NETHERLANDS Law and Practice Contributed by: Gianluca Kreuze, Ruben den Hollander, Anne van Geen and Sanne van Esterik, Loyens & Loeff
• the jurisdiction of the non-Dutch court is based on internally acceptable ground; and • the judgment by the non-Dutch court is not incompatible with an earlier judgment ren- dered between the same parties concerning the same subject and cause by a Dutch court, or non-Dutch court provided that such judg- ment qualifies for recognition in the Nether- lands. Enforcement in Insolvency In general, secured creditors have a very strong position under Dutch insolvency law. Under Dutch law, a secured party may enforce its secu- rity rights as if there were no suspension of pay- ments or bankruptcy and without any co-oper- ation of a bankruptcy trustee being required. In addition, Dutch security rights create a preferred right on the distribution of the proceeds and rank above any other right (subject to limited excep- tions, eg, certain claims of the Dutch tax authori- ties). A court may order a general stay of all creditors’ actions for a maximum period of four months in a suspension of payments or bankruptcy. This will give the bankruptcy trustee time to inves- tigate the debts and assets of the bankrupt company, during which rights of creditors are suspended. The bankruptcy trustee may also require the secured party to enforce its security within a reasonable period. Failure to comply may lead to the bankruptcy trustee selling the assets. In that case, the secured party will keep a statutory priority right on the proceeds, but will only receive payment when the bankruptcy estate is distributed and will have to share in the bankruptcy costs. WHOA The Dutch scheme of arrangement ( Wet homolo- gatie, onderhands akkoord ter voorkoming
van faillissement, WHOA) is based on the UK Scheme of arrangement and the US Chapter 11. Companies have the possibility to offer a com- position to their (secured) creditors without hav- ing to file for bankruptcy and retaining control of their assets (eg, debtor in possession). Also, creditors, shareholders and a works council (if established) can initiate the launch of a composi- tion by requesting the court to appoint a restruc- turing expert. Such expert can offer a composi- tion to the creditors and shareholders on behalf of the company. The purpose of a composition can be to: (i) restructure the company’s debts; or (ii) to liq- uidate the company and distribute amongst the creditors. A composition under the WHOA can only be offered if the debtor is in a situation where it can be reasonably expected that it will be unable to continue to pay its debts. This will be the case if there is no realistic prospect of the debtor avoiding insolvency without restruc- turing its debts. During the negotiating process, the debtor stays in possession and is offered protection against enforcement actions. Only creditors whose rights are affected by the composition are entitled to vote and must be placed in a class. The court can be asked for ratification if at least once class of creditors voted in favour of the composition. If ratified by the court, a composition can be imposed on dis- senting (classes of) creditors and shareholders. Future obligations can be amended or terminat- ed and guarantees issued by group entities can also be included in the composition. The court’s decision cannot be appealed. There are several mandatory grounds for refus- al which require the court to reject the relevant motion (to ratify the plan as offered), such as procedural requirements not being met or the
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