Suspension of payment
A company, business or organization experiencing temporary payment problems can apply for a suspension of payment. A deferment of payment can save a company experiencing financial difficulties from bankruptcy. The procedure for applying for a deferment of payment is governed by civil law. The application for a suspension of payment must be submitted to the court by a lawyer. Various conditions are attached to the granting of a suspension of payment. For example, the financial problems must be of a temporary nature and the viability of a company will be assessed by the court.
Applying for a provisional deferment of payment
Suspension of payment is intended for companies that cannot meet their payment obligations, but want to prevent bankruptcy. A lawyer submits the request for a suspension of payment to the court, after which a provisional suspension of payment is granted straight away. The court also appoints an administrator. The administrator examines the viability of the relevant company. Two to four months after the provisional suspension of payment, a hearing will take place on the definitive deferment of payment. During the hearing, creditors vote on the payment deferral.
Definitive suspension of payment
After creditors have agreed to the deferment of payment, the provisional deferral will be converted into a definitive suspension of payments. Creditors cannot claim outstanding debts for a period of eighteen months. This offers companies the space to solve their payment problems and restructure the organization. A court-appointed administrator is closely involved in the restructuring and in the implementation of the debt rescheduling plan. In addition, the administrator assists in negotiations with creditors and the management of business assets. If the court decides to refuse the definitive suspension of payments, a company can be declared bankrupt.
Termination of the procedure
A suspension of payments ends at the request of the administrator, the creditor or the court, if: – the debtor acts in bad faith in the administration of the estate during the suspension of payments – the debtor tries to disadvantage the creditors – the debtor violates his power to act – the debtor acts contrary to what has been imposed on him by the court or administrator – the condition of the estate is such that the possibility of the debt being settled is unlikely. After reaching a final agreement with the creditor(s), the suspension of payments can be terminated.
Requesting support and advice in the event of a suspension of payment
The lawyers at Fruytier will give you expert and specific advice and support when applying for a suspension of payment. We can start the procedure for you, but we will also critically review the situation to ensure deferment of payment is the right solution. Alternative measures to prevent bankruptcy include a composition with creditors, a pre-pack or a reorganization. Our experienced specialists in bankruptcy law and insolvency law will be happy to guide you. For more information about the procedure surrounding a suspension of payment, feel free to contact one of our lawyers, without obligation.