Turboliquidation in the Netherlands


Turbo­liquidation in the Netherlands

Planned legislative changes

It seems as if it will soon become more difficult for rogue entrepreneurs in the Netherlands to avoid creditors by means of making use of the instrument referred to as 'turboliquidation'. In future, owners will have to announce their plans for an accelerated dissolution and face increased accountability for the necessity of turboliquidation.

Under current Dutch laws, fraud involving so called “plof-bv’s” (“Burst BVs”) and “turboliquidation” is quite simple. By making use of this instrument, rogue entrepreneurs can avoid their creditors. Dutch Minister Sander Dekker announces an amendment to the law to make abuse more difficult.

It looks as if it will soon become more difficult for rogue entrepreneurs in the Netherlands to avoid creditors by means of making use of the instrument referred to as “turboliquidation”.

Pursuant to competent Dutch Minister Dekker’s plans, in the future, owners will have to announce their plans for an accelerated dissolution of a corporation in advance and they will face greater accountability when it comes to explaining the necessity for turboliquidation proceedings. The envisaged amendments to the law are designed to help creditors to recover their money. The Dutch Ministry of Justice and Security hopes that this will halt the rise of fraud involving so-called “plof-bv’s” (from the Dutch word ploffen, which means to burst, to pop, to explode and can be translated as “Burst BVs”).

Minister Dekker is working on an amendment to the law, he writes to the Lower House of Parliament on October 7, 2019.

Turboliquidation, a rapid means for achieving a dissolution without liquidation, has existed since 1994. The tool is intended to save entrepreneurs costs and red tape once the activities have been discontinued and the company in question no longer holds any assets. But because of this simplicity, abuse is far too easy, says Minister Dekker.


In the event of a turboliquidation, the shareholders' meeting decides to dissolve the company. The director reports this to the Chamber of Commerce and signs a form stating that there are no assets. That is all that is needed. No comparable instrument or procedure is available under German law - with the exception of attempts of (ab)using the dissolution procedure pursuant to Section 141a of the German Act on Voluntary Jurisdiction (Freiwillige Gerichtsbarkeit-Gesetz).

In 2018, the Dutch Chamber of Commerce registered almost 37,000 dissolution decisions, of which 33,000 were “turboliquidations”. The Ministry of Justice and Security does not know how often fraud has been committed in this context. On the basis of figures for the period 2010-2016, the Tax and Customs Administration estimates that something might have been wrong in one out of five turboliquidations.

Pursuant to a position taken by some practitioners, making abuse of the turbo liquidation' is 'remarkably simple'. This simplicity – combined with the fact that the government increasingly focuses on the prevention of bankruptcy fraud, – leads to a rise in the number of abuse cases. Others argue that the alleged number of abuse cases - which, thus far, has not been established or verified in detail, – does not justify the abolition of a procedure for a quick liquidation in normal cases, where there is no abuse and no damage to the creditors.

Better protection

By implementing amendments to the law, Minister Dekker wants to make the process of turboliquidation more transparent. In the current situation, creditors are not informed and only find out over time that they can whistle for their money. They will soon be better protected,' he says.

In a letter to the Lower House, Dekker writes: “A company whose activities are discontinued by making use of turboliquidation will in the future have to provide more information in order to justify the fact that turboliquidation was necessary. For example, the board will be obliged to draw up a final balance sheet and have it recorded, with an explanation of why there are no assets on the balance sheet (anymore). The company must also provide insight into its annual accounts. Changes in the assets that have occurred in previous years would then be easier to control.”


Until now, the Minister has not explained in detail, how he wants to achieve the desired situation. But Dekker thinks that creditors will in the future be in a position in which they can more easily oppose a turboliquidation in court. It shall also become easier for them to hold directors liable for fraud, for example. “Whether creditors also want to do so is a matter for their own consideration”, says Dekker.


According to the authors' own experience, the procedure of turboliquidation was also misused in the past, for example to prevent companies from being held liable under personal securities granted by them, by means of first implementing so-called asset stripping measures and then winding up the company quietly, secretly and quickly. The associated damage to creditors was considerable. Against this background, an amendment to the law that would put a stop to abuse would certainly be welcome.

It must be admitted to the critics, however, that for normal cases - where there is no threat of damage to creditors the procedure seems to make sense; it is often difficult to explain the complexities, formalism and time requirements for a silent liquidation procedure under German law - in particular to foreign market participants .
It remains to be seen whether the Dutch legislator will succeed in fulfilling both objectives, so that contractual partners of Dutch BVs will no longer be exposed to the risk that Dutch BV evades its obligations, but that for "normal cases", the possibility of an efficient winding-up of inactive BVs will continue to exist.

We will keep you informed of any further developments.

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