The Netherlands Remains A Secured Creditor-Friendly Jurisdiction

(Originally published on September 16, 2011)

Strong position of secured creditors

A striking feature of Dutch insolvency law is the strong position of secured creditors. Pursuant to Section 57 of the Bankruptcy Act, a pledgee and a mortgagee may independently exercise their rights as if there were no bankruptcy at all. This means that they have the same enforcement rights during the pledgor's bankruptcy as they would without the bankruptcy. When the pledgee or mortgagee forecloses in case of bankruptcy, it is entitled to receive the proceeds of the sale without having to share in the costs of the bankruptcy proceedings. Furthermore, an arrangement between the debtor and its creditors to reorganise the former's debts, when approved by a certain majority of ordinary creditors and upon confirmation by the court, cannot be binding on secured creditors. Some international experts have even called the Netherlands the 'promised land' for secured creditors, as their