Good news! Applying for turbo liquidation is becoming more difficult.

On November 15, 2023, the Temporary Act on Transparency of Turbo-Liquidation came into effect. This law marks a crucial change in how companies without assets are dissolved. The new law, which is temporarily in force for two years, introduces a set of new rules to ensure the process becomes more transparent and creditors are better protected.

What is Turbo-Liquidation?

Turbo-liquidation is a procedure whereby companies without assets can be dissolved quickly. Previously, a turbo-liquidation could be requested quite easily by filling out a form at the Chamber of Commerce. There was no verification of whether creditors could have been paid in any way. This method allowed malicious entrepreneurs to 'quite simply' abuse the rules. For example, it was theoretically possible to siphon off assets before liquidation and leave debts behind.

Ultimately, other companies were left with unpaid bills. Collecting claims was not possible because, after the liquidation, the company no longer existed. To prevent abuse of turbo-liquidation and better protect creditors, stricter rules have been drawn up in the form of a new law.

What is changing?

Under the new law, companies must deposit the following documents with the Chamber of Commerce within 10 days of requesting the turbo-liquidation:

• Balance sheet and Profit and Loss account: This describes the financial situation of the company for the current financial year.
• Declaration regarding the absence of assets and unpaid debts: A report with reasons explaining why there are no assets and why any debts have not been paid.
• Final distribution list: An overview of creditors who were paid before the final liquidation.
• Annual accounts: The annual accounts for the years preceding the dissolution must be submitted.

Once all these documents have been filed with the Chamber of Commerce, the various creditors must be notified.

What happens if a company fails to do this?

If a company does not deposit the required documents (in time) with the Chamber of Commerce, this can have serious consequences. Failure to deposit the documents is considered an economic offense. In addition to a director disqualification (maximum of 5 years) for the directors, there is also a serious risk of criminal prosecution, especially if an entrepreneur is frequently involved in liquidations with left-behind debts.

Through this information obligation and the depositing of these documents, abuse can be more easily demonstrated by a creditor. If it becomes clear that a company has wrongly carried out a turbo-liquidation, it can be reversed. If sufficient funds were actually available, a creditor can still be paid. If this is not the case, bankruptcy can be requested and a receiver will be appointed for the (financial) settlement.

What is the difference between bankruptcy and turbo-liquidation?

In a general meeting of shareholders, it can be decided to dissolve a legal entity (BV, NV, etc.). After this decision, all assets must be realized (collecting receivables, selling stock and assets), and all debts must be paid. Any remaining capital is for the shareholders.

If it turns out during the liquidation that there are not enough assets to pay all debts, bankruptcy should actually be requested and a receiver proceeds with the settlement. However, if there are no assets left, filing for bankruptcy can be omitted, and one can choose a turbo-liquidation.

Why these changes?

The changes to the turbo-liquidation rules stem from the expectation that many entrepreneurs will want to dissolve their companies due to poor economic conditions. Previously, entrepreneurs could dissolve their companies relatively easily and continue with a 'clean slate.' Creditors were left empty-handed with unpaid invoices and financial damage. The new rules are intended to prevent abuse of turbo-liquidation and better protect creditors.

What can you do?

Are you in difficult waters yourself, or do you suspect a client is? Then it is important to stay on the ball. Pay attention to your debtors and transfer your unpaid invoices to a collection specialist in a timely manner. They have experience with collecting outstanding claims. Moreover, this allows you to focus fully on your core business.

It is also important not to be too easily dismissed if a client has carried out or wants to carry out a turbo-liquidation. Requesting this has become less easy, and as a creditor, you can check whether the turbo-liquidation was performed legitimately.

Do you have invoices that are not being paid? Create a free account at incasso.nl and submit your unpaid invoices today. In over 90% of cases, the payment arrears are resolved without the intervention of a judge.