Pursuant to article 1 of the Bankruptcy Decree (Faillissementswet BES), a debtor who has ceased to pay its creditors is declared bankrupt by court order in accordance with article 1 of the Bankruptcy Decree. The Court of First Instance will appoint a bankruptcy trustee (curator), charged with the administration and liquidation of the assets of the bankrupt debtor. Subsequently, the bankruptcy trustee will provide for an equitable distribution of the (proceeds of the) bankrupt’s assets among the creditors of the bankrupt estate. A supervisory judge (rechter-commissaris) is appointed by the court to supervise the bankruptcy trustee. A bankruptcy is a general attachment of practically all the assets belonging to the bankrupt estate irrespective of the location of such assets.
The Bankruptcy Decree prohibits that a creditor improves its position with respect to other bankruptcy creditors by taking recourse against assets outside the BES islands and requires him to contribute the proceeds that he realized outside the BES islands to the bankrupt estate, thus safeguarding the paritas creditorium (equality of creditors). Other than the Anglo-Saxon jurisdictions (such as in the United States under a Chapter 11 procedure), the debtor and its existing management do not continue to operate the business as a debtor-in-possession.