Collective debt restructuring is an important process to help companies in financial difficulties restructure their debts and potentially avoid bankruptcy. In the Netherlands, there is no collective debt restructuring for companies. However, this can have far-reaching consequences for employees, both practically and emotionally. In this article, we explain what collective debt restructuring entails, how it differs from bankruptcy, and what rights and responsibilities employees have in this situation.
What is collective debt settlement?
Collective debt restructuring is a legal procedure that allows indebted companies to make agreements with their creditors regarding payment plans or partial debt forgiveness. The goal is to give the company a fresh financial start, without immediate bankruptcy. This process can be requested through the court and is often used when a company is still viable but is struggling with excessive debt.
Difference between bankruptcy and debt restructuring
The main difference between bankruptcy and debt restructuring is the starting point:
- Bankruptcy: This is where the company's existence ends. Assets are sold to pay off as much debt as possible. Employees often lose their jobs.
- Debt settlement: The company will continue to operate and is trying to regain financial health through agreements with creditors. Employees can keep their jobs, although there are risks, such as reorganizations.
For employees, debt restructuring offers more security than bankruptcy, but there are conditions and consequences that you should be aware of.
The role of employees in collective debt restructuring
Employees play an indirectly crucial role in debt restructuring. They are often involved because their wages, working conditions, or even job security may be at stake.
What does this mean for you as an employee?
- Salary guarantee: In most cases, the company remains obligated to pay the salary. If this is not possible, the Employee Insurance Agency (UWV) can (temporarily) take over the salary.
- Reorganization: Debt restructuring often involves cost-saving measures. This can lead to layoffs or changes in employment conditions.
- Participation through co-determination: The works council (OR) often plays a role in assessing reorganization plans. Employees can exert influence through the OR.
Consequences for employment contracts and social security
During collective debt restructuring, employment contracts generally remain valid. However, there are a few things to keep in mind:
- Dismissal risk: Although debt restructuring is intended to preserve jobs, layoffs may be part of the agreements with creditors. In that case, you are entitled to a transition payment, unless the company cannot afford it.
- Changes in employment conditions: The company can make proposals to reduce employment conditions, for example by eliminating bonuses or vacation days.
- Social security: In case of dismissal or wage guarantee via the UWV You will remain entitled to benefits such as unemployment benefits. Please note that your pension accrual may be affected during debt restructuring.
What can you do
- Inform yourself: Ask your employer for transparency and stay informed about the plans. Discuss your rights with the works council or union representative.
- Check your rights: Check your employment contract and collective bargaining agreement. These contain agreements regarding wage guarantees, dismissal protection, and other relevant matters.
- Get help: Are you unsure about your position or do you need legal assistance? Then please contact De Unie.
How can union De Unie help you?
At De Unie We understand how stressful collective debt restructuring can be, especially when your job or income is at stake. We offer:
- Free consultations with our legal specialists.
- Assistance with negotiations with your employer.
- Support through the Works Council to represent your interests.
Do you have questions or would you like to become a member? Call us at 0345 851 963 or email us at sc@unie.nlWe are available on weekdays between 8:30 AM and 17:00 PM. Together we are stronger!
