European Perspective in Brief
Europe has struggled mightily during the last several years to triage a long series of critical blows to the economies of the 28 countries that comprise the European Union, as well as the collective viability of eurozone economies. Here we provide a snapshot of some recent developments regarding insolvency, restructuring, and related issues in the EU.
The Netherlands—In August 2014, the Dutch legislature circulated a proposed bill that would introduce to Dutch restructuring law U.K.-style "schemes of arrangement," a radical departure from existing procedures. The proposed bill follows the introduction of a prepackaged insolvency mechanism in 2013. Acknowledging that the nation lacks a flexible corporate rescue procedure, the Dutch legislature has proposed legislation that would make schemes of arrangement patterned on U.K. law possible for distressed Dutch companies, but under rules that could make such schemes even faster than their English counterparts.
Under existing Dutch law, it is nearly impossible to alter the capital structure of a company without the unanimous approval of all debt and equity holders. The draft bill introduces rules that would bind dissenting creditors to a restructuring proposal under certain circumstances. In addition, under the proposed legislation, security rights granted to lenders that provide emergency financing during the period between the introduction of a proposed scheme and the date the court decides whether to approve the scheme will no longer be subject to challenge (or annulment) by any trustee who is thereafter appointed to oversee the company’s winding-up. The public consultation process for the draft bill commenced in August, and the legislation may be amended before it is implemented. Implementation is expected to take place on January 1, 2016.
Other recent European developments can be tracked in Jones Day's EuroResource, available here.