# Suspension of payments

Source: https://contracko.com/glossary/suspension-of-payments

# Suspension of payments

A temporary court-granted moratorium giving a struggling debtor breathing space to restructure.

## Definition

Suspension of payments is a temporary moratorium granted by the court to a debtor who foresees being unable to continue paying. It provides breathing space to restructure and continue as a going concern. Governed by the Bankruptcy Act, it suspends enforcement by ordinary (unsecured) creditors but does not bind secured or preferential creditors. Where restructuring fails, it frequently converts into bankruptcy.

## Example

> A manufacturer hit by a temporary cash crunch obtains suspension of payments to negotiate with creditors and avoid immediate bankruptcy.

## Why this is a business risk

When a counterparty is granted suspension of payments, ordinary creditors cannot enforce existing claims during the moratorium, which can disrupt your cash flow and delay recoveries indefinitely. The debtor remains in control of the business alongside a court-appointed administrator, and the outcome is uncertain: restructuring may succeed, but the moratorium often converts to bankruptcy. Businesses without a clear picture of their outstanding receivables and contract rights with the debtor are poorly positioned to protect their interests during the process.

## How to manage it

- As soon as a counterparty enters surseance, identify all outstanding claims and contracts with that party so you can assess your position quickly.
- Check whether your contracts contain ipso facto termination or suspension clauses triggered by insolvency proceedings, and whether those clauses will hold up under Dutch law.
- Retain independent legal advice early: creditor committees, proof of claim deadlines and restructuring votes require prompt action.
- Avoid supplying further credit or goods on open account to a debtor in surseance without securing additional protection such as prepayment or security.

### How Contracko helps

Contracko's searchable repository lets you instantly pull all contracts with a counterparty in financial difficulty, so you can assess the scope of your exposure before the moratorium restricts your options. The AI review layer identifies insolvency and termination clauses in each agreement, giving your team a clear view of the rights available to act on.

## Legal references

- Fw art. 214 Bankruptcy Act: suspension of payments

Unless marked otherwise, references are to Dutch law (Burgerlijk Wetboek, the Dutch Civil Code); EU instruments such as the GDPR apply across the EU. This is general information, not legal advice. Other jurisdictions treat these concepts differently. Verify the current text and your situation with a qualified lawyer.

## Relevant for

[Financial Services](https://contracko.com/industries/financial-services)[Manufacturing](https://contracko.com/industries/manufacturing)[Retail & Wholesale](https://contracko.com/industries/retail-wholesale)[Construction](https://contracko.com/industries/construction-industry)

## Related clauses

- [Termination for Cause Clause](https://contracko.com/clause-library/termination-for-cause)
- [Change of Control Clause](https://contracko.com/clause-library/change-of-control)

## Related terms

- [Bankruptcy](https://contracko.com/glossary/bankruptcy)
- [Notice of default](https://contracko.com/glossary/notice-of-default)
- [Bailiff's writ](https://contracko.com/glossary/bailiffs-writ)
- [Payment default](https://contracko.com/glossary/payment-default)

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## Frequently asked questions

Common questions about this term.

- **Q:** What is the difference between surseance van betaling and faillissement?
  **A:** Surseance is a temporary moratorium intended to preserve the business as a going concern while it restructures. Faillissement is a collective liquidation procedure in which the debtor's assets are sold for the benefit of creditors. Surseance frequently converts to faillissement if restructuring fails.

- **Q:** Can a creditor still recover secured claims during surseance?
  **A:** Yes. Surseance only suspends enforcement by ordinary (unsecured) creditors. Secured creditors such as mortgage holders and pledge holders can continue to act independently of the moratorium, as can the tax authority and UWV in their preferential capacity.

- **Q:** Does a debtor in surseance still have to perform ongoing contracts?
  **A:** Generally yes, for contracts entered into after the moratorium. For pre-existing contracts the administrator and debtor must decide whether to continue or disclaim them. The moratorium does not automatically excuse performance of ongoing obligations.

- **Q:** How long can surseance van betaling last?
  **A:** Initial provisional surseance is granted for a very short period (a matter of days). Definitive surseance, if granted, lasts up to 18 months under the Bankruptcy Act, with the possibility of extension. In practice many surseances convert to bankruptcy within weeks.

- **Q:** Can new contracts be concluded during surseance?
  **A:** Yes, but they require the co-signature or consent of the court-appointed administrator. Obligations arising from contracts concluded with the administrator's consent become estate debts (boedelschulden) with preferential ranking, which is more favourable for the creditor than an ordinary claim.

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