I OVERVIEW OF RESTRUCTURING AND INSOLVENCY ACTIVITY

i Liquidity and state of the financial markets

Quantitative easing by the European Central Bank and others has resulted in high liquidity levels and low funding costs for Dutch borrowers. Dutch corporates have also had good access to financing because foreign financiers and investors have been showing an increasing appetite for Dutch assets. Notably, in the real-estate market, German Pfandbrief banks are becoming lenders of choice, while in the market for leveraged financing, an increasing number of borrowers has access to 'covenant lite' financings. Unitranche financings are gaining market share as far as this is concerned. Volumes for acquisition financing were not as high as the acquisition volumes would otherwise suggest. Strategic purchasers could often fund the acquisition price out of their own funds, with a bridge facility being merely sought as a tool to present certainty of funding. However, as the number of private equity-backed transactions increased in the course of 2017, so did the relative proportion of acquisitions backed by significant financing.

ii Impact of specific regional or global events

The political shocks of the Brexit referendum and the election of Donald Trump as US president continued to affect the market in 2017, with M&A activity that was at times patchy or limited to transactions with a more domestic focus. However, the Brexit referendum also resulted in increased activity in the Dutch real-estate market, with a number of international investors choosing to invest in the Netherlands partially as a result of uncertainty about the prospects for UK real estate and sterling.

In consumer-facing sectors, fierce competition of low-budget competitors, new market-entry disruptors and online shops, and short-term liquidity problems, continue to drive changes in the retail sector.

iii Market trends in restructuring procedures and techniques employed during 2017

Pre-packaged insolvencies (pre-packs) remain an area of focus in the Netherlands. In order to ensure continuity of a stressed business, a debtor, sponsor, their advisers and key creditors (notably secured lenders and key suppliers) prepare a deal, following which the court appoints a liquidator to assess the proposed restructuring as a transaction that might be implemented on the first day of an actual bankruptcy. While the Dutch legislator continues to work on a broader statutory platform for pre-packs (see Section VI), employee rights have taken centre stage with arguments having been raised that a pre-pack constitutes a transfer of undertaking that is not exempted from protections of the workforce (known as TUPE rules, under which employees effectively transfer to the transferee business). Following the recent judgment of the European Court of Justice (ECJ) concerning the Estro pre-pack (see Section VI), pre-packs can in most instances no longer be used as a tool to make part of the workforce redundant, at least not without making severance payments. It has now also been clarified that, if a company that is trying to restructure via insolvency has a works council, that works council, in principle, has advisory rights in respect of the restructuring (see also below Section III.v).

In retail insolvencies, one enforcement method that is regularly used includes a liquidation sale conducted by the liquidator under a mandate granted by the secured creditor. Any cash and electronic payments made by customers in respect of encumbered property are deemed to constitute enforcement proceeds available for distribution to the secured creditor.

In larger insolvency proceedings containing numerous (notably financial) creditors, debt restructurings generally take place through a consensual deal or a restructuring plan combined with a statutory cramdown mechanism in formal proceedings or by using a foreign route.

iv Number of formal procedures entered into or exited during 2017

According to details made available by the Central Bureau of Statistics of the Netherlands (CBS), the total number of corporate bankruptcy proceedings commenced in 2017 amounts to 3,290 new cases (excluding sole proprietors and traders). This represents a decrease of approximately 25 per cent compared to the number of new filings in 2016, and is the lowest number since 2000. The decrease in the number of new bankruptcy cases is linked to the recovery of the Dutch economy in recent years.

Similar to 2016, most new bankruptcies have been recorded in the wholesale and retail sector. A total number of 345 new cases were opened in the wholesale sector and 270 new cases in the retail sector. The sharpest drop in new bankruptcy cases concerned the financial services sector (a decrease of 36 per cent) and the industrial sector (a decrease of 27 per cent).

II GENERAL INTRODUCTION TO THE RESTRUCTURING AND INSOLVENCY LEGAL FRAMEWORK

i Available insolvency and restructuring procedures2

The Bankruptcy Code provides for three main formal proceedings: bankruptcy, suspension of payments and debt adjustment for natural persons.

Bankruptcy proceedings have been primarily designed as liquidation proceedings, but in practice, can function as a restructuring tool (e.g., through a composition scheme or by means of a going-concern sale of the debtor's viable business parts). The primary objective of suspension of payments proceedings is the reorganisation and continuation of the debtor's business, but the limited scope of the proceedings – confined to ordinary (i.e., unsecured and non-preferential) insolvency claims – and continued application of transfer of undertaking protection rules render it ineffective for many restructurings.3 The main purpose of debt adjustment for natural persons is to provide heavily indebted natural persons with a fresh start. Considering the focus of this chapter on large corporate debtors, debt adjustment for natural persons will not be further dealt with.

Special emergency proceedings for financial undertakings have been enacted in the Financial Supervision Act. Such proceedings contain elements of both liquidation and restructuring proceedings.4 Furthermore, the Bank Recovery and Resolution Directive (the BRRD)5 and the Single Resolution Mechanism Regulation (the SRM Regulation)6 provide for a European approach towards the recovery and resolution of banks and large investment firms (and certain affiliated entities) in distress. To facilitate a timely intervention in respect of such institutions, national legislation implementing the BRRD and the SRM Regulation grants certain intervention powers to competent resolution authorities. Beyond the scope of the BRRD and the SRM Regulation, the Dutch Central Bank has powers to procure that a bank in serious financial problems is transferred, in whole or in part, to a third party. Furthermore, the Dutch Minister of Finance holds powers to intervene in the affairs of banks, investment firms and (managers and custodians of) investment institutions (all as defined in the Financial Supervision Act), including the power to expropriate their shares or capital instruments and some or all of their assets (e.g., as applied to the nationalisation of SNS REAAL NV and SNS Bank NV in February 2013), where this is necessary to safeguard the stability of the Dutch financial system.

Restructurings often occur beyond the setting of formal insolvency proceedings (e.g., through security enforcement, new or amended financing arrangements, contractual restructuring arrangements or foreign restructuring routes). The main disadvantages of such informal restructurings often include the lack of a stay on individual recourse rights of creditors and the absence of a cramdown mechanism in relation to dissenting and non-participating creditors, beyond those mechanisms agreed between creditors (see further on out-of-court restructuring arrangements below in Section III.i). Changes to the statutory framework are pending to enhance attempts to restructure financially distressed companies outside formal insolvency proceedings (see further in Section VI).

ii The taking and enforcement of security

Loans granted to a corporate debtor can be secured over the company's assets. Creation requirements of security rights are governed by general rules of property law and depend on the relevant type of collateral. All-embracing security can be obtained by a combination of pledges and mortgages over assets comprising the debtor's business.

An important effect of the commencement of bankruptcy proceedings is the divestment of the debtor (i.e., the debtor loses the power to dispose of and administer the assets included in the insolvent estate).7 Pledges granted in advance over future property8 can no longer crystallise after the debtor's divestment.9 During the course of bankruptcy proceedings, the liquidator is exclusively entitled to dispose of and administer the insolvent estate.10

The secured creditor in Dutch insolvency proceedings can enforce its rights as if the proceedings had not been opened.11 Enforcement of security can only be temporarily stayed by the order of a moratorium at the time of the bankruptcy adjudication or subsequently by the supervisory judge.12 Such a moratorium can last for a maximum period of four months (including extensions). The liquidator has powers to expedite enforcement of security by demanding that the secured creditor realise the collateral within a reasonable period of time.13 Failure to enforce within that time period will result in a loss of enforcement rights and an obligation to share in the general realisation costs of the proceedings.14 A final limitation on the position of the secured creditor is that it cannot enforce its security in respect of all claims that might arise after the opening of insolvency proceedings.15

In practice, the secured creditor and the liquidator often agree on the realisation of the secured asset by the latter against the deduction of a nominal fee from the realisation proceeds.

iii Duties of directors of companies in financial difficulties

No statutory obligation exists for directors of a financially distressed company to file for insolvency proceedings. Nevertheless, governance of the company may be placed under increased scrutiny by third parties and continued trading may give rise to director's liability.

In essence, directors would face liability if their behaviour was negligent towards a third party and constituted serious personal wrongdoing.16 A prominent ground for personal liability is when directors allowed the debtor to carry out a transaction with a third party while they knew (or should have known) that the debtor would be unable to meet its obligations under that transaction and that the deprived counterparty would not have sufficient recourse for its damages.17 Director's liability can also arise from actions that resulted in default and non-recoverability of damages,18 as well as selective payments (e.g., non-payment to a particular creditor based solely on unwillingness of the director to allow such payment to be made).19

Each director can also be held personally liable for the entire deficit of the bankrupt estate if their improper management caused the bankruptcy.20 By statute, improper management is established if books and records of the bankrupt company have not been properly maintained or if directors failed to meet obligations regarding the company's annual accounts. Subject to proof to the contrary, that improper management is also assumed to have caused the bankruptcy.21

Directors can also be held liable by the company for improper performance of management tasks allocated to them by law or the articles of association.22 Examples of circumstances in which directors can be held liable include violation of the law or articles of association, procuring reckless and irresponsible financial behaviour of the company and utilising assets of the company for personal benefit.23

iv Clawback actions

During bankruptcy proceedings, a liquidator may invoke the actio Pauliana in order to invalidate antecedent transactions that are detrimental to the insolvent estate. Clawback generally prerequires prejudice, which will materialise in the event creditors receive a lower distribution on their claims as a result of a transaction.

Prejudice would typically be the result of a reduction in the total value of the debtor's estate as a result of a transaction (transactions at an undervalue) or as a result of a disturbance of the statutory waterfall of priorities when a company is already insolvent (preferences). The liquidator should look at the entire transaction (including beneficial aspects of the transaction) and, therefore, has no right to cherry-pick by only looking at one particular provision of a document as a clause that has a negative impact on the recourse position of the joint creditors. If the disputed act was part of a set of transactions, the positive or negative effects of the combined set should be regarded as well.24

Where prejudice has been established, the right to challenge the prejudicial action depends on further circumstances. The avoidance of an act entered into without a preexisting obligation to perform the relevant act requires that the debtor (and in the case of a transaction against consideration, also the counterparty) knew or should reasonably have known that such prejudice would materialise.25

Knowledge of a mere chance that prejudice may occur is insufficient to invoke the actio Pauliana. Knowledge must relate to a reasonable degree of likeliness that insolvency proceedings will be opened and that the insolvent estate contains a deficit.26 In certain cases, the onus of proof regarding knowledge of prejudice is reversed by law (e.g., in the event of certain transactions executed between related parties within a period of one year prior to the bankruptcy date).27

A compulsory or involuntary legal act, on the other hand, can only be avoided either in the event that the transaction occurred at a time on which the counterparty knew or ought to have known that a petition was submitted for the commencement of insolvency proceedings against the debtor,28 or in the event of a concerted action by the debtor and the creditor aimed at facilitating preferential treatment of the latter (collusion).29

Finally, it should be noted that set-off effected in the period immediately prior to the commencement of insolvency proceedings could be clawed back if the creditor effecting the set-off acted in bad faith when acquiring its claim or debt on which it relied when setting off.30 Bad faith is, notably, given when the creditor knew or should have known that the insolvency could reasonably be expected.31

III RECENT LEGAL DEVELOPMENTS

i Out-of-court restructuring agreement and dissenting creditors

In previous case law,32 the view has been held by the Supreme Court that creditors are generally free to reject an out-of-court restructuring proposal (under the terms of which creditors would receive only a partial payment of their claims against a full discharge of the debtor) except in cases where such a rejection would amount to an abuse of power33 and where it would be unreasonable for the creditor to reject the proposed arrangement. Such abuse of power can only be deemed to exist in exceptional circumstances. In 2017, the Supreme Court endorsed the view that a similar rule applies to a creditor who refused to act in accordance with an out-of-court restructuring arrangement (providing for, inter alia, a haircut) that has been executed between the debtor and a large part of its other creditors.34

ii Prerequisite of a plurality of creditors

An important condition for the commencement of bankruptcy proceedings is that the debtor must have ceased paying his debts. It has been held in various cases by the Supreme Court – also taken into account the collective nature of bankruptcy proceedings – that this financial state of the debtor requires the existence of a plurality of creditors.35 In the absence of such a plurality, a single creditor who has one or more claims against the debtor can take recourse against the debtor's property beyond the framework of formal bankruptcy. In 2017, the Supreme Court confirmed that the plurality of creditors is still a prerequisite for the commencement of the proceedings.36

iii Knowledge test and the actio Pauliana

As further discussed above in Section II.iv, a pre-commencement transaction can only be avoided pursuant to the actio Pauliana if the liquidator can demonstrate that (in case of a transaction against consideration) both the debtor and the counterparty had knowledge of the prejudicial effect of the transaction. It has been held in earlier case law of the Supreme Court that such knowledge must relate to a reasonable degree of likeliness that insolvency proceedings will be opened and that the insolvent estate contains a deficit. In the bankruptcy proceedings opened against the various entities in the Thieme Group (active in the field of graphic design), the applicable knowledge test was confirmed by the Supreme Court.37 Furthermore, it was held by the Supreme Court that this test also applied to pre-commencement transactions aimed at averting bankruptcy by implementing a reorganisation.

iv Executory contracts38

Under Dutch insolvency law, contracts are not automatically terminated (or amended) upon the commencement of bankruptcy proceedings. The further status of executory contracts (i.e., contracts which have not been (fully) performed by both the debtor and the counterparty) depends on whether the liquidator assumes or rejects the contract. Upon assumption of the contract,39 the claims arising from the contract (including any pre-commencement claims) will be awarded the status of claims against the estate. Furthermore, the liquidator will be obliged to grant security for the performance of the debtor's obligations. There is discussion in legal literature whether such security must be provided only for post-commencement obligations or also for pre-commencement obligations. In 2017, the Supreme Court had the opportunity to provide a ruling on this matter, but dismissed the case on other grounds.40 In practice, the counterparty will generally be able to suspend the performance of its obligations if pre-commencement obligations of the debtor have not been fulfilled. Upon assumption of an executory contract by the liquidator, the suspension rights of the counterparty will often incentivise the liquidator to also provide security for pre-commencement obligations. If the liquidator rejects the contract, he or she loses the right to demand performance of the contract and the counterparty can submit a claim for admission as an ordinary insolvency claim in the proceedings.41

Contracts which have been fully performed by either the debtor or the counterparty fall under a different regime. In case of full performance by the counterparty, the latter will be entitled to submit his or her insolvency claim for admission in the proceedings. In the event that the debtor has fully performed the contract, the liquidator will be entitled to demand full performance of the contract by the counterparty. It follows from two cases of the Supreme Court – both published in 2017 – that the liquidator can demand partial performance by the counterparty of its due obligations following the partial performance of the contract by the debtor (e.g., the payment by the counterparty of instalments which have become due as a result of the partial construction by the debtor of commissioned real estate property).42

v Asset disposals by the liquidator and the advisory role of the works council

It follows from recent case law of the Supreme Court that no prior approval of the works council43 is required for the liquidator to decide on asset disposals44 or the dismissal of employees.45 However, such decisions by the liquidator do require prior approval in case of a going concern sale pursuant to which (a part of) the debtor's business is continued or if business rescue is facilitated within the same corporate entity (e.g., by the adoption of a composition scheme).

IV SIGNIFICANT TRANSACTIONS, KEY DEVELOPMENTS AND MOST ACTIVE INDUSTRIES

As a summary, below is an overview of significant new formal proceedings and informal restructurings commenced in 2017.

i Bankruptcy proceedings
    1. Klesch Aluminium (previously: Aldel);
    2. Doniger Fashion Group (previously: McGregor)
    3. Witteveen Fashion; and
    4. The Phone House.
ii Suspension of payments proceedings

a Sungevity.

iii Informal debt restructuring proceedings

a Steinhoff Group.

V INTERNATIONAL

i General cross-border insolvency framework

The general legal framework pertaining to cross-border insolvency proceedings is primarily of European origin. Dutch courts recognise foreign insolvency proceedings that fall within the ambit of the Recast of the European Insolvency Regulation (Recast EIR)46 and the Winding-Up Directives concerning credit institutions and insurance undertakings.47 To date, the Netherlands has not adopted the UNCITRAL Model Law on Cross-Border Insolvency.

In the absence of binding international rules on recognition of foreign insolvency proceedings, other than the said EU law instruments, the fallback position under Dutch law is based on case law only. Under that case law, foreign proceedings outside of the scope of EU law instruments are merely granted territorial effect in the following ways:

    1. Assets of a debtor that are situated in the Netherlands are excluded from the scope of a general attachment and a general stay under the lex concursus.
    2. Any legal effects of the commencement of insolvency proceedings applicable under the lex concursus cannot be invoked in the Netherlands to the extent that this would prevent the debtor's creditors from taking recourse against assets situated in the Netherlands during or upon the conclusion of the proceedings.
    3. The application of the territoriality principle does not prevent any other legal effects from being invoked in the Netherlands. For example, a liquidator is entitled to administer and dispose of the debtor's assets situated in the Netherlands, provided that such rights are conferred to him under the lex concursus and any attachments levied by an execution creditor prior to such acts by the liquidator are respected.48

In the insolvency proceedings opened in respect of two Dutch entities of the international Oi group, two important judgments were rendered by the Supreme Court in 2017.49 In these judgments, the Supreme Court held, inter alia, that the position of an administrator in Dutch suspension of payments proceedings (and the same applies to a liquidator in Dutch bankruptcy proceedings) is not curtailed in the event that a group restructuring is pursued in foreign proceedings (in this case, from the centre of main interest of the group, which is located in Brazil). Priority is thus given to the administration of the Dutch suspension of payments proceedings of each insolvent Dutch group member. However, to the extent that the administrator has certain discretionary powers conferred to him pursuant to the Bankruptcy Code, he or she may also take into account the interests of a group as a whole and the group's creditors. In order to properly perform his or her function – notably in respect of acts of disposal and administration by the debtor for which the cooperation of the administrator is required – the debtor must duly inform the administrator about the course of the foreign proceedings (e.g., concerning the contemplated group restructuring). The group interest may also play a role when the court must reach a decision on the possible revocation of the proceedings.

ii ECJ judgment in Estro case

An important judgment in 2017 of the ECJ in the bankruptcy proceedings of the Estro group (active in the Netherlands in the field of childcare services) provides guidance on the application of TUPE rules (see above Section I.iii) in bankruptcy proceedings.50 In essence, the ECJ ruled that TUPE rules apply to pre-packaged going concern sales implemented upon (or soon after) the commencement of bankruptcy proceedings. Although bankruptcy proceedings are designed by the legislator as winding-up proceedings and generally benefit from a statutory liquidation carve out from the TUPE rules, a pre-pack aimed at ensuring the continuation of the debtor's business cannot be considered to be a liquidation for the purposes of such carve-out (regardless of whether the pre-pack is technically implemented during bankruptcy proceedings). Employment contracts and accrued liabilities will thus automatically transfer to the transferee of the debtor's business. Where many of the companies that used Dutch pre-packs had done so as a tool to reduce (the costs associated with) their workforce, without having to make severance payments, this incentive for a pre-pack has now been effectively blocked by the ECJ. A pre-pack could still be useful to, for example, restructure other liabilities of a financially distressed debtor or to procure a going concern sale of viable parts of the debtor's business.

iii Recognition of UK schemes of arrangement

Dutch companies have increasingly been using English law-governed schemes of arrangement as a means of implementing debt restructurings. The first case involving a Dutch company in which recognition issues have been considered is Re NEF Telecom Company BV.51 Another example entails the scheme offered by Magyar Telecom (a Dutch finance vehicle of a telecommunication group operating in Hungary).52 Other recent examples include Metinvest BV (a Dutch finance vehicle in an Ukrainian based iron ore and steel conglomerate) and Indah Kiat International Finance Company BV (a Dutch finance vehicle related to the APP Group, which is primarily engaged in manufacturing paper pulp).

The prevailing view in legal literature and practice is that Dutch courts will probably recognise an English court order. There is guidance that a scheme of arrangement is within the scope of the Brussels I bis Regulation,53 so that the Dutch court is generally not entitled to dispute the English court's jurisdiction and refuse recognition of the scheme.

Should schemes of arrangement be outside the scope of the Brussels I bis Regulation, then alternative grounds for recognition have been identified, including:

    1. the Rome I Regulation;54
    2. the Convention providing for the Reciprocal Recognition and Enforcement of Judgments in Civil Matters (concluded on a bilateral basis between the Netherlands and the United Kingdom on 17 November 1967); and
    3. general Dutch private international law.

VI FUTURE DEVELOPMENTS

i EU instruments

The Dutch restructuring and insolvency regime is increasingly being shaped by EU instruments. An important example of future EU measures is the proposed EU Directive on preventive restructuring frameworks, second chance and measures to increase the efficiency of restructuring, insolvency and discharge procedures.55 If implemented, it would significantly close the gap between Member States' existing restructuring and insolvency frameworks, placing a greater emphasis on corporate rescue and significantly reducing the ability of shareholders and 'out of the money' creditors to block a viable restructuring proposal.

Another example of such future EU developments concerns future EU measures to reduce non-performing loans (NPLs) and prevent their renewed build-up. The EU package of proposed new measures includes a proposal for an EU Directive on credit servicers, credit purchasers and the recovery of collateral.56 The proposed regime purports to provide banks with an efficient mechanism of out-of-court value recovery from secured loans and aims to encourage the development of secondary markets where banks can sell their NPLs to investors and make use of specialist credit servicers.

ii Future reform of Dutch law

It is currently clear that no full revision of the statutory regime will occur in the foreseeable future. Various proposals are currently pending or have recently been implemented to improve specific parts of the current regime. Main themes of reform include:

    1. combating insolvency fraud through the introduction of director disqualification rules, revision of criminal law aspects of insolvency proceedings and other powers;
    2. the promotion of corporate rescue through the Business Continuity Acts described below; and
    3. the modernisation of insolvency proceedings by enhancing electronic communication modes, abolishing physical claims admission meetings, adding flexibility in the composition of the creditors' committee and other tools.

Specific attention should be drawn to the proposed Business Continuity Acts I and II. These Acts purport to promote the rescue of financially distressed companies at an early stage.

A proposed amendment of the current regime under the Business Continuity Act I includes the debtor's right to request the court to appoint a silent administrator (and a supervisory judge) prior to the commencement of formal proceedings. The silent administrator will, in principle, be appointed as liquidator in subsequent bankruptcy proceedings. The silent administrator can prepare the future commencement of such proceedings (including a possible going concern sale to be executed swiftly upon the commencement of the proceedings). These preparations beyond the ambit of formal (public) proceedings can have a beneficial impact on, inter alia, the expected sale proceeds and the preservation of employment opportunities.

The Business Continuity Act II purports to introduce a statutory regime governing restructuring plans outside formal insolvency proceedings. The proposed regime provides for cramdown in relation to creditors and shareholders dissenting to a debt restructuring supported by a majority of creditors and shareholders in the relevant class of creditors. A composition plan can be offered to individual classes.


Footnotes

1 Paul Kuipers is a partner at Linklaters LLP.

2 See further on available insolvency and restructuring procedures: Dennis Faber and Niels Vermunt, 'National Report for the Netherlands', in Dennis Faber et al. (eds), Commencement of Insolvency Proceedings, Oxford International and Comparative Insolvency Law Series, Volume 1, Oxford University Press 2012, page 428 ff.

3 Article 232 of the Bankruptcy Code, Article 7:663 and Article 7:666 of the Civil Code. See, however, on the application of such rules in case of bankruptcy proceedings below in Section V.ii.

4 See Part 3.5.5 of the Financial Supervision Act.

5 Directive 2014/59/EU of the European Parliament and of the Council of 15 May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms and amending Council Directive 82/891/EEC, and Directives 2001/24/EC, 2002/47/EC, 2004/25/EC, 2005/56/EC, 2007/36/EC, 2011/35/EU, 2012/30/EU and 2013/36/EU, and Regulations (EU) No. 1093/2010 and (EU) No. 648/2012, of the European Parliament and of the Council.

6 Regulation (EU) No. 806/2014 of the European Parliament and of the Council of 15 July 2014 establishing uniform rules and a uniform procedure for the resolution of credit institutions and certain investment firms in the framework of a Single Resolution Mechanism and a Single Resolution Fund and amending Regulation (EU) No. 1093/2010.

7 Article 23 of the Bankruptcy Code.

8 Mortgages cannot be granted in advance over future immoveable assets, registered ships and registered aircraft. See Articles 3:97(1) and 3:98 of the Civil Code.

9 Articles 23 and 35(2) of the Bankruptcy Code.

10 Article 68(1) of the Bankruptcy Code.

11 Article 57(1) of the Bankruptcy Code.

12 Article 63a of the Bankruptcy Code.

13 Article 58(1) of the Bankruptcy Code.

14 Article 58(1) and Article 182 of the Bankruptcy Code.

15 It follows from Article 132(2) of the Bankruptcy Code and Article 483e of the Civil Procedure Code that security can only be enforced during insolvency proceedings for (1) pre-commencement secured claims; and (2) post-commencement secured claims which originate from a pre-commencement legal relationship. Cf. also Supreme Court 16 October 2015, JOR 2016/20 (DLL/Van Logtestijn).

16 Article 6:162 of the Civil Code.

17 Supreme Court 6 October 1989, NJ 1990, 286 (Beklamel).

18 Supreme Court 18 February 2000, JOR 2000/56; NJ 2000, 295 (New Holland Belgium/Oosterhof) and Supreme Court 8 December 2006, JOR 2007/38; NJ 2006, 659 (Ontvanger/Roelofsen).

19 Cf. e.g. Supreme Court 26 March 2010, JOR 2010/127; NJ 2010, 189 (Zandvliet/ING).

20 Article 2:138(1) and Article 2:248(1) of the Civil Code regarding public and private limited companies. Such improper management must have occurred within three years of the commencement of the bankruptcy proceedings. See Article 2:138(6) and Article 2:248(6) of the Bankruptcy Code. The scope of the provision is extended to shadow directors pursuant to Article 2:138(7) and Article 2:248(7) of the Civil Code. Pursuant to new legislation on management and supervision of legal entities (which will enter into force in the near future), similar rules will apply to other types of corporate entities.

21 Article 2:10 of the Civil Code.

22 Article 2:9(1) of the Civil Code and the future Article 2:9b of the Civil Code.

23 Other circumstances that may be relevant include the nature of the company's activities and corresponding risks, the allocation of tasks within the board of directors, possible guidelines applicable to management, the information available to directors at the time of scrutinised actions and decisions, and the knowledge and prudence which may generally be expected of a director which is sufficiently prepared and performs his task in a diligent manner. See Supreme Court 10 January 1997, JOR 1997/29; NJ 1997, 360 (Staleman/Van de Ven).

24 Supreme Court 10 December 1976, NJ 1977, 617 (Eneca) and Supreme Court 8 July 2005, JOR 2005/230; NJ 2005, 457 (Van Dooren qq/ABN AMRO Bank II).

25 Article 42 of the Bankruptcy Code.

26 Cf. Supreme Court 22 December 2009, JOR 2011/19; NJ 2010, 273 (ABN Amro Bank/Van Dooren qq III).

27 Article 43 of the Bankruptcy Code.

28 Knowledge of the mere likelihood that insolvency proceedings may be opened is insufficient to meet this requirement. See Supreme Court 16 June 2000, NJ 2000, 578 (Van Dooren qq/ABN AMRO Bank I).

29 Supreme Court 24 March 1995, NJ 1995, 628 (Gispen qq/IFN) and Supreme Court 20 November 1998, JOR 1999/19; NJ 1999, 611 (Verkerk/Tiethoff qq).

30 Article 54(1) of the Bankruptcy Code.

31 Supreme Court 7 October 1988, NJ 1989, 449 (AMRO/THB).

32 Cf. Supreme Court 12 August 2005, JOR 2005/257 (Payroll).

33 Article 3:13 of the Civil Code.

34 Supreme Court 24 March 2017, JOR 2017/209 (V&D).

35 Cf. e.g., Supreme Court 11 July 2014, JOR 2015/175 (Berzona).

36 Supreme Court 24 March 2017, JOR 2017/183 (X/Y).

37 Supreme Court 7 April 2017, JOR 2017/213 (Thieme).

38 See further regarding the treatment of (executory) contracts under Dutch insolvency law Dennis Faber and Niels Vermunt, 'National Report for the Netherlands', in: Dennis Faber et al. (eds.), Treatment of Contracts in Insolvency, Oxford International and Comparative Insolvency Law Series, Volume 2, Oxford University Press 2013, chapter 12.

39 Assumption of an executory contract generally occurs explicitly by the liquidator. It follows from case law published in 2017 that such assumption can also occur implicitly (e.g., as inferred from the actions of the liquidator). In this respect, it must be sufficiently clear that the liquidator has implicitly assumed the contract and did not merely intend to agree to, for example, a mere temporary continuation of a contract. See Supreme Court 2 December 2016, JOR 2017/241 (CTAC/Liquidators Free Record Shop).

40 Supreme Court 16 June 2017, JOR 2017/275 (B.B.O.M. Vastgoed/Savelkoul qq).

41 If such claim concerns a non-monetary claim, conversion must take place into a monetary claim pursuant to Article 133 of the Bankruptcy Code.

42 Supreme Court 2 December 2016, JOR 2017/239 (X/Van Logtestijn qq) and Supreme Court 2 December 2016, JOR 2017/240 (X/Peters qq).

43 Such prior approval is governed by Article 25 of the Works Council Act.

44 Article 176 of the Bankruptcy Code.

45 Such dismissal may occur pursuant to Article 40 of the Bankruptcy Code. Cf. Supreme Court 2 June 2017, JOR 2017/248 (DA).

46 Regulation (EU) 2015/848 of the European Parliament and of the Council of 20 May 2015 on insolvency proceedings.

47 Council Regulation (EC) No. 1346/2000 of 29 May 2000 on insolvency proceedings, OJ 2000, L160/1, Directive 2001/17/EC of the European Parliament and of the Council of 19 March 2001 on the reorganisation and winding up of insurance undertakings, OJ 2001, L110/28 and Directive 2001/24/EC of the European Parliament and of the Council of 4 April 2001 on the reorganisation and winding up of credit institutions, OJ 2001, L125/15.

48 See Supreme Court 2 June 1967, NJ 1968, 16 (Hiret/Chiotakis); Supreme Court 31 May 1996, JOR 1996/75 (Coppoolse/De Vleeschmeesters); Supreme Court 24 October 1997, JOR 1997/146 (Gustafsen qq/Mosk); Supreme Court 19 December 2008, JOR 2009/94 (Yukos I) and Supreme Court 13 September 2013, JOR 2014/50 (Yukos IV).

49 Supreme Court 7 July 2017, JOR 2017/306 (PTIF/Citicorp cs) and Supreme Court 7 July 2017, JOR 2017/305 (Oi Coop/Citadel cs).

50 ECJ 22 June 2017, C-126/16; JOR 2017/217 (FNV/Smallsteps).

51 [2012] EWHC 2944 (Comm); recognition issues do not appear to have been raised in a prior case of a Dutch company proposing a scheme, Re DAP Holding NV [2005] EWHC 2092 (Ch).

52 Re Magyar Telecom [2013] 3800 (Ch).

53 Regulation (EU) No. 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, OJ 2012, L 351/1.

54 Regulation (EC) No. 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations, OJ 2008, L177/6.

55 Proposal for a Directive of the European Parliament and of the Council on preventive restructuring frameworks, second chance and measures to increase the efficiency of restructuring, insolvency and discharge procedures and amending Directive 2012/30/EU, COM/2016/0723.

56 Proposal for a Directive of the European Parliament and of the Council on credit servicers, credit purchasers and the recovery of collateral, COM(2018)135.