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Doubts about usefulness of amended Bankruptcy Act
The legislation on bankruptcy and suspension of payments changed on 15 January 2005. However, the original objective of the amendment – promoting the effectiveness of suspension of payments and bankruptcy – has gone astray. There is now widespread doubt as to the usefulness of this amendment.
The cooling-off period was extended from one to two months, with a one-off option to extend for another two months. This means that an administrator/receiver has ample opportunity to check on the rights of creditors and others and to find out in which way the estate can best be liquidated. During this term, third parties such as pledgees and mortgagees, suppliers who have delivered goods and/or services subject to retention of title and lessors cannot claim their asserted property from the administrator/receiver without authorization by the supervisory judge.
Furthermore, the threshold for accepting an individual or company voluntary arrangement has been lowered. The consent of more than 50% of the ordinary creditors, who represent at least 50% of the non-preferential claims, will be enough. Power companies are no longer entitled to cut off power supply to the bankrupt on account of debts receivable dating from the time before they went bankrupt. Nor are they entitled to rescind the underlying contract on that ground or on account of the bankruptcy.
Finally, a centralized bankruptcy register has been set up. This means that court orders on bankruptcy and suspension of payments – like the bankruptcy order – will no longer be published in national newspapers.
For more information on this subject, please contact Paul Schaink
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