Turbo liquidation is no safe harbour: director liability as potential asset justifies bankruptcy declaration

Turbo liquidation: quick and easy dissolution — but not without risk

Turbo liquidation has long been a popular way to dissolve an empty private company (BV) quickly and cheaply. The principle is simple: if there are no longer any assets, the company can be dissolved by a shareholders' resolution and immediately ceases to exist — without the need to appoint a liquidator. No trustee, no lengthy procedure, no costs.

But turbo liquidation is no safe harbour for directors who leave debts behind. The The Hague District Court made clear once again on 16 October 2024 that a turbo-liquidated company can still be declared bankrupt — and that a potential claim against the director for manifestly improper management is sufficient as a potential asset.

What happened?

A creditor (Oak Management B.V.) had a claim against a company in liquidation. The company acknowledged the claim and that it had left multiple debts unpaid. Nevertheless, it had dissolved itself on 2 November 2022 via turbo liquidation and deregistered from the Chamber of Commerce, on the ground that there were allegedly no more assets.

The creditor disagreed and asked the court to declare the company bankrupt. His argument: the financial statements for the years 2018 through 2021 had never been filed on time. The last filed financial statements dated from the 2017 financial year. Only on the eve of the hearing — after the respondent's lawyer had pointed out the discrepancy to his client — did the authorised representative call the Chamber of Commerce and file the missing financial statements belatedly.

Too late. The court held that the statutory filing obligation had not been met.

The legal framework: turbo liquidation and judicial review

Turbo liquidation is governed by Article 2:19(4) of the Dutch Civil Code (DCC): if a legal entity has no assets at the time of dissolution, it ceases to exist upon that resolution. No liquidation takes place.

But the board's assessment that there are no assets is subject to judicial review. If a creditor makes it plausible that (potential) assets exist, the court can still declare the company bankrupt. The company is then deemed to have continued to exist for the purpose of winding up the bankruptcy (Supreme Court 27 January 1995, ECLI:NL:HR:1995:ZC1631).

The question in this case was: does a potential director liability claim under Article 2:248 DCC constitute such a potential asset?

The court's reasoning

The court answers that question in the affirmative. Its reasoning:

1. Breach of the filing obligation is established. The financial statements for 2018–2021 were not filed on time. The fact that the authorised representative filed them belatedly on the eve of the hearing makes no difference.

2. Article 2:248 DCC activates a double presumption. Breach of the filing obligation in the three years prior to bankruptcy gives rise to the statutory presumption that (a) the board manifestly improperly performed its duties and (b) that this was an important cause of the bankruptcy.

3. Every (de facto) director may be jointly and severally liable for the bankruptcy deficit. The argument of the authorised representative that, as proxy holder of the foundation-director, he was too remote from the company to be liable, was rejected by the court as insufficiently substantiated and contrary to established case law. Moreover, it emerged that he was also an authorised representative of the company itself.

4. A potential Article 2:248 DCC claim = potential asset. It has been summarily established that (potential) assets exist. The remaining requirements for a bankruptcy declaration have been met. The company is declared bankrupt.

A critical note: is the court moving too fast?

The blog commentary that prompted this post raises a legitimate question about the judgment. In case law, there is no consensus on whether an Article 2:248 DCC claim qualifies as an asset of the company within the meaning of Article 2:19(4) DCC in the first place. Strictly speaking, it is a claim of the trustee (for the benefit of the estate), not of the company itself. The Supreme Court has not yet definitively ruled on this, creating legal uncertainty.

Moreover: even accepting that such a claim can constitute a potential asset, the court should not too readily assume that the asset actually exists. The mere breach of the filing obligation is not in itself sufficient to conclude that the claim has a reasonable prospect of success and will lead to recovery. More facts and circumstances are needed:

• Is there actually a bankruptcy deficit?
• Can the director rebut the statutory presumption?
• Are there recovery prospects (assets of the director)?

The court barely addresses these questions in this judgment. The outcome — bankruptcy declaration — may be correct, but the reasoning is thin.

What does this mean in practice?

Turbo liquidation with outstanding debts is risky. Creditors can ask the court to scrutinise the turbo liquidation. If they make it plausible that potential assets exist — including a potential director liability claim — the company can still be declared bankrupt.

The filing obligation is absolute. Even if financial statements get 'stuck' in a digital system, it is the director's responsibility to verify that filing has actually taken place. Last-minute filing on the eve of a hearing repaired nothing in this case.

De facto directorship counts. Anyone acting as a de facto director — even as proxy holder of a foundation-director — runs the risk of personal liability. A structure with a foundation as an intermediary does not automatically provide protection.

Thinking of dissolving your BV? Do so only if you are certain that:

• all debts have been settled, or
• all creditors have agreed to dissolution without payment,
• and all financial statements have been filed on time.

If that is not the case, consider a regular liquidation or — if the company is insolvent — a voluntary bankruptcy petition, which gives you as director more control over the process.

Conclusion

This ruling confirms that turbo liquidation is not a risk-free escape route for directors who leave debts behind. A potential Article 2:248 DCC claim may be sufficient as a potential asset to justify a bankruptcy declaration — even if the company has formally ceased to exist. The legal uncertainty about the qualification of that claim and the question of how much plausibility is required makes this an area where you as a director should not operate without legal advice.

Ruling

This blog post is based on ECLI:NL:RBDHA:2024:16981, judgment of The Hague District Court of 16 October 2024.

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