NETHERLANDS Law and Practice Contributed by: Gianluca Kreuze, Ruben den Hollander, Anne van Geen and Sanne van Esterik, Loyens & Loeff
interest rate (although rates can also be floating). In addition, private placements and loan notes allow for greater flexibility in negotiation and structuring compared to traditional bank financ- ing. The terms of the financing are negotiated directly between the issuer and the investors, based on their respective needs and preferenc- es. Private placements and loan notes attract a diverse investor base, including institutional investors, private equity funds, family offices and accredited investors. These investors may have different risk profiles, return expectations and investment criteria, which can influence the terms of the financing. Private placements and loan notes may be sub- ject to securities laws and regulations in the Netherlands, as well as any applicable regu- lations in the jurisdiction where the offering is conducted. 3.6 Asset-Based Financing Asset-based financing structures are recently more often used in the Dutch market within the context of financing an acquisition. In practice, it has been observed that some lenders are also keen to enter the market for asset-based financ- ing, which is attractive for companies, and all the more so when the (target) companies have valuable assets (such as accounts receivable, inventory, equipment, etc) that can be leveraged to secure financing. Asset-based financing pro- vides a flexible and more affordable source of capital. Asset-based financing structures offer flexibil- ity and scalability, allowing borrowers to access financing based on the value of their assets and adjust the financing as their needs evolve. This makes asset–based financing an attractive option for companies seeking flexible capital solutions for acquisitions and growth initiatives.
Asset-based financing requires thorough due diligence to assess the quality and value of the assets being financed. Lenders will typically con- duct asset appraisals, inventory audits and other assessments to determine the collateral’s value and eligibility for financing. In addition, asset- based financing arrangements often include monitoring and reporting requirements to ensure compliance with the terms of the financing. This may involve regular reporting of financial and operational metrics, asset inspections, and other monitoring mechanisms to protect the lender’s interests. Creditors have an equal right to be paid from the net proceeds of all assets of their debtor in proportion to their claims (paritas creditorum – equality of creditors) and as such, their claims rank equally or pari passu. Dutch law, however, allows for intercreditor structures to be based on both lien subordination and claim subordina- tion. Under Dutch law multiple liens (eg, secu- rity interests) can be created on the same asset whereby the ranking of each lien/security right is determined by the moment of perfection (or alternatively as determined between the parties). Similarly, a contractual arrangement between a creditor and a debtor may stipulate that a claim of a creditor shall take, in respect of all or certain other creditors, a ranking lower than the rank- ing conferred by law. Such contractual arrange- ments can for example be included in an inter- creditor agreement or subordination agreement. Intercreditor arrangements are particularly rel- evant in finance transactions involving multiple layers of debt (senior, bonds and/or mezzanine). 4. Intercreditor Agreements 4.1 Typical Elements Role of Intercreditor Agreements
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