Flitsfaillissement

A flash bankruptcy refers to an insolvency proceeding in which a company is declared bankrupt within a matter of hours or days following the filing of the petition. This form of bankruptcy is distinguished by the extreme expedition of the judicial decision and is frequently prepared in practice through a pre-pack arrangement.

Its significance lies in the preservation of the company’s value, as extended uncertainty as to its viability may prove detrimental to customers, suppliers and employees alike. It enables creditors and the trustee to effect a rapid sale or transfer of assets without further erosion of the company’s worth.

In Dutch practice, flash bankruptcies are regularly employed in respect of companies facing financial difficulties that seek to effect a controlled restart, with the court and the administrator having been engaged at an earlier stage.