Bankruptcy Act

TITLE 1 BANKRUPTCY

Chapter 6 Final Arrangement with the Creditors (Composition)

Article 138 Final arrangement for payment with the creditors
The bankrupt debtor is entitled to offer a final arrangement for payment (composition) to his joint creditors.

Article 139 Draft for a final arrangement with the creditors
- 1. If the bankrupt debtor has deposited, not later than eight days prior to the verification meeting, a draft for a final arrangement with the creditors (composition) at the office of the clerk of the court, in order to enable others to inspect it there free of charge, then this draft shall be discussed and decided upon immediately at the end of the verification meeting, except for what is provided in Article 141.
- 2. When the draft for the final arrangement (composition) is deposited for inspection at the office of the clerk of the court, the bankrupt debtor must, at the same time, sent a copy thereof to the liquidator ('curator') and to each of the members of the provisional creditors committee.

Article 140 Written opinion on the draft for a final arrangement with the creditors
At the verification meeting the liquidator ('curator') and the provisional creditors committee must, each for themselves, disclose a written opinion on the draft for a final arrangement with the creditors (composition).

Article 141 Adjournment of the discussion and decision on the draft for a final arrangement
The discussion and the decision on the draft for a final arrangement with the creditors (composition) shall be adjourned to another meeting which must take place within three weeks on a date to be set by the magistrate ('rechter-commissaris'):
1° if, during the verification meeting, a definitive creditors committee is appointed which does not consist of the same persons as the provisional creditors committee and the majority of the creditors present at the verification meeting requires from this committee a written opinion on the draft for a final arrangement with the creditors (composition);
2° if the draft for a final arrangement with the creditors (composition) has not been deposited in time at the office of the clerk of the court and the majority of the creditors present at the verification meeting make clear that they are in favour of an adjournment.

Article 142 Liquidator informs the creditors not present at the verification meeting of the adjournment
If the discussion and decision on the draft for a final arrangement with the creditors (composition) has been adjourned pursuant to the preceding Article, the liquidator ('curator') shall, without delay, inform any creditor whose claim has been admitted or provisionally admitted and who was not present at the meeting by means of a letter containing a summary of the content of the draft for the official arrangement (composition) with the creditors.

Article 143 Creditors excluded from voting on the draft for a final arrangement
- 1. Excluded from voting on the draft for a final arrangement (composition) are all creditors whose claims are ranked with priority (preferred creditors with a right of preference), including those whose priority ranking (right of preference) is disputed, unless they have waived their priority (right of preference) in favour of the liquidation estate prior to the voting.
- 2. As a result of such waiver these preferred creditors have become unsecured creditors even if the draft for a final arrangement (composition) is not accepted.

Article 144 Bankrupt debtor may defend and amend the draft for a final arrangement at the meeting
The bankrupt debtor is entitled to clarify and defend the draft for a final arrangement with the creditors (composition) and to amend it during the meeting.

Article 145 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 unsecured creditors present at the meeting whose claims are admitted or provisionally admitted, provided that their claims represent at least one-half of the total amount of the admitted or provisionally admitted claims to which no priority ranking (right of preference) is attached.

Article 146 Adoption of the draft for a final arrangement by the magistrate
Upon the request of the bankrupt debtor or the liquidator ('curator'), the magistrate ('rechter-commissaris') may, in derogation from Article 145, adopt an offered final arrangement (composition) by means of a well-substantiated order as if it was accepted, if:
a. three-fourths of the creditors present at the meeting whose claims have been admitted or provisionally admitted, 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 liquidation estate would be wound-up, reasonable could not have come to such voting behaviour.

Article 147 Later changes do no affect an acceptation, adoption or rejection
Any later changes in the number of creditors or the amount of the claims will not affect the validity of the acceptance, adoption or rejection of the draft for a final arrangement with the creditors (composition).

Article 148 Official record of the meeting on a final arrangement with the creditors
- 1. The official record of the meeting shall set out the content of the final arrangement with the creditors (composition), the names of the voting creditors present at the meeting, the vote cast by each of them, the outcome of the voting and all that has occurred furthermore at the meeting. It shall be signed by the magistrate ('rechter-commissaris') and the clerk of the court.
- 2. The official record 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 149 Request to correct the official record of the meeting
The creditors who have voted in favour of the final arrangement (composition) as well as the bankrupt debtor may, within eight days after the ending 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 150 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 consider the sanctioning (approval) of that final arrangement (composition).
- 2. If Article 149 has been applied, the District Court shall determine this hearing in its court order. The liquidator ('curator') 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) with the creditors or, if Article 149 has been applied, after the court order of the District Court.

Article 151 Submission of reasons for refusing the sanctioning of the final arrangement
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 152 The public hearing
- 1. On the day set for the hearing, the magistrate ('rechter-commissaris') shall provide a written report on the matter to the District Court, while each creditor is entitled to express his reasons, either in person or through a representative authorized by written procuration (proxy) or through an advocate (solicitor admitted to the Bar), why he is either for or against the sanctioning (approval) of the final arrangement with the creditors (composition).
- 2. The bankrupt debtor is entitled to be present at this hearing in order to defend his interests.

Article 153 Grounds for the refusal of a sanction
- 1. At the day of the hearing meant in the previous Article or, otherwise, as soon as possible thereafter, the District Court shall render its well-substantiated court order.
- 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 with the creditors (composition) is insufficiently guaranteed;
3° if the final arrangement with the creditors (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 bankrupt debtor or any other party cooperated therein;
4°. 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.

Article 154 Appeal against the court order of the District Court
If the sanction (approval) is refused, the creditors who voted in favour of the final arrangement with the creditors (composition) and the bankrupt debtor may file, within eight days after the involved court order of the District Court, an appeal against that court order; if the sanction (approval) is granted, the creditors who have voted against the final arrangement (composition) or who were not present or represented at the voting may file, within eight days after the involved court order of the District Court, an appeal against that court order. In the latter case the creditors who voted in favour of the final arrangement (composition) have the same right of appeal, but only on the ground that, after the sanction (approval), they have discovered that one or more acts as mentioned in Article 153, under (3°) have been performed.

Article 155 Way to make an appeal
- 1. An appeal shall be 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, which must take place within twenty days. The clerk of the court before which the appeal proceedings were instituted shall, without delay, notify the clerk of the District Court which rendered the court order relating to the sanction (approval).
- 2. Article 152 and Article 153, paragraph 1, apply to the appeal proceedings, with the exception of the provisions relating to the magistrate ('rechter-commissaris')

Article 156 Appeal in cassation
An appeal in cassation (appeal to the Supreme Court) must be made and heard within the same periods and in the same manner as meant in the previous Article.

Article 157 Sanctioned final arrangement (composition) is binding on all unsecured creditors
A final arrangement with the creditors (composition) that has been sanctioned (approved) by the court, is binding on all unsecured creditors without exception, regardless whether or not they have filed their claim in the bankruptcy.

Article 158 No new proposal for a final arrangement after a sanction is rejected or refused
After a rejection or refusal to sanction (approve) the final arrangement with the creditors (composition), the bankrupt debtor may not propose another draft for a final arrangement (composition) in the same bankruptcy.

Article 159 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 of the verification, an enforceable judgment on behalf of the creditors whose claims have been admitted and were not disputed by the bankrupt debtor on the basis of Article 126, which judgement is enforceable against the bankrupt debtor and the sureties (guarantors) who entered into the final arrangement (composition) as a party.

Article 160 Continuation of the rights of creditors against third persons
Notwithstanding the final arrangement with the creditors (composition), the creditors shall retain all their rights against any sureties (guarantors) and other co-debtors of the bankrupt debtor. Any rights which they may have in respect of assets of third person shall continue to exist as if no final arrangement with the creditors (composition) had come about.

Article 161 Ending of the bankruptcy after the sanction has become final and binding
As soon as the judicial decision in which the final arrangement with the creditors (composition) is sanctioned (approved), has become final and binding, the bankruptcy shall end. The liquidator ('curator') shall ensure publication thereof in the Government Gazette.

Article 162 Rendering of accounts by the liquidator
- 1. After the judgment in which the final arrangement with the creditors (composition) is sanctioned (approved), has become final and binding, the liquidator ('curator') must render accounts to the debtor in front of the magistrate ('rechter-commissaris').
- 2. The liquidator ('curator') shall, against a proper receipt, release to the debtor all assets, moneys, books and documents belonging to the liquidation estate, unless other provisions have been made to this end in the final arrangement (composition).

Article 163 Amounts to be paid first to privileged and secured creditors
- 1. Any amount which may be claimed by admitted creditors under an admitted priority ranking (right of preference) and the costs of bankruptcy must be paid to the liquidator ('curator'), unless the debtor has provided security therefore. As long as this requirement has not been fulfilled, the liquidator ('curator') must retain all moneys and assets belonging to the liquidation estate until this amount and the earlier mentioned costs have been paid to the appropriate parties.
- 2. If no such payment has been made by or on behalf of the debtor within one month after the judgment in which the final arrangement (composition) was sanctioned (approved), has become final and binding, the liquidator ('curator') shall make such payments from the available assets of the liquidation estate.
- 3. If necessary, the amount referred to in paragraph 1 and the parts thereof imputed to each creditor under his priority ranking (right of preference) will be estimated by the magistrate ('rechter-commissaris').

Article 164 Provisionally admitted priority ranking (right of preference)
With regard to claims of which the priority ranking (right of preference) has been admitted provisionally, the obligation of the debtor referred to in the preceding Article shall be limited to the provision of security for the payment of that claim; in the absence thereof, the liquidator ('curator') only has to make a reservation from the assets of the liquidation estate to the amount to which the priority ranking (right of preference) relates.

Article 165 Rescission of the sanctioned final arrangement
- 1. Any creditor towards whom the debtor fails to comply with the sanctioned (approved) final arrangement (composition) may demand that this final arrangement (composition) with the creditors is rescinded.
- 2. The debtor must prove that the final arrangement with the creditors (composition) has been performed properly.
- 3. The court may, even of its own motion, grant an extension of no more than one month to the debtor to perform his obligations after all.

Article 166 Filing of a legal claim for the rescission of a final arrangement
A legal claim (right of action) for the rescission of a final arrangement with the creditors (composition) must be brought to court and shall be decided upon in the same way as provided in Articles 4, 6 up to and including 9 and 12 in respect of a request for a bankruptcy order.

Article 167 Re-opening of the bankruptcy after a rescission of the final arrangement
- 1. The judgment in which the final arrangement with the creditors (composition) is rescinded shall also contain an order to re-open the bankruptcy and to appoint a magistrate ('rechter-commissaris') and a liquidator ('curator') and, if a creditors committee already existed in the bankruptcy, such a committee.
- 2. Preferably, the same persons shall be appointed who occupied these positions earlier in the bankruptcy.
- 3. The liquidator ('curator') shall ensure publication of the judgment as provided under Article 14, paragraph 3.

Article 168 Applicable provisions when the bankruptcy is re-opened
- 1. Articles 13, paragraph 1, 15 up to and including 18, and those laid down in Chapters 2, 3 and 4 of the present Title, shall apply if the bankruptcy is re-opened.
- 2. The provisions of the Chapter on the verification and admission of claims shall apply likewise, except that the verification is limited to claims which had not yet been verified and admitted already.
- 3. Nevertheless, the creditors whose claims have already been admitted shall also be invited to attend the verification meeting and they shall have the right to dispute any claims for which admission is sought.

Article 169 Acts performed by the debtor between the sanction and the re-opening of the bankruptcy
Any acts performed by the debtor in the period between the sanction of the final arrangement (composition) with the creditors) and the re-opening of the bankruptcy shall be binding on the liquidation estate, except for the application of Article 42 and following Articles, if there are grounds therefore.

Article 170 Winding-up after the bankruptcy has been re-opened
- 1. When a bankruptcy has been re-opened, no further final arrangement with the creditors (composition) may be proposed.
- 2. The liquidator ('curator') shall immediately start with the winding-up of the liquidation estate.

Article 171 Distributions made within a re-opened bankruptcy
- 1. If the final arrangement with the creditors (composition) had been performed already in full or in part towards some creditors before the bankruptcy was re-opened, then, when making a distribution, an advance payment of the percentages offered under the final arrangement (composition) will be made to the new creditors and to the old creditors who had not yet received any payment, whereas towards the old creditors who had already received a partial payment, an advance payment will be made of an amount of the offered percentage that remained unpaid.
- 2. Any surplus shall be divided equally amongst all creditors, old and new.

Article 172 Liquidation estate of the debtor is declared bankrupt again
The preceding Article shall apply also if the liquidation estate of the debtor is declared bankrupt again before the debtor has fully performed the final arrangement with the creditors (composition).

Article 172a Final arrangement offered in main insolvency proceedings
The provisions of the present Chapter apply accordingly when a final arrangement (composition) is offered on the basis of Article 34, paragraph 1, of the European Regulation mentioned in Article 5, paragraph 3.