The Dutch government sent a long-awaited bill to Parliament, introducing a brand-new pre-insolvency procedure for a compulsory composition in the Netherlands. In this article Joost Volkers, who has a particular focus on financial, restructuring and insolvency litigation, discusses the main features of the bill.
The proposal includes elements of a UK scheme of arrangement and the US Chapter 11, but also has some distinct features. The Dutch scheme provides an instrument to Dutch and foreign debtors to efficiently restructure their debts (including debts owing to secured creditors and shareholders) in a quick turnaround at relatively low costs (likely to be lower than the costs of its US and UK counterparts). Due to its broad range of jurisdiction and easy access, the Dutch scheme provides an interesting option for cross-border restructurings. The procedure can be a swift, final and effective one, with effective measures to guarantee deal certainty and protection of the restructuring scheme put in place, while creditors’ rights are protected in a balanced way.
This article was published in The Butterworths Journal of Banking and Financial Law.
Update 21 April
“The corona-crisis has accelerated the legislative process: the government designated the bill as urgent, requesting Parliament to handle it with priority. It is expected to enter into force on 1 July 2020. The Dutch scheme may have a very material impact on your current financings and investments. Please see this memorandum, which discusses its key points and aims to answer the most important questions you may have.”