Under Dutch law each partner of a partnership (other than a limited partner) is severally liable for liabilities of the partnership. The Dutch Supreme Court has recently rendered two important judgments with respect to the liability of partners in a partnership and the consequences thereof if the partnership is declared bankrupt.
In its decision of 6 February 2015, the Dutch Supreme Court found that the bankruptcy of a Dutch partnership no longer entails – by operation of law – the bankruptcy of its partners. A court should only open bankruptcy proceedings with respect to individual partners after determining that they themselves meet the bankruptcy criterion, including that each individual partner has its centre of main interest in the Netherlands. This decision was the subject of the NautaDutilh Newsflash published on 10 February 2015.
On 13 March 2015, the Dutch Supreme Court clarified the extent of the liability of a partner, in particular with respect to a partner who joins a partnership that has already been existing for some time. The Dutch Supreme Court issued a clear-cut rule: each partner (other than a limited partner) is severally liable for all liabilities of the partnership, including liabilities that have arisen prior to that partner joining the partnership.
This means that if a partnership is unable to fulfil its obligations, a creditor of the partnership may demand payment from each partner (other than a limited partner) and take recourse on the assets of each partner, irrespective of whether a partner has joined the partnership before or after the claim of the creditor came into existence. In other words: when a partner joins a partnership, this will lead to additional means of redress for the creditors of the partnership - old and new.
This judgment shows the importance of a proper investigation into a partnership's state of assets and liabilities when a party considers joining an already existing partnership. In some cases it may be advisable for the future partner to stipulate guarantees from the existing partners and/or to provide for a contractual arrangement on the contribution of each of the partners for claims of the partnership's creditors.