failliet

Failliet is the status of a person or company that has been formally declared insolvent in a court proceeding in Dutch-speaking jurisdictions. The formal procedure is called faillissement. The term is used in the Netherlands and in Flemish-speaking parts of Belgium, and is broadly equivalent to bankruptcy in English.

Typically, when a debtor cannot pay debts as they come due, a creditor or the debtor can petition the court for bankruptcy. If the court grants the request, it declares bankruptcy and appoints a bankruptcy trustee (faillissementscurator) to take custody of the debtor's assets, realize the estate, and distribute proceeds to creditors in accordance with statutory priorities. Secured creditors and certain preferred claims (for example wages) are paid before general creditors; any remaining assets are divided among unsecured creditors.

During the process, the debtor loses control over most assets and faces statutory restrictions on acting as a director or incurring new debts. The bankruptcy ends when the estate is liquidated and distributions are completed; in many cases, the debtor may be relieved of the remaining debts subject to specific legal rules.

Some jurisdictions also offer a temporary moratorium known as surseance van betaling (payment suspension) to give a financially troubled company a chance to restructure outside formal bankruptcy.

Related terms include faillissement (the procedure) and failliet (the bankrupt person). The English equivalent is bankruptcy.