NSOL VENCY OF PUBLIC ENTITIES OTHER THAN THE STATE question should be raised how clear this distinction will be in practice. Furthermore they are still separate parts in the accounts of one and the same property. Holding on to this distinction in the framework of a bankruptcy -the public part would remain unaffected by the bankruptcy -would mean a violation of the principles of property law and insolvency law 3 Government activities and the risk of bankruptcy respective of the legal form (public andor private legal entities), a government body with duties and competence pertaining to public law can get into financal difficulties. In this respect, it is important that, in principle, every debtor is obliged, to the full extent of his assets, to pay his own debts(Article 3: 276 DCC); no exceptions are made for governments. However, it should be borne in mind that a debtor is meant to be a separate legal entity, with its own rights and obligations. Public bodies or other entities without its/their own legal personality, which belong to a certain (wider) legal entity, have the same rights and obligations. This means that if an dependent(public-law or private-law) legal entity with govemmental duties can be identified as such its cred itors will have recourse to its assets 3.1 Tackling financial difficulties If a govemment entity gets into financal difficulties, with expenses exceeding revenues, there are roughly two possibilities to respond: an attempt can be made either to increase revenues and/or to decrease expenses. If this is successful, a situation of bankruptcy is a voided and bankruptcy law does not play a role. Therefore, we will not take this situation into account below. What happens, however, if neither A special situation in this respect concems the municipality as a legal entity governed by public law. Every Dutch municipality annually receives a payment from the national Gemeentefonds [Municipalities Fund]. This fund is for the most im portant part funded by a percentage of the State's tax revenues, which is deter ined annually. The payment a municipality receives from the State is deter ined accord ing to objective standards. In adm inistrative practice, it has tumed out that, even if there is a ba lanced system of distributive standards, this does not automatica lly mean it meets the individual requirements of municipalities. Therefore in the Financiele-Verthoudingswet [Financial Relations Act], a subjective way to balance the books has been included in Article 12. If the general financial means of a municipality has been exceeded considerably and structurally, the municipality can apply for a supplementary payment on the grounds of Article 12 of the Financal Relations Act. Such a supplementary payment is mostly subject to various regulations(such as increase of own income and restriction of expenses), so that a municipality will to a certa in extent be a dministered by the Ministry of the Interior 3.2 Concursus creditorum If the attempt to steer a different financal course comes too late or fails, a new situation arises If the legal entity's assets are insufficient to pay all its creditors andINSOLVENCY OF PUBLIC ENTITIES OTHER THAN THE STATE 7 question should be raised how clear this distinction will be in practice. Furthermore, they are still separate parts in the accounts of one and the same property. Holding on to this distinction in the framework of a bankruptcy - the public part would remain unaffected by the bankruptcy - would mean a violation of the principles of property law and insolvency law. 3 Government activities and the risk of bankruptcy Irrespective of the legal form (public and/or private legal entities), a government body with duties and competence pertaining to public law can get into financial difficulties. In this respect, it is important that, in principle, every debtor is obliged, to the full extent of his assets, to pay his own debts (Article 3:276 DCC); no exceptions are made for governments. However, it should be borne in mind that `a debtor' is meant to be a separate legal entity, with its own rights and obligations. Public bodies or other entities without its/their own legal personality, which belong to a certain (wider) legal entity, have the same rights and obligations. This means that if an independent (public-law or private-law) legal entity with governmental duties can be identified as such, its creditors will have recourse to its assets. 3.1 Tackling financial difficulties If a government entity gets into financial difficulties, with expenses exceeding revenues, there are roughly two possibilities to respond: an attempt can be made either to increase revenues and/or to decrease expenses. If this is successful, a situation of bankruptcy is avoided and bankruptcy law does not play a role. Therefore, we will not take this situation into account below. What happens, however, if neither of the two possibilities occur? A special situation in this respect concerns the municipality as a legal entity governed by public law. Every Dutch municipality annually receives a payment from the national Gemeentefonds [Municipalities Fund]. This fund is for the most important part funded by a percentage of the State's tax revenues, which is determined annually. The payment a municipality receives from the State is determined according to objective standards. In administrative practice, it has turned out that, even if there is a balanced system of distributive standards, this does not automatically mean it meets the individual requirements of municipalities. Therefore, in the Financiële-Verhoudingswet [Financial Relations Act], a subjective way to balance the books has been included in Article 12. If the general financial means of a municipality has been exceeded considerably and structurally, the municipality can apply for a supplementa ry payment on the grounds of Article 12 of the Financial Relations Act. Such a supplementary payment is mostly subject to various regulations (such as increase of own income and restriction of expenses), so that a municipality will to a certain extent be a dministered by the Ministry of the Interior. 3.2 Concursus creditorum If the attempt to steer a different financial course comes too late or fails, a new situation arises. If the legal entity's assets are insufficient to pay all its creditors and