insolvency laws
Last November the draft bill for a new Dutch Insolvency Act was
presented to the minister of justice after four years of
preparation by the Kortmann Commission. All ‘users’ of insolvency
law have until the middle of September 2008 to submit comments,
criticisms and suggestions, which are expected to be numerous.
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The Dutch Leasing Association (NVL) will contribute to the
debate in close consultation with the Dutch Bankers’ Association.
NVL said that it is important that the explanatory notes to the
draft bill contain a recommendation that tax privileges be
realigned and, in particular, that the right of seizure be
abolished.
Briefly, NVL’s main objection to the proposed Insolvency Act is
that it gives receivers powers that are too broad to continue the
company, and even convert assets into cash with the enforced
cooperation of the various parties involved, such as suppliers and
leasing companies.
Leasing companies’ power to terminate their contracts during a
period of insolvency and sell the assets themselves is sharply
limited in the draft bill. This mostly applies to finance leases,
hire purchase and agreements based on a right of pledge. In the
case of operating leases and other lease contracts, the change in
the lessor’s position is less marked. In addition, the
possibilities of the receiver nullifying legal acts performed
between a financier/lessor and the company just prior to the
insolvency are considerably increased.
NVL was pleased that the Kortmann Commission recommended
abolishing the right of seizure. This anomaly in the Dutch legal
system has long given rise to discussions with the tax authorities
and the Ministry of Finance.
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By GlobalDataNVL said that although there is a compromise that is acceptable
for the affected parties in the form of the leasing regulations,
these regulations have not solved the fundamental inequality
inherent in the right of seizure, i.e. unequal treatment in equal
cases.
Given that the intended ‘reorganising capacity’ of the
Insolvency Act is frustrated to a large extent by the consequences
of the right of seizure, a fundamental discussion of this
bottleneck in insolvency law is pressing. It has, however, been
postponed indefinitely. If, and when it takes place, NVL will
actively engage in the discussion.
Margaret Waldren
