NETHERLANDS Law and Practice Contributed by: Folko de Vries, Ilse van Gasteren, Robert Smits and Stern Flik, Clifford Chance
6. Enforcement 6.1 Enforcement of Collateral by Non- Bank Secured Lenders Enforcement of loans and guarantees can take place by sending a demand for payment, taking into account any applicable contractual agree - ments. Enforcement of security takes place based on mandatory law provisions and can only be started upon the occurrence of a payment default (subject to other contractual provisions). Such enforcement takes place either by public auction (involving a Dutch notary), or by a private sale. A private sale in enforcement is possible if either the Dutch court grants approval or the relevant pledgor who granted the security does so. The Dutch court approval route is the most common in a Dutch restructuring, which requires a petition to the court together with valuation evidence. Sometimes, the pledgor approval route is taken, but this can only be agreed after the security has become enforceable and usually requires the same valuation evidence as required in a court process. A secured creditor can credit bid in an enforcement. Security in the Netherlands is most often held by a Security Agent on behalf of the lenders. From an enforcement perspective it does not matter whether the lenders are banks or non-bank pri - vate credit providers. Most often in a restruc - turing, a share pledge enforcement is used to sell the business or do a loan-to-own, and an increase in the market in private credit financings is seen using this share pledge enforcement to implement a restructuring (if it is not possible to do the sale on a consensual basis). 6.2 Foreign Law and Jurisdiction A choice of a foreign law may be upheld in the Netherlands on the basis Regulation (EC) No 593/2008 of the European Parliament and of
bles and such first ranking security is typically permitted under the facilities agreement. Hedging It is typically possible in Dutch transactions for a borrower to enter into secured hedging, which would either rank super senior (up to a limit) or senior (subject only to being permitted hedging and the relevant hedging agreement complying with the terms of the applicable intercreditor agreement). 5.10 Bank Licensing Licensing or Regulatory Limitations With respect to licensing and/or regulatory limi - tations or holding of collateral, please refer to 2. Regulatory Environment and 4. Tax Considera- tions . There are no specific limitations. Shared Security Security is typically taken to secure a parallel debt which is created contractually and this gives a security agent a claim equal to the claim of the collective lenders, allowing the security agent to take security for this claim, enforce the security and distribute the proceeds of enforce - ment in accordance with an intercreditor agree - ment. Dutch law does not know the construct of a trust. If a lender transfers its claim on a bor - rower, this does not impact the parallel debt and therefore does not impact any Dutch security created to secure that parallel debt. Dutch law also does not know the construct of novation, so there cannot be any novation of any debt claim which triggers any concerns in respect of secu - rity for that debt claim.
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