Turbo liquidation

If, when the resolution to dissolve the legal entity is adopted, there are no remaining or future assets, no winding-up process is required and the legal entity can be dissolved immediately without further formalities. Put simply, a turbo liquidation involves deregistering the company from the Trade Register of the Dutch Chamber of Commerce without a winding-up process taking place. This allows legal entities to be dissolved quickly.

The legal entity then ceases to exist immediately, irrespective of whether it still has creditors.

Why would you opt for a turbo liquidation? First of all, it is a quick and inexpensive way to bring a legal entity to an end. In addition, unlike bankruptcy, turbo liquidation can protect the image of the legal entity and can - and in such cases should - avoid lengthy bankruptcy proceedings.

In addition to being used when a business is being wound down, turbo liquidation can also form part of a restructuring. One example is the so-called ‘sterfhuis’ structure. Under such a structure, viable parts of a business are transferred to another company so that they can continue operating. The non-viable parts remain in the company that cannot continue: the ‘sterfhuis’, which is then declared bankrupt or, if it has no assets, dissolved by way of turbo liquidation.

If no assets remain when the resolution to dissolve the legal entity is adopted, there is no winding-up process: the legal entity ceases to exist immediately and can be deregistered from the Trade Register without further formalities. ‘Assets’ includes all present and future assets of the business. This may also include future tax refunds and claims arising, for example, from directors’ liability.

The Temporary Act on Transparency in Turbo Liquidations entered into force on 15 November 2023. Its purpose is to increase transparency in the use of turbo liquidation, improve accountability and prevent abuse. As a result of this Act, additional requirements apply to turbo liquidations on a temporary basis.

Creditors who believe that they have been prejudiced by a turbo liquidation have several options for challenging what has happened. For example, they may seek to have the dissolved legal entity declared bankrupt if they believe that assets still exist that should be wound up. Such an asset may also consist of a claim against the management board for improper performance of its duties.

In such a situation, creditors may also bring a claim directly against the management board. However, the evidential burden is often difficult to satisfy and the costs can be substantial, which is why creditors frequently decide not to pursue the matter.

A turbo liquidation can be complex and overwhelming. That is why our experienced insolvency lawyers are ready to guide you through the process. We help you weigh the advantages and disadvantages, advise you on the statutory requirements and assist you throughout the entire process. With our expert support, you can make a well-informed decision for you and your business.

Ready to take the next step and bring your business to an end efficiently? Contact us. We are here to help make the turbo liquidation process as smooth and straightforward as possible.