Insolvency Law at Sint Maarten (Netherlands)
In Sint Maarten, insolvency proceedings are governed by the Bankruptcy Decree (Faillissementswet), which applies to the Dutch Caribbean territories, including Sint Maarten. This legislation provides a structured approach to address financial distress among individuals and entities.
⚖️ Legal Framework
The Bankruptcy Decree outlines procedures for:
Bankruptcy (Faillissement): A court-ordered liquidation of a debtor's assets to satisfy creditor claims. The Court of First Instance appoints a bankruptcy trustee (curator) responsible for managing and liquidating the debtor's assets. A supervisory judge (rechter-commissaris) oversees the trustee's actions. The bankruptcy extends to all assets, regardless of location, and prohibits creditors from improving their position by pursuing assets outside Sint Maarten. (Bankruptcy -Guide to doing business)
Suspension of Payments (Moratorium): A temporary procedure allowing a debtor to negotiate with creditors to reach a composition agreement, aiming to avoid insolvency. This procedure is typically initiated before the debtor becomes insolvent.
Liquidation of Legal Entities: Voluntary liquidation of a legal entity begins with a resolution by shareholders, members, or the Court. The appointed liquidator manages the entity's affairs, converting assets into cash, settling debts, and distributing any remaining balance to entitled parties. If assets are insufficient to cover debts, the liquidation may convert into bankruptcy under court supervision.
🧾 Insolvency Procedures
The insolvency process typically follows these stages:
Initiation: A creditor or the debtor may file for bankruptcy.
Supervision: An interim manager assesses the debtor's financial situation.
Rehabilitation or Liquidation: Depending on the assessment, the debtor may undergo financial rehabilitation or liquidation.
Settlement Agreement: At any stage, a settlement agreement may be reached between the debtor and creditors.
Completion: The proceedings conclude once the court approves the final report and discharges the debtor.
📌 Key Considerations
Debtor's Obligation: A debtor is obliged to file a claim with the tribunal requesting that it be subject to the insolvency procedure within a maximum of 30 days from the occurrence of insolvency. Insolvency is defined as the point at which insufficient funds are available for the payment of certain, liquid, and payable debts of more than 60 days.
Management Liability: The patrimonial liability of the members of management and/or supervisory bodies of the company, as well as any other persons who contributed to the insolvency of the debtor, may be requested if they have ordered, for their own benefit, the continuation of an activity that clearly led to the company’s cessation of payments.
Court Oversight: Insolvency proceedings are overseen by the court, which appoints a judicial administrator or liquidator to manage the process. The court ensures that the proceedings comply with legal requirements and protects the interests of creditors and other stakeholders.
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