Abuse of bankruptcy law
The right must be used for the purpose for which it was written. The purpose of bankruptcy law is to prevent people or companies from continuing to accrue debt that they cannot pay off.
Bankruptcy law is often used by a franchisor as a means of pressure to induce the franchisee to pay promptly. If payment is not made on time, the franchisor immediately threatens to file for the bankruptcy of the franchisee. No room is left for a possible counterclaim or to contest the claim.
In short, the bankruptcy law indicates that bankruptcy can be declared when there are several creditors and the debtor is in a state in which he has ceased to pay. The requirement that there must be more than one creditor will often be met when a franchisor claims to have a claim against a franchisee. As a creditor, for example, the current account credit already counts. However, the fact that there are several creditors is not a sufficient condition to be declared bankrupt. In addition, there must also be a situation in which payment has ceased.
When a franchisee leaves an invoice unpaid and the franchisee has a reason for this, it is therefore advisable to properly communicate and record the reason for non-payment. If the franchisee does not pay for a reason, he is not in the situation that he has ceased to pay, so the reason must be known. In this way, the franchisee avoids being wrongly put under pressure to file for bankruptcy or, more annoyingly, that, after the franchisor has already filed for bankruptcy, the situation has to be explained to the court, where there is actually a discussion about the amount of the invoice or the quality of the service or goods provided.
Ludwig & Van Dam franchise attorneys, franchise legal advice
Other messages
Recoverability in times of crisis
A recurring theme in this contribution to the First Franchise Newsletter is payment discipline
Termination of a dealer agreement in relation to price maintenance
At the end of 2007, the Court of Appeal in Arnhem issued an interesting ruling concerning
Restyling forecasts
As is well known, a good franchisor offers its franchisee a good deal at the start
Nuanced franchise agreement on the grounds of error is a nuanced consideration
The Court in preliminary relief proceedings in Rotterdam recently ruled that a franchisor is not automatically responsible
The duty to offer in the franchise agreement is not valid
Recently, the Court of Appeal determined that an obligation of the franchisee
Franchise agreements of an indefinite term cannot be terminated just like that
Contrary to what is sometimes thought, franchise agreements for an indefinite period cannot be terminated just like that.