The news rarely arrives directly. A delivery fails to turn up, your usual contact stops answering, and then an email from a law firm lands in your inbox: "By judgment of the district court, your supplier has been declared bankrupt. The undersigned has been appointed trustee." From that moment it is no longer your supplier who decides what happens to your contract. It is someone who does not know you and whose job is to recover as much money as possible for all creditors.
For most small and mid-sized businesses this is not a theoretical risk. Bain & Company puts external procurement at 43% of total business costs on average. A large part of how you operate depends on the financial health of other companies. This article covers what happens legally under Dutch law, four situations to check contract by contract, and what to put in your contracts while things are still going well.
The contract does not end by itself
A common assumption is that bankruptcy ends all of the bankrupt company's contracts. It does not. The contract stays in place and the trustee (the curator) decides whether to continue it. If that benefits the estate, for example because you still owe payment for a delivery that is nearly finished, the trustee will want to go ahead. If it costs the estate money, the trustee will leave it.
You do not have to wait and see. Under Article 37 of the Dutch Bankruptcy Act you can give the trustee a reasonable deadline, in writing, to state whether the contract will be performed. If the answer is yes, the trustee has to provide security that performance will actually follow. If there is no answer, or the answer is no, the trustee loses the right to demand performance from you, and you know where you stand.
A suspension of payments works differently. The company keeps trading under the supervision of an administrator and management stays in place. It often ends in bankruptcy, but not always. Use those weeks to work out your position on each contract.
If your contract says it ends when the other party goes bankrupt or obtains a suspension of payments, you can generally rely on that. A worked example is in the conditions subsequent clause template. One exception: if the supplier offers a composition through the Dutch WHOA scheme, you may not terminate solely because that procedure has started (Article 373 of the Bankruptcy Act).
Four situations to check per contract
You paid in advance. This is the painful one. An advance payment for goods or services you have not received becomes an ordinary claim against the estate once bankruptcy is declared. You file it with the trustee and join the queue of unsecured creditors. What remains after the bank, the tax authority and wages are paid is often a small percentage, or nothing.
If you still owe the same supplier on other invoices, you can in most cases set those off against what you are owed, as long as both amounts existed before the bankruptcy date (Article 53 of the Bankruptcy Act). So do not pay outstanding invoices on autopilot until you have checked this.
Your own property is at the supplier's premises. Moulds, printing plates, tools, stock you bought but have not collected: what belongs to you is not part of the estate and you can reclaim it. The trustee can declare a cooling-off period during which nobody may collect anything, and you have to be able to prove ownership. A purchase order, an invoice and a marking on the item make that much easier.
Your data sits with the supplier. With software as a service, the biggest risk is access rather than money. A trustee has no reason to keep servers running when nobody pays for them. If your SaaS agreement contains a data portability clause with an export format and a retrieval period, you at least have terms to point to. For software your operations depend on, an escrow arrangement is worth considering: the source code is held by an independent party and released on bankruptcy.
The trustee arranges a restart. Trustees often sell the business to a new party that carries it on. Your contract does not transfer automatically. The new owner needs your cooperation for a contract transfer, which gives you room to say yes, say no, or set conditions such as a shorter term, a bank guarantee or better exit rights.
An example from wholesale
A packaging wholesaler with fourteen staff has printed boxes made by a manufacturer in the south of the Netherlands. On an order worth 60,000 euros it has paid a 30% deposit, so 18,000 euros. The printing plates carrying its customers' logos, which the wholesaler paid for itself, are kept at the manufacturer. An invoice of 7,500 euros for an earlier delivery is still unpaid.
Then the manufacturer goes bankrupt. The wholesaler sets the unpaid 7,500 euros off against the deposit and files a claim for the remaining 10,500 euros with the trustee. It collects the printing plates two weeks later, with the original purchase order as proof. The order itself has to be placed again with another manufacturer, at an eight-week lead time in the busiest season of the year.
Looking back, the most expensive mistake was not the deposit. It was having no second manufacturer lined up. The wholesale sector page looks at how strongly that dependency plays out in this industry.
What to arrange while things are going well
Most protection has to be in place before the bankruptcy. Afterwards your negotiating position is gone.
- Ask for an advance payment guarantee on large deposits. A bank guarantee for the deposit amount covers exactly the risk in the example, and the bank guarantee clause template gives you wording to start from.
- Record ownership of your own property in writing, with a list of what is held at the supplier and a duty to mark it and store it separately.
- Include a termination right for bankruptcy and suspension of payments and, for software, an export right and an exit plan.
- Watch for signals. A supplier that suddenly asks for prepayment, lead times that keep growing and regular contacts who leave are reasons to recalculate your exposure. A yearly supplier evaluation helps you spot the pattern in time, and the Dutch Central Insolvency Register is public.
- Check before you sign. A trade register extract and a brief financial check are step one of our procurement check for new suppliers.
None of this works unless you know which contracts you have. Loio found that 71% of companies cannot locate at least 10% of their own contracts (Loio, 2026). In a bankruptcy, that missing contract is exactly the one you need on day one, because the deposit, the termination right and the data terms are all in it. With a contract register organised by supplier, you can pull those details together in an hour rather than in the week the trustee wants an answer.
For a quarterly routine to check whether suppliers keep their commitments, read Signed is not delivered. More figures on the cost of poor contract management are on our contract management statistics page.
Tracking Contracts shows per supplier which contracts are running, what has been paid in advance and when you can give notice, so you have the overview the moment bad news arrives. Try it free for a month.
Sources
- Bain & Company: external procurement averages 43% of total business costs
- Loio (2026): 71% of companies cannot locate at least 10% of their contracts
- Dutch Bankruptcy Act, Articles 37, 53 and 373: position of the trustee, set-off and compositions outside bankruptcy