PhD defence H.J. (Erik) de Kloe

Summary:

The thesis examines the formal influence of creditors in insolvency proceedings. The insolvency proceedings studied are bankruptcy, pre-pack, and ‘the Dutch scheme’ (WHOA). 

According to many, a trustee in bankruptcy should focus almost exclusively on the interest of creditors in maximizing distributions in bankruptcy. The thesis takes the position that the trustee should also consider more public interests such as ESG factors. As a result, creditors should not have a decisive influence in bankruptcy.

The current situation, however, is that creditors are hardly involved at all in the bankruptcy proceedings. This is the case, although the trustee is settling the bankruptcy primarily for the benefit of these creditors. It starts with creditors not being informed or being informed too late about the actions the trustee wants to take. 

If creditors have (some) information, they can make themselves heard individually through the court or collectively in a creditors’ meeting or creditors’ committee. Both forms of participation have their limitations. In court, social interests and interests that cannot easily be expressed in monetary terms are in principle irrelevant. The creditors’ meeting and creditors’ committee are underused in practice. A revival of these bodies could bring more democracy to the bankruptcy process.

With the pre-pack, a bankruptcy that is prepared in silence, the formal say of creditors is often not possible at all. The bankruptcy is then announced only after the trustee has sold the company. The pre-pack requires safeguards tailored to this procedure for a fairer process.

A new insolvency procedure is the Dutch scheme, the WHOA. In this procedure, an entrepreneur can offer an agreement to his creditors. Creditors can vote on the agreement, but otherwise, they have few formal options to influence the process and the options they have are very expensive. 

The study concludes that creditors have too little influence in all the insolvency proceedings studied. The author makes concrete recommendations to improve the position of creditors.