Vol 15 (2018) - Issue 1

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Dutch Government Publishes Revised Draft Bill for New Dutch Scheme

Introduction
On 5 September 2017, the Dutch Ministry of Security and Justice published a revised draft bill (the Act on the confirmation of a private restructuring plan in order to prevent insolvency) aiming to introduce scheme-like pre-insolvency proceedings in the Netherlands. The draft bill is a revised version of an earlier draft and addresses several concerns that were raised during an earlier consultation stage. The current draft bill is open for consultation until 1 December 2017. If the legislative process runs smoothly, the draft bill could become law within a year.

Current situation
The Netherlands currently lacks an effective restructuring procedure. The main reason for this is that the available mechanism binds neither shareholders nor secured or preferential creditors. It can only bind ordinary unsecured creditors, making it ineffective for many cases. Another significant drawback of the current restructuring mechanism is that it is only available in formal, more comprehensive proceedings with the associated negative stigma. As a result of the shortcomings of the current system, in the past numerous Dutch companies have availed themselves of the English scheme of arrangement and American Chapter 11 proceedings to restructure their debts. It is anticipated that with the new Dutch scheme as proposed in the draft bill, Dutch companies will no longer need to revert to foreign procedures for the purpose of implementing a restructuring.