Suspension of Payment

Definition

A suspension of payment is a statutory arrangement by which a company is granted a temporary postponement of payment to its creditors. The goal is to give the company the opportunity to reorganize and reach an agreement with creditors, as an alternative to bankruptcy.

The agreement

During the suspension, the company offers an agreement — typically the payment of a percentage of the debt. If a qualified majority of the creditors agrees, the judge can declare the agreement binding (homologation). This means that all creditors are bound, including those who voted against it.

Floresteca and suspension of payment

Floresteca B.V. Netherlands has applied for a suspension of payment and offered an agreement. 96% of the creditors agreed, and the agreement was homologated by the Amsterdam District Court. BFRG filed an appeal on behalf of its clients because, in our opinion, the agreement was not in the interest of defrauded investors.

Impact on your claim

A suspension of payment agreement may mean that you receive only a portion of your claim via the agreement. However, this does not exclude the possibility that you can recover your full damages from the responsible individuals personally via another legal route — directors’ and officers’ liability.