Restructuring: introduction of Dutch Scheme one step closer
On 5 July 2019 the Minister of Justice submitted a bill to parliament that will add a new powerful tool to the Dutch restructuring toolbox. The bill on the "Act on the Confirmation of a Private Restructuring Plan" is expected to introduce a serious competitor to the UK's Scheme of Arrangement and the USA's Chapter 11.
The introduction of the bill will move one step closer on 26 September 2019, when members of the parliament are scheduled to submit their questions and remarks on the bill to parliament's Standing Committee on Justice and Security. A few highlights of this "Dutch Scheme" are set out below.
- A fast and efficient procedure to make a restructuring plan binding on creditors (either all creditors or a group) with limited court involvement. The procedure can be finalised in only 4 to 6 weeks.
- The debtor remains in possession during the process.
- The procedure can either be private – with foreign recognition of the plan based on private international law - or public – with foreign recognition based on the Insolvency Regulation.
- Throughout the process the debtor can request the court to apply measures to safeguard the process and to decide on substantive matters to provide deal certainty (such as freezing orders or decisions confirming the division of classes). These requests will be dealt with by specialised judges and with no possibility to appeal these decisions.
- Flexibility on the contents of the plan.
- Possibility to restructure guarantees provided by (foreign or domestic) group companies of the debtor.
- Voting takes place in classes of creditors or shareholders with similar rights or interests as formed by the debtor.
- A cross-class cram-down mechanism is included: a plan which is not approved by the requisite majority in every voting class may become binding upon dissenting voting classes.
- A plan can only be approved if it meets the absolute priority rule and best interest of creditors test.
Although the Dutch Scheme appears to meet the requirements of the Directive on Restructuring and Insolvency (which came into force on 16 July 2019), the Minister of Justice has decided to implement the Directive by amending the existing suspension of payments proceedings. Our earlier blog about the Directive can be found here.
The Stibbe Restructuring Group is excited about the Dutch Scheme, and we look forward to adding this powerful tool to our restructuring toolbox. We believe - and hope - that the Dutch Scheme will enter into force by the summer of 2020.
