Pre pack

On 21st June 2016, the Dutch House of Representatives adopted the Continuity of Enterprises Bill (WCO I). This bill introduces a statutory basis for the so-called pre-pack insolvency which makes relaunching after a bankruptcy easier.

In a pre-pack, a ‘prospective administrator is appointed by the court during the moratorium before the company declares bankruptcy, and in principle they can determine in two weeks if a relaunch has a chance of success.

The possible chances of a sale of the profitable parts of the company for as high a price as possible are increased thereby. To counteract abuse of the rules in order to get rid of redundant staff, the prospective administrator is required to involve the works council or the staff representative body in the preparations for the impending bankruptcy and the relaunch, on condition of secrecy.

The possibility of such a “moratorium” during which preparations are made as well as possible for a bankruptcy has already been adopted by 8 out of the 11 district courts (Estro, Heiploeg).