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Welcome / Blog Archive / English / 2022-11-doc4 Towards a review of the Dutch IP profession

2022-11-doc4 Towards a review of the Dutch IP profession

The EU (without Denmark) is an economic market, with 27 member states. All these states have their own national insolvency system. In this whole European region there are presently around 120 types of national insolvency proceeding, which is around 4.5 per member state. As examples: Belgium lists eight proceedings (in Dutch and in French), Estonia two, Ireland no less than 10 and Spain four.

The “insolvency administrator” on an EU level is referred to as an “insolvency practitioner” (IP). Across the 120 national insolvency proceedings, no less than 114 persons or bodies are charged with their execution. Each country lists its IPs in its national language. Germany lists 10 types of IP, Austria nine, Italy eight and Malta six, where Spain lists two names and Lithuania just one.

Since 2021, the Netherlands has listed four types of insolvency proceedings and five types of IP. Already well known abroad is the Dutch bankruptcy liquidation proceeding (“faillissement”) in which an IP (“curator”) is appointed by the court. The fresh WHOA (or “Dutch Scheme”), which came into effect on 1 January 2021, introduced two new insolvency procedures in the Dutch Bankruptcy Act. These are the “closed” (or ‘private’, or ‘confidential’) and public settlement procedure outside bankruptcy. Both procedures provide that a debtor that is in a condition in which it is reasonably likely that it will not pay its debts, can enter into an arrangement with creditors and shareholders to (i) make a company financially healthy again through debt restructuring and to avert impending bankruptcy, or (ii) to facilitate a company that has no solid financial future to check its chances of survival after negotiations with its stakeholders and gain a better result than it would be able to settle in bankruptcy.

In a civil law obeying country like the Netherlands, the most important source of knowledge for its insolvency law is, evidently, a legal instrument, i.e. the Bankruptcy Act (“Faillissementswet”) of 1896. A law that is over 120 years old! However, it has been amended several times since then. The Bankruptcy Act is the most decisive and binding source of knowledge for the nature and task of the IP (“curator”). This Bankruptcy Act, however, is a ramshackle act. It contains only the most necessary rules regarding the position of the IP, such as those concerning its appointment and the announcement of the appointment of an IP; its task; the supervision by the supervisory judge on the performance of its duties; the determination of the IPs salary, the reporting obligations and the rules regarding rendering account to the supervisory judge.

Given its age and history, one can accept that the Bankruptcy Act does not contain any rules with regard to, for instance, the organisation of the office of an IP (or any regulation of firms that provide insolvency services, as suggested by the UK Insolvency Service in December 2021); criteria regarding administration and reporting; criteria on the opening and holding of a separate quality bank account; a list of ancillary activities that may or may not be permitted (may a curator who is a lawyer represent a creditor in a litigation against a thrid party?); training and quality assurance; rules of professional conduct; rules regarding conflicts of interest; or even disciplinary proceedings or a complaints procedure.

The gaps left by the Act have (sort of) been closed mainly with judicial guidelines. In addition to the rules in the Bankruptcy Act and the significance of case law for its interpretation, courts have created guidelines for bankruptcies and suspension of payments proceedings. These so-called “Recofa” guidelines have been approved by the national consultation of supervisory judges in bankruptcies and suspension of payments proceedings, and by the National Judicial Consultative Body for Civil District and Subdistrict & Supervision.

These guidelines contain rules for handling a bankruptcy, including details on appointments, publications, notifications, reporting, time registration, salary, the duty to take out an insurance policy, etc. This gap-filling exercise for the Act when dealing with bankruptcy liquidation cases makes sense – however the legal basis as well as the status of those Recofa guidelines is unclear and may be unpredictable as courts are allowed, if the circumstances give rise to it, to deviate from the guidelines. In Dutch practice deviation is not uncommon – in my opinion to the detriment of the consistency and predictability of judicial approaches. Here, in this small country, we have ended up with eleven different laws in eleven different judicial districts!

As to the guidelines’ legal status, the Netherlands Supreme Court, in a judgment of July 2022, was clear: “The Recofa guidelines were not adopted by a body that has the power to bind judges on the basis of general principles of due process of law with regard to the use that they make of the discretion left to them by the legislator. The Recofa guidelines can therefore not be regarded as ‘law’ that can be reviewed in highest instance by the Supreme Court.” In a civil law country as the Netherlands, it is clear that this is a serious assessment! The result is that the Supreme Court cannot fulfil two of its core tasks in cassation: offering individual legal protection and ensuring unity of law.

In the system of the Bankruptcy Act, the Dutch IP’s task is set in stone. If a debtor is declared bankrupt, the bankruptcy judgment includes the appointment of one or more IPs. The “curator” is charged with the management and liquidation of the bankrupt estate. This takes place under the supervision of the supervisory judge. In practice, the IP assembles the assets of the estate, liquidates them and divides the proceeds among the entitled persons on the basis of a (final) distribution list. In all his or her actions, the IP is driven by the interests of the creditors. So far, so good.

However, since 1995 the Netherlands Supreme Court has added a rather abstract dimension to the IPs role. In doing his job the IP must, the Supreme Court says, also take into account weighty, considerable interests of a social nature, such as the continuity of the enterprise and retention of employment, and the IP may allow those interests to prevail under certain circumstances above the interests of an individual creditor.

Evidently, all these terms spark questions and disputes, for which reason I have defended for a long time that in a civil law oriented country, it is up to the legislator to anchor the task of an IP to be socially responsible in matters of insolvency in binding legislation (the Act), and to include a solid description of these “social interests” and their relation to the IP’s prime task in bankruptcy, which is to act in the interests of the joint creditors. “Social” tasks cannot be performed without proper context or at the expense of creditors to be decided at the individual discretion of an IP.

The legislator should also regulate adequate compensation for performance of social tasks. What will be the effect of the growing influence of ESG (environmental, social, and governance) matters on the poor Dutch IP’s position? The legislator should not let IPs down and should set – after parliamentary discussion – clear standards.

In the Netherlands, since 2021, the legislator also has given IPs a new task: to examine whether “fraud” is a cause of bankruptcy. According to the Bankruptcy Act, a trustee: (a) in the management and liquidation of the bankrupt estate, must examine whether there are irregularities that, at least partly, have caused the bankruptcy, made the liquidation of the bankrupt estate more difficult, or have increased the deficit in the bankruptcy, (b) inform the supervisory judge about this confidentially, and (c) if he or the supervisory judge deems it necessary, report irregularities to the competent authorities.

In September 2022, this topic was partly covered in a University of Leiden doctoral PhD defended by Jessie Pool, with the title: “The role of the IP in tackling irregularities, an empirical-legal study”. Miss Pool delivered one of the few empirical studies in the insolvency arena (including interviews with IPs, analysis of over 2,000 bankruptcy reports, a survey among 30% of all Dutch IPs), testing the facts and the way IPs assess their work and the work of their colleagues. Her main conclusion is that there are serious complaints against the legislator. Her research results show that there is a lack of consistency in the way in which IPs deal with “irregularities”. IPs carry out their task of dealing with irregularities in substantially different ways and do not agree on the way in which they should deal with them. Roughly speaking, she concludes, two groups of IPs can be distinguished: on the one hand, a group that does not consider dealing with irregularities to be part of their task and therefore only tackles irregularities if that is in the interests of the joint creditors, and on the other hand, a group that considers dealing with irregularities as a part of their task, even when this is not directly in the interests of the joint creditors. Also in this case, I would say, the legislator should be clear and more substantial and specific in the legal design of binding legislation. The term “irregularities” is an insufficiently specified standard. Furthermore, where over 50% of bankruptcy liquidations result in “empty” estates, who is paying the IP for its “public” task of tackling fraud?

To conclude, the Dutch IP’s scope for policy freedom or discretion to act (“beleidsvrijheid”) in the administration of an estate may – in case of the vague norm of social interests – include unequal treatment of creditors and may – in case of irregularities indicating fraud – entail the risk of arbitrariness (which person will be prosecuted and which will not?).

Primary legislation should solve these uncertain situations. Primary legislation should also empower a regulatory body to be created (not just the collective wisdom of some 30 supervisory judges) to further regulate matters of administration and/or give such a body the power to delegate certain functions, like adding procedural rules “extra” to the Bankruptcy Act, to other suitable bodies.

This approach deserves EU support, as I argue in a forthcoming article (see references below).


WHOA stands for Wet Homologatie Onderhands Akkoord (Act on the homologation of a private restructuring plan). Since 1 January 2021 it is arranged in articles 369-387 in the Dutch Bankruptcy Act. It is a debt settlement procedure outside bankruptcy. In practice, the Dutch acronym WHOA equals the term ‘Dutch Scheme’.

Netherlands Supreme Court (Hoge Raad) 24 February 1995, Nederlandse Jurisprudentie (NJ) 1996/472

Netherlands Supreme Court (Hoge Raad) 15 July 2022, ECLI:NL:HR:2022:1093

J.W.M. Pool, De rol van de curator bij de aanpak van onregelmatigheden, E.M. Meijers Instituut, Leiden, ISBN 978-94-6421-827-5 (with a summary in English see

Bob Wessels, Performance of insolvency administrator activities in EU Member States – A Dutch view, in: International Corporate Rescue November 2022 (forthcoming)

This is a slightly adapted version of a regular column Bob Wessels is writing for Global Restructuring Review (GRR) on the topic of cross-border restructuring and insolvency in a European context. GRR is a subscription-only publication and the column appeared in GRR on 5 October 2022. See