While the dust settles, and lawyers on both sides of The Channel scrutinise the UK-EU trade deal and consider the many legal issues not covered by the accord, The Netherlands is taking steps to assert itself as the most attractive restructuring market in Europe.
Historically, the Courts of England and Wales have enjoyed substantial competitive advantage in restructurings due to, amongst other things, the flexibility of the English Scheme of Arrangement and the relative ease by which foreign companies can avail themselves of the English Court's jurisdiction to restructure their affairs. The Corporate Insolvency and Governance Act 2020 introduced the new Restructuring Plan, with its much vaunted cross-class cram down, in an attempt to solidify the position of England and Wales as the pre-eminent restructuring market in Europe and to look to compete with the US Chapter 11 system which has long enjoyed the ability to cram down dissenting creditors.
Enter, The Netherlands - with the new Bankruptcy Act the Dutch have introduced their own restructuring scheme and are aiming to wrest control of the European restructuring market from the English and cement themselves as the best place to deal with debt this side of the Atlantic.
Last week, the Court of The Hague published its first judgment in which the new Dutch scheme was deployed. Interestingly, the scheme was used by a Dutch SME with a relatively modest amount of debt. Schemes of Arrangement have traditionally been the preserve of bigger companies with more complex affairs (owing in part to the associated costs) so it is noteworthy that an SME was able to economically avail itself of the Dutch scheme.
The English restructuring industry is here to stay (in particular for larger corporates and complex groups) but given the ease with which an SME appears to have been able to access the Dutch scheme it remains to be seen whether The Netherlands has found some competitive advantage in the SME market. While the English Restructuring Plan has primarily been used by larger corporates so far - Virgin Atlantic and Pizza Express being the prime examples - if SMEs are able to utilise the Restructuring Plan then this may act as a riposte to The Netherlands' designs on the podium. One suspects that this cross-Channel tug-o-war is not over quite yet.
In what is believed to be the first decision relating to the new Dutch scheme, the Court of The Hague has ordered a two-month moratorium on creditor actions against an anonymised retail company. In a 15 January ruling, a three-judge bench ordered a “cooling-off period” under Article 376 of the Dutch Bankruptcy Act, which was amended through the Act on Confirmation of Private Plans or Wet Homologatie Onderhands Akkord (WHOA) last year. The new law came into force on 1 January. Local lawyers have welcomed the court’s “generous” precedent and say the fact the judgment concerns an SME company does not dilute its importance.