NETHERLANDS Law and Practice Contributed by: Marcel Willems and Rowan Hamer, Fieldfisher
eral requests by third parties, the observer will have the opportunity to present their views to the court – for example, regarding the request to appoint a restruc - turing expert, or the request to limit the debtor’s power to use or dispose of assets. 4.6 The Position of Shareholders and Creditors in Restructuring, Rehabilitation and Reorganisation The guiding principle is that creditors and sharehold - ers who have not assented to the restructuring plan, should not be in a less favourable position than if the assets were liquidated (monetised) in a bankruptcy procedure. Shareholders may in principle retain equi - ty, but this would not be very likely. Their position will usually be limited by (among other things) the best- interest-of-creditors test and the absolute priority rule. Creditors can usually exercise their ordinary rights, but this right may be suspended during a cooling-off period. In principle, the WHOA procedure cannot be thwarted by contractual intercreditor covenants, as the debtor is usually not a party to such a covenant. If the debtor is a party to such a covenant, it can seek an amend - ment to the covenant under the WHOA. Secured Creditors In principle, the WHOA does not provide the facility to deprive security holders of their securities. As men - tioned, the starting point is that (secured) creditors should not be in a less favourable position than in a bankruptcy procedure, so a secured creditor is usually entitled to the (liquidation) value of the security object. Unsecured Creditors Unsecured (trade) creditors must, in principle, comply with their contractual obligations. Events and acts of the debtor related to the preparation or performance of a restructuring plan under the WHOA do not con - stitute grounds for the amendment of obligations or liabilities towards the debtor, for the suspension of the performance of an obligation towards the debtor or for the dissolution of an agreement entered into with the debtor. Similarly, any default by the debtor prior to the imposi - tion of a cooling-off period does not provide grounds
for such amendment, suspension or dissolution, pro - vided that the debtor has given security for the per - formance of new obligations. Cooling-Off In the event a cooling-off period is imposed at the request of the debtor or restructuring expert, this may affect the position of (some of) the creditors. In brief, the cooling-off period prevents the exercise of creditors’ (recovery) rights against the debtor and the assets in their possession, and thereby facilitates the continuation of the business. As a result, inter alia, secured creditors cannot exercise their rights, and creditors with a retention of title cannot recover goods, if they are not authorised to do so by the court during the cooling-off period. In addition, during the cooling-off period (pre-restructuring), attachments can be lifted and suspension of payments or bank - ruptcy petitions are suspended. Set-Off/Transfer In principle, set-off can be carried out as usual during a WHOA procedure. If the debtor has established an undisclosed pledge on a registered claim or on the usufruct of such a claim, the pledgee is not entitled to set off against a claim from the debtor during a cool - ing-off period, if the debtor has provided substitute security. In principle, the creditor of a claim against the debtor is entitled to transfer such claim to a third party. 5. Statutory Insolvency and Liquidation Procedures 5.1 The Different Types of Liquidation Procedure Dutch law has three statutory insolvency procedures (see 1.2 Types of Insolvency for an overview): (i) the statutory debt restructuring scheme for natural per - sons, which restructures a natural person’s debts so that they can continue with a “clean slate”; (ii) suspen - sion of payments, which aims to restructure a debtor’s debts; and (iii) bankruptcy, which aims to liquidate the debtor’s assets and distribute the proceeds to credi - tors.
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