight days after the end of the meeting, request the District Court to correct the official record of that meeting, if it appears from the official documents themselves that the magistrate ('rechter-commissaris') thought wrongly that the final arrangement (composition) had been rejected.

Article 269b Hearing before the District Court in order to sanction the final arrangement
- 1. If the final arrangement with the creditors (composition) has been accepted or adopted, the magistrate ('rechter-commissaris') shall set, before the meeting is closed, the date for the hearing where the District Court shall take the sanctioning (approval) of that final arrangement (composition) into consideration.
- 2. If Article 269a has been applied, the District Court shall determine this hearing in its court order. The administrators shall notify the creditors in writing of such court order.
- 3. The hearing shall be held no less than eight days and no more than fourteen days after the voting on the final arrangement (composition) or, if Article 269a has been applied, after the court order of the District Court.
- 4. During this period the creditors may provide the magistrate ('rechter-commissaris') in writing with the reasons why they consider a refusal of the sanctioning (approval) desirable.

Article 270 Correction of the official records of the District Court by the Court of Appeal
- 1. If the consultation (discussion) and the voting on the final arrangement (composition) have taken place in front of the District Court, then the creditors who have voted in favour of the final arrangement (composition) as well as the debtor may, within eight days after the end of the voting, request the Court of Appeal to correct the official record of the District Court if it appears from the official documents themselves that the District Court thought wrongly that the final arrangement (composition) had been rejected.
- 2. If the Court of Appeal corrects the official record, it shall, in the same court order, specify the date on which the District Court shall take the sanctioning (approval) of the final arrangement (composition) into consideration. This hearing shall be held no less than eight days and no more than fourteen days after the court order of the Court of Appeal. The administrators shall notify the creditors in writing of such decision of the Court of Appeal. By operation of law this decision brings along that any bankruptcy order rendered pursuant to Article 277 shall be nullified.

Article 271 The public hearing
- 1. If the final arrangement (composition) with the creditors is accepted, the magistrate ('rechter-commissaris'), if one is appointed, shall submit a written report on the date set for the public hearing, and the administrators and each creditor may submit grounds in support of or contesting the sanction. Article 152, paragraph 1, shall apply accordingly.
- 2. The District Court may decide that the hearing where the sanctioning (approval) of the final arrangement is taken into consideration, shall take place at a later date which is set simultaneously.

Article 272 Grounds for the refusal of a sanction
- 1. The District Court shall render its well-substantiated court order as soon as possible.
- 2. The District Court shall refuse to sanction (approve) the final arrangement with the creditors (composition):
1° if the value of the assets of the liquidation estate considerably exceed the sum stipulated in the final arrangement (composition);
2° if performance of the final arrangement (composition) is insufficiently guaranteed;
3° if the final arrangement (composition) has come about under the influence of fraudulent acts, the favourable treatment of one or more creditors or other unfair means, regardless whether the debtor or any other party cooperated therein;
4°. if the remuneration and disbursements of the experts and the administrators have not been paid to the administrators or if no security has been provided for these obligations.
5°. if the liquidator ('curator') in the main insolvency proceedings as meant in Article 6, paragraph 1, third sentence, has denied his consent to the final arrangement with the creditors (composition), unless the District Court is of the opinion that the final arrangement (composition) does not damage the financial interests of the creditors in these main insolvency proceedings.
- 3. The District Court may also refuse its sanction (approval) on other grounds and of its own motion.
- 4. Where the District Court refuses to sanction (approve) the final arrangement with the creditors (composition), it may in the same court order declare the debtor bankrupt. If it does not declare the debtor bankrupt, the moratorium on payment shall end as soon as the court order in which the sanction has been refused, has become final and binding. The administrators shall ensure publication of the termination of the moratorium in the way as prescribed by Article 216.
- 5. Articles 154 up to and including 156 and 160 apply accordingly.

Article 273 Binding effect of a sanctioned final arrangement
A final arrangement with the creditors (composition) that has been sanctioned (approved) by the court, is binding on all creditors for whom the moratorium on payment was effective.

Article 274 Enforceable judgement against the bankrupt debtor and involved sureties
The court order in which the final arrangement with the creditors (composition) has been sanctioned, shall, when it has become final and binding, produce, together with the official record as referred to in Article 269, an enforceable judgment on behalf of the creditors whose claims were not disputed by the debtor, which judgement is enforceable against the debtor and the sureties (guarantors) who entered into the final arrangement (composition) as a party.

Article 275 No ending of the moratorium as long as no final and binding decision is given on the final arrangement
As long as no final and binding decision has been given in respect of an offered final arrangement with the creditors (composition), the moratorium on payment shall not end on the expiry of the period for which it was granted.

Article 276 Ending of the moratorium after the sanction has become final and binding
As soon as the judicial decision in which the final arrangement with the creditors (composition) has been sanctioned (approved), has become final and binding, the moratorium on payment shall end. The administrators shall ensure publication thereof in the way prescribed by Article 216.

Article 277 Possibilities when the offered final arrangement has not been accepted
If an offered final arrangement with the creditors (composition) has not been accepted, then the District Court may declare the debtor bankrupt. If the debtor is not declared bankrupt, then the moratorium on payment shall end when the period meant in Article 269a or Article 270 has expired without the use of the possibility to lodge a request as referred to in these Articles, or when a correction of the official records is refused. The administrators shall ensure publication of the termination of the moratorium in the way as prescribed by Article 216.

Article 278 Right of appeal of the debtor who has been declared bankrupt
- 1. If the District Court has declared the debtor bankrupt, the debtor has the right to lodge an appeal against this decision within eight days after the moment on which the period meant in Article 269a or 270 has expired, or on which the correction of the official records was refused.
- 2. Such an appeal is made by submitting a petition to the office of the clerk of the Court of Appeal which must hear the matter. The presiding judge shall at once set the date and time of the hearing.
- 3. The clerk of the Court of Appeal shall ensure publication of the appeal and of the date and time of the hearing in the Government Gazette. Each creditor may plead his cause at the hearing.

Article 279 Appeal in cassation
- 1. If the Court of Appeal confirms (upholds) the decision of the District Court in which the debtor has been declared bankrupt, then the debtor has the right to lodge an appeal in cassation against the decision of the Court of Appeal; if the Court of Appeal nullifies (sets aside) the decision of the District Court in which the debtor has been declared bankrupt, then each creditor who has pleaded his cause at the hearing of the District Court has the right to lodge an appeal in cassation against this decision of the Court of Appeal.
- 2. Such an appeal in cassation is made and taken into consideration within the same period and in the same way as an appeal to the Court of Appeal, on the understanding, however, that the publication in the Government Gazette shall be substituted by a writ which must be served on the other party within four days after the appeal in cassation has been lodged.

Article 280 Rescission of the sanctioned final arrangement
- 1. Articles 165 and 166 apply accordingly in respect of any rescission of the final arrangement with the creditors (composition).
- 2. In the judgment in which the rescission of the final arrangement with the creditors (composition) is pronounced, the debtor shall be declared bankrupt as well.

Article 281 No possibility to offer a final arrangement in a bankruptcy which is ordered on the basis of the present Chapter
- 1. It is not possible to offer a final arrangement with the creditors (composition) in a bankruptcy that has been ordered on the basis of Articles 272, 277 or 280.
- 2. The provisions of the present Chapter (Chapter 2 of Title II) apply accordingly to a situation in which a final arrangement with the creditors (composition) has been offered on the basis of Article 34, paragraph 1, of the European Regulation mentioned in Article 5, paragraph 3.