Big Bazar bankruptcy: implications for landlords, employees and suppliers

Big Bazar was declared bankrupt by the Amsterdam District Court on Tuesday, 26 September, 2023. The Amsterdam District Court appointed two curators who have been in charge of managing and settling the bankruptcy as of 00:00 on 26 September, 2023. Big Bazar’s bankruptcy has implications – many far-reaching – for the parties involved. In this blog, I will reflect on the impact on Big Bazar’s landlords, employees and suppliers.

Landlords

As the landlord, you may terminate the lease – just as the curator may. The agreements negotiated in the contract regarding the duration of the lease and the notice periods to be observed do not play a role in bankruptcy, or at least they do not have to be observed. The maximum notice period to be observed is three months. This is different only if the rent has been paid in advance. In this case, the rent cannot be terminated earlier than by the day for which advance payment was made.

The rent over the notice period is an estate liability and is paid from the estate with priority. That does not mean, by the way, that you are assured that your claim will actually be paid. Whether your estate claim is satisfied depends on the funds in the estate. Any rent overdue as of the date of bankruptcy is an unsecured claim that you must file with the curator for verification.

Employees

The curator is authorised to terminate your employment contract by the earliest possible date but no later than six weeks. If you are still in your probationary period, termination of your employment contract is effective immediately. In the case of a fixed-term employment contract that ends within the aforementioned notice period, your employment contract will end at the agreed upon time. It is good to be aware that during the notice period you are, in principle, required to perform work; this is only different if the curator has informed you that you are exempt from work. Failure to perform work while you are not exempt from work may affect your benefit from the UWV under the wage guarantee scheme.

The employer’s wage obligations to you are taken over by the UWV under the so-called wage guarantee scheme. The UWV takes over the following payment obligations from the employer:

• the back pay for up to thirteen weeks immediately preceding the date of termination of the employment contract by the receiver;
• wages over the notice period (of up to six weeks);
• vacation pay and vacation allowance for a period of up to one year prior to the end of the notice period;
• amounts owed by the employer to third parties under the employment contract for a period of up to one year prior to the end of the notice period.

Suppliers

Chances are, as a Big Bazar supplier, you delivered goods before the date of bankruptcy but your outstanding invoices have not yet been paid (in full). The law provides two instruments you may be able to use to mitigate your damages by allowing you to recover the goods you have delivered.

Right of recovery

As a supplier – also being a creditor – of Big Bazar, you may invoke the right of recovery against the curator. Invoking the right of recovery must be done in writing and you must give the curator reasonable time to comply with your claim. If the curator does not comply within the reasonable time, then invoking the right of recovery shall result in the dissolution of the contract. Contract dissolution entails you to regain ownership of the goods delivered to Big Bazar (for which no payment has as yet been received). Since the bankruptcy concerns only property of the bankrupt, invoking the right of recovery entails the curator to be obliged to return the goods to you. This is different only in the event that the curator actually complies with your claim.

To successfully invoke the right of recovery, two conditions must be met:

1. your claim must be due, which is usually when the payment period has expired, and;
2. you must invoke the right of recovery in a timely manner.

The time limits for invoking the right of recovery are short. The authority expires when six weeks have passed after the claim for payment of the purchase price has become due and payable; also the authority expires if the delivered goods were delivered to Big Bazar more than 60 days ago.

Furthermore, goods must still be present at Big Bazar and you must be able to prove with respect to the goods that they were actually delivered by you. With respect to the latter, a difficulty may arise if the good in question is supplied by multiple suppliers.

Retention of title

Whether you as a supplier may validly invoke retention of title depends on whether your general terms and conditions General terms applicable on all contracts of a corporate business.
» Meer over general terms and conditions general terms and conditions apply, and whether they include a retention of title. If both are the case then you may invoke retention of title against the curator and reclaim the goods you delivered. When invoking the retention of title, you must give the curator a reasonable time within which the curator can inform you whether there is a willingness to pay the outstanding claim, in which case the goods you have delivered become the property of the estate.

Lien

You may conceivably have Big Bazar property in your possession under an agreement entered into between you and Big Bazar. In case you still have one or more outstanding invoices, you may be able to invoke the lien.

If you as a creditor hold a Big Bazar property under your control, you may hold the property under your control until your claim is satisfied. Three conditions must be met to successfully invoke the lien:

1. there must be a claim due and payable;
2. there must be sufficient connection between the property subject to the lien and the claim in question, and;
3. the person seeking to invoke a lien must exercise actual control over the property.

The curator facing a lien claim may – after obtaining permission from the bankruptcy judge – claim and sell the property. In that case, the debtor holding the property is obliged to surrender the property to the curator. After the general bankruptcy costs have been deducted from them, the sale proceeds accrue to the creditor who had invoked the lien. In the event that the bankruptcy costs exceed the proceeds, the foregoing means that you receive nothing below the line despite a lien claim.

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