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Like other enterprises, credit institutions and insurers may go bankrupt. DNB may apply for the bankruptcy of a credit institution or insurer to be declared. It is the most far-reaching measure DNB can take.

Published: 23 December 2022

Application for bankruptcy

Under the Faillissementswet [Bankruptcy Act] DNB may ask a court of law to declare bankruptcy on a credit institution or an insurer. DNB can do so without being a creditor of the firm in question. Nor must it be established that the firm ‘has ceased to pay’. DNB may apply for bankruptcy if the firm has negative own funds and declaration of emergency regulations can no longer provide a way out.
Alternatively, the bankruptcy of a bank or insurer may, under the Bankruptcy Act, be applied for by its creditors or by the firm itself, if it ‘finds itself in the position of having ceased all payment’. Before pronouncing its ruling, the court enables DNB to state its opinion. If an application for bankruptcy coincides with an application for emergency regulations to be declared, the latter application will be given priority.
The bankruptcy of a credit institution or an insurer may also follow emergency regulations. At the request of the administrator (bewindvoerder), or at the recommendation of the delegated judge (rechter-commissaris), or at its own initiative, the Court may declare bankruptcy if the firm’s own funds are negative and there is no reasonable hope that continuation of the emergency regulations will achieve the purpose for which they were declared.

Consequences of bankruptcy

The purpose of bankruptcy is the realisation of the failed enterprise’s assets on behalf of the joint creditors. The receiver appointed by the Court is given the task of managing and ultimately dividing the assets.
When bankruptcy has been declared on a credit institution or an insurer, DNB will cancel the firm’s authorisation. DNB will inform the Minister of Finance and the competent supervisors of the EEA Member States of the bankruptcy. Also, upon the bankruptcy of a credit institution, DNB will activate the Deposit Guarantee Scheme and the Investor Compensation Scheme.

International aspects

A credit institution or an insurer having its registered office in another Member State cannot be declared bankrupt in the Netherlands. Conversely such a bankruptcy, if declared in another Member State, will always be recognised in the Netherlands. Save for certain exceptional cases, a bankruptcy declared elsewhere in the EEA will be governed by the law of the Member State where it was declared. For lack of applicable European law, a different regime applies to the international aspects of bankruptcies of benefit in-kind funeral insurers.

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