Vol 10 (2013) - Issue 2

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An Overview of Dutch Insolvency Law for Late 2009 up to February 2013

Introduction
In this update, an overview of Dutch insolvency law (both case law and legislation) for December 2009 up to and including early February 2013 is given.
The financial crisis led to the Intervention Act and to a proposal to apply collective settlement of mass claims to bankruptcy situations. Moreover, it became clear that the proposed Preliminary Bill for a new Dutch Insolvency Act would not become a bill, and therefore would not lead to actual amendments of this Act. Both these proposals and the Intervention Act will be discussed.
Subsequently, this update will give a survey of Supreme Court case law on the liability of a foreign director in a Dutch bankruptcy, a judgment on the European Insolvency Regulation (EIR), and various rulings in the Yukos proceedings. The conclusion will be that the length and complexity of the Yukos proceedings in the Netherlands illustrate that there is an urgent need for Dutch or EU legislation on the recognition and enforcement of insolvency proceedings started in non- EU states.

New legislation and bills
Intervention Act
On 13 June 2012 legislation allowing the Dutch Central Bank or the Dutch Minister of Finance to intervene in respect of failing banks and insurance companies with seat in the Netherlands (‘Intervention Act’) came into force with retroactive effect from 20 January 2012. The Intervention Act mainly amends the Dutch Financial Supervision Act and the Dutch Bankruptcy Act. It is a forerunner of the proposal from the European Commission for a Directive establishing a framework for the recovery and resolution of credit institutions and investment firms (Recovery and Resolution Directive) that was published on 6 June 2012.
The Intervention Act introduces the authority for the Dutch Central Bank to prepare a transfer plan, providing for the transfer of (i) deposit agreements (in the case of a bank), (ii) other assets and liabilities of a bank or insurance company or (iii) issued shares in the capital of a bank or insurance company (being a problem institution). A bank or insurance company will be considered an institution suffering from problems if the following criteria are met: (i) there are signs of a dangerous development regarding the institution’s equity capital, solvency, liquidity or technical provisions and (ii) there is a reasonable probability that this development will not sufficiently or timely be reversed. The criteria are based on the benchmark presently used for applying emergency regulations to banks under the current Section 3:160 of the Financial Supervision Act, but has a wider scope. Under the Intervention Act, the criterion will also be used for the application of emergency regulations to a bank or insurance company and for subjecting it to bankruptcy.
The Minister of Finance is given the authority to take immediate measures or to expropriate assets of or shares in the capital of a financial institution, if the Minister thinks that the stability of the financial system is in serious and immediate danger because of the situation of the relevant financial institution. Already within eight months after the date of entry into force of the Intervention Act, the Minister of Finance made use of this authority. On Friday 1 February 2013 the Dutch State nationalised the SNS Reaal bank and insurance group by expropriating shares, core tier 1 securities and other subordinated debts issued by the SNS Reaal group. SNS Bank is the fourth largest bank of the Netherlands. This nationalisation, which is combined with additional capital injections from the Dutch State, aims to save the SNS Reaal group from insolvency and thus safeguard the stability of the Dutch financial system.