Netherlands Survey on: Claw-back of security in insolvency Questionnaire 1 INTRODUCTORY QUESTIONS

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1 Netherlands Survey on: Claw-back of security in insolvency Questionnaire 1 INTRODUCTORY QUESTIONS 1.1 Please briefly describe the main type of security in your jurisdiction (per type of asset; per perfection technique; per type of secured obligation) General Under Dutch law, there are two types of in rem security rights (i.e. limited rights intended to provide the person holding the security recourse against certain assets of the person giving the security, with preference over other creditors of that person), being: (i) (ii) a (right of) mortgage; and a right of pledge. A mortgage is vested in assets which are registered with a public register (i.e. real estate, registered aircraft and registered ships). On all other assets a security right is vested by way of a right of pledge. The security provider is hereinafter referred to as a mortgagor or pledgor. The secured party is referred to as a mortgagee or pledgee It is generally assumed that under Dutch law a security right cannot be validly created in favour of a person who is not a creditor of the claim that the security right purports to secure. The concept of a trust is not available under Dutch law. Accordingly, parallel debt is a commonly used technique for sharing security between multiple lenders, but the validity of the technique has not been tested before the Dutch courts. A parallel debt provision creates an obligation by the debtors to pay the security trustee - the debtors undertake to pay the security trustee an amount equal to any amount owed by the debtors to the lender(s) under the loan documentation Security per asset class Different formalities apply per asset class and with respect to the most common asset classes, such formalities are described in more detail below. Transfer of title for the purpose of granting security is prohibited under Dutch law. Under Dutch law a business cannot be used as collateral in other words: each asset of the company should be pledged/mortgaged separately. There is no Dutch law equivalent of a floating charge. 1 Real Estate A mortgage over real estate located in the Netherlands is created pursuant to a notarial deed of mortgage which must be executed before a civil law notary in the Netherlands. In order to perfect 2 the mortgage, the notarial deed must be registered with the Dutch Land Register. 1 Please note however that in a recent Supreme Court case, the Dutch Supreme Court approved current practice and confirmed that a lender obtains an undisclosed right of pledge on all receivables of its borrower by registering an unspecified collective deed of pledge (verzamelpandakte) on a regular basis (e.g. weekly or daily), provided that (i) a master deed of pledge (stampandakte) between the lender and borrower and (ii) an irrevocable power of attorney from the borrower to the lender had been registered previously (Supreme Court case of 3 February 2012, LJN BT6947). 2 Please note that we use the word "perfect "or a "perfection requirement" to describe an action which is to be fulfilled in order to create a valid security right over the relevant asset. 1

2 Movable assets A right of pledge over movable assets can either be created as a possessory right of pledge or as a non-possessory right of pledge. A possessory right of pledge over movables is created by bringing the asset into the possession of the pledgee or a third party designated by the pledgee and the pledgor (although common legal practise to execute a private deed - no deed is required). A possessory right of pledge over movables is created pursuant to a deed of pledge and by having the secured party take possession over the pledged movables. A non-possessory right of pledge over movables is created pursuant to a deed of pledge. In the case of a non-possessory right of pledge of movables, the deed must either be a private deed registered with the Dutch tax authorities or be in the form of a notarial deed. It is common legal practice to execute a private deed. If a non-possessory right of pledge is created, the secured party is entitled to request the security provider to surrender the pledged movables to the secured party (or a third party) upon the occurrence of a default in the secured obligations (effectively changing the non-possessory right of pledge into a possessory right of pledge). Receivables (includes claims, trade and other receivables, intercompany loans and bank accounts) A right of pledge over receivables is created pursuant to a deed of pledge and can either be disclosed or non-disclosed to the debtor of the receivable (in the event of a right of pledge over bank accounts, the claim is against the account bank). A disclosed right of pledge of receivables is perfected by notification of the relevant debtor. 3 Acknowledgement of notification by the debtor is not a perfection requirement, it is, however, valuable as proof of notification. The holder of a disclosed pledge on receivables has the right to collect the pledged receivable by operation of law. It is common legal practice for the secured party to authorise the security provider to collect the pledged receivables until the occurrence of a specified default upon which the authorisation can be (or is automatically) revoked. In the case of a non-disclosed right of pledge of receivables, the deed must either be a private deed registered with the Dutch tax authorities or be in the form of a notarial deed. 4 It is common legal practice to execute a private deed. In order to ensure that future receivables not arising from a relationship existing at the time of the deed are covered under a non-disclosed right of pledge, supplemental deeds of pledge must be periodically executed and registered with the Dutch tax authorities. 3 This can, amongst others, be effected by a sending a notification letter or including notification wording on the invoice that is sent to the relevant debtor. 4 It is possible, but not recommended and very uncommon, to create a non-disclosed right of pledge over bank accounts. Additionally, the account bank generally retains certain security interests in the bank account pursuant to its general banking conditions (e.g. right of pledge over the balance in the bank account and a legal right to set-off). It is common legal practice to request the account bank to waive such rights. 2

3 IP Rights A right of pledge over IP rights must be created pursuant to a deed of pledge. A security right cannot be granted over know-how (e.g. unpatented inventions, formulae, procedures and methods). The law is unclear whether it is possible to grant a right of pledge over trade names and domain names. The deed must either be registered with the Dutch tax authorities or be in the form of a notarial deed. It is common legal practice to execute a private deed. To ensure that the right of pledge is enforceable against third parties acting in good faith, it is recommended to register the right of pledge in the relevant IP registers. Registration with the IP registers is, however, not a perfection requirement. Additionally, it is advisable to periodically execute supplemental deeds of pledge of IP rights (to cover any changed or new intellectual property rights) and have such supplemental deeds of pledge registered with the Dutch tax authorities and with the relevant IP registers. Registered shares (no bearer shares or listed shares) A right of pledge over registered shares in a public limited liability company (NV) or a private limited liability company (BV) is created pursuant to a notarial deed executed before a civil law notary in the Netherlands. A pledge over registered shares may be restricted or excluded by the articles of association of a public or private limited liability company. A right of pledge over registered shares is validly created upon execution of the notarial deed. However, a right of pledge over registered shares should be acknowledged by the company and registered in the shareholder's register in order for the secured party to be able to enforce its right of pledge versus the company and versus third parties who in good faith have acquired the pledged shares or have levied an attachment on or created a right of pledge over such shares. Traded stock and debt securities Under Dutch law, a distinction should be made between (i) securities that are capable of being part of a collection depository and a giro depository within the meaning of the Dutch Securities Giro Act (referred to as Wge Securities) and (ii) non-wge Securities. In principle, securities are Wge Securities unless an exception applies. Traded stock and debt securities would typically qualify as Wge Securities. Consequently, for the purpose of this survey we will not discuss the non-wge Securities. Generally, a right of pledge over Wge Securities is created pursuant to a deed of pledge. The right of pledge needs to be notified to the relevant intermediary, amongst others, requesting the intermediary to make the required book-entry in its administration. There are no specific provisions as to how the registration should take place. 3

4 1.2 Please briefly describe whether your jurisdiction provides for a procedure of protection against creditors (usually initiated by a debtor at a time when the debtor is yet not insolvent) and if so what are its basic assumptions? Please refer to Section regarding suspension of payments. 1.3 Please briefly describe the types of insolvency proceedings contemplated by your legislation (liquidatory proceedings; reorganisation or recovery proceedings). There are two types of insolvency proceedings in the Netherlands: (i) (ii) suspension of payments, intended to provide a debtor with temporary relief in a situation of temporary illiquidity, as a result of which a debtor is effectively granted a period of relief in order to attempt, by way of reorganisation, continuation of the enterprise and, ultimately, satisfaction of the creditors; and bankruptcy, focussed on liquidation of a debtor's assets and distribution of proceeds amongst creditors. Both proceedings are governed by the rules of the Dutch Bankruptcy Code (Faillissementswet) and are described below Suspension of payments Dutch law provides for the concept of a suspension of payments, a court-ordered suspension of payments which is intended to provide a debtor with temporary relief in a situation of temporary illiquidity (suspension of payments must be considered as early as possible, if it is considered too late in time, it will likely result in a debtor's bankruptcy) In practice the suspension of payments generally ends in a bankruptcy, for instance if the administrator finds that the estate is in a position where it is no longer desirable to maintain the suspension of payments or if it is unlikely that the debtor will be able to pay his creditors in due course, the administrator is obliged to request the termination of the suspension of payments. After the court has terminated the suspension of payments, the court will usually declare the debtor bankrupt Please note that only the debtor itself can file for a suspension of payments and it is therefore not possible for creditors or any other third parties to request a suspension of payments for such debtor Typically, a debtor will apply for a suspension of payments if it believes that it will be unable to meet its financial obligations temporarily, but will be able to overcome this temporary illiquidity. A suspension of payments will be provisionally granted by the court at the request of the debtor without the necessity of a further investigation. In its decision, the court will set a date on which the debtor and any known creditors will be heard before the court decides whether the suspension of payments should be given a definitive status The most important effect of the suspension of payments is that the debtor loses the power to dispose of his assets. Throughout the course of a suspension of payments, the debtor may no longer administer or dispose of his assets without the authorisation or assistance of an administrator (bewindvoerder) appointed by the court upon granting the provisional suspension of payments. An essential difference with the trustee in a bankruptcy is that the court-appointed administrator will manage the assets together with the debtor. The debtor therefore can exercise some influence in the suspension of the payment process. 4

5 The court is empowered to grant a definitive suspension of payments unless there are certain grounds to refuse such a definite suspension of payments (e.g. objections of specified amount of creditors, or a suspension of payments is most likely to be to the detriment of creditors). A suspension of payments may be granted by the court for a maximum period of 18 months (subject to an extension of successive 18 months periods at the request of the debtor) If the definitive suspension of payments is not granted, or if the court refuses to grant an extension. the court is entitled to, and in practice often does, declare the debtor bankrupt The rights of unsecured creditors to pursue their claims are affected by the suspension of payments due to the fact that any recourse on the debtor's assets is suspended by the suspension of payments. Attachments on the debtor's assets are lifted as soon as a definitive suspension of payments has been granted Secured and preferred creditors are in general not affected by a suspension of payments. However, please note that the estate may be subject to a court-ordered general stay (a cooling down period as described hereunder) of all creditors' actions, including foreclosure by secured creditors A suspension of payments may be terminated by the court under certain circumstances (debtor regains ability to pay debts, debtor and creditors enter into a composition (as described below) or bankruptcy) Bankruptcy A debtor may be declared bankrupt by a court order at the request of one or more of its creditors (one of which has a claim that is due and payable), the public prosecutor (if the public interest so requires), or by itself, provided that the debtor has ceased payment of its obligations and that there is more than one creditor If a petition for bankruptcy is granted, the court will appoint at least one bankruptcy trustee (curator), which usually is/are (a) member(s) of the local bar, together with a supervisory judge 5, who supervises the actions of the trustee. Immediately upon his appointment, the trustee must take all necessary steps to preserve the estate. All creditors' actions and claims are automatically stayed. After consultation with the supervisory judge, the trustee decides whether or not he will temporarily continue any part of the bankrupt's business, which is only permissible if this would not be to the detriment of the collective creditors The bankruptcy trustee is charged with the administration and liquidation of the bankrupt's estate in order to (partially) satisfy its creditors. Creditors are invited to file their claims with the trustee, which claims will be paid in order of preference. The trustee operates for the benefit of all creditors collectively and should therefore take into account their collective interests. The trustee, in performing its duties should, in addition to that, also take into account issues related to the social impact of a bankruptcy (i.e. employment and continuity of business) The bankrupt estate includes all property of the debtor at the time of the declaration as well as all property acquired during the bankruptcy proceedings. As of the start of bankruptcy, all attachments of the debtor's property for the benefit of specific creditors terminate and are replaced by the 5 Amongst other things, the supervisory judge is empowered to examine witnesses and order an inquiry by experts such as accountants. Furthermore, the trustee requires the prior consent of the supervisory judge for certain actions, inter alia if the trustee wants to terminate a lease contract, wants to give notice to employees, wants to initiate legal proceedings against a third party or wants to enter into settlement agreements or for a period of time wants to continue the debtor s business activities. 5

6 general bankruptcy attachment for the benefit of all creditors. Furthermore and other than in a situation of a suspension of payments, the debtor completely loses the power to dispose of its property with retroactive effect from 00:00 hours on the day the bankruptcy is declared. Only the trustee may dispose of the property of the estate from then on. The bankruptcy estate is only liable for obligations incurred by the debtor after the adjudication of the bankruptcy if such obligations are in the benefit of the bankruptcy estate Creditors which hold a security interest may exclude the collateral from the debtor's estate and foreclose their security (the trustee may set a reasonable time frame for such foreclosure) as if there were no bankruptcy. However, please note that the estate may be subject to a court ordered general stay (a cooling down period as described hereunder) of all creditors' actions, including foreclosure by secured creditors If obligations under an agreement between the bankrupt company and a third party have not, or have only partially been performed by the bankrupt company or a third party, the third party may request the trustee to express his intention whether or not he will insist upon further performance. If further performance is denied by the trustee, the contract terminates and the other party may claim damages, usually as an unsecured creditor. If the trustee responds affirmatively, which he is only likely to do if the execution of the contract will benefit the estate, he must provide the security for the proper performance of the agreement; improper performance will then give rise to estate claims If the trustee concludes that the bankruptcy should be closed, meaning that the bankruptcy procedure should be terminated due to there being little or no assets, he will advise the supervisory judge accordingly. The supervisory judge may then advise the court to close the bankruptcy. Almost all bankruptcies are closed in this way and for this reason Cooling down period During bankruptcy or suspension of payments the court may at its own discretion or at the request of the debtor or a bankruptcy trustee, for a period of two months with a possible extension of two more months, order a general stay (afkoelingsperiode) of all creditors' actions, including foreclosure by secured creditors who are entitled to prompt foreclosure in specific circumstances. The reason for allowing such cooling down period is to enable the relevant trustee to get an overall picture of the debtor's estate. It is important to note that secured creditors do not lose their enforcement rights as a result of the general stay, but are only temporarily prevented from taking such enforcement action. The court can limit the effect of the cooling down period to certain parties only, can attach certain conditions to its order or can impose certain conditions upon a creditor that despite of the cooling down period nevertheless wants to take action against any assets of the estate Composition During bankruptcy or suspension of payments a debtor and his (ordinary) creditors may enter into a composition. This is an agreement which seeks to provide for full or at least partial satisfaction of the (ordinary) creditors' claims and it is for that reason that creditors will be inclined to discuss a composition with their debtor. If such composition is accepted, the debtor's estate will not be liquidated. The debtor can make a proposal to the creditors for a composition only once; if it is not accepted, there will not be an opportunity to make any further proposals. 6

7 1.4 Please briefly describe the types of claw-back actions available in your jurisdiction Fraudulent conveyance Pursuant to Dutch law, the validity of a legal act may be affected by fraudulent conveyance provisions. The fraudulent conveyance provisions are applicable in and outside bankruptcy but for now we will only discuss the fraudulent conveyance provisions which are applicable in bankruptcy. Note that the fraudulent conveyance rules in and outside bankruptcy are to a large extent similar whereby a third party creditor may file a claim to affect the validity of the transaction on the basis of fraudulent conveyance Dutch insolvency law contains fraudulent conveyance provisions which empower a bankruptcy trustee to void voluntarily executed transactions, provided he can establish that both parties to the transaction knew or should have known that the transaction would prejudice the available means of recourse of recovery of one or more other creditors Knowledge that the transaction has prejudiced the debtor's creditors is presumed by law, save proof to the contrary, for all transactions performed within one year prior to an adjudication of bankruptcy, provided it can also be established that the transaction falls within one of the following categories: (i) (ii) (iii) (iv) (v) transactions in which the debtor received substantially less than the estimated value; payment or granting of security for debts which are not yet due; transactions entered into by the debtor with certain relatives; transactions entered into by the debtor-corporation with its managing director, a member of the board (supervisory director), certain relatives of those directors or certain shareholders; transactions by the debtor corporation with a group company Nullity may only be invoked by the trustee within three years from the moment he discovers the fraudulent conveyance. The nullification has retroactive effect and the legal act that prejudiced the creditors of the debtor is considered never to have been performed. A successful nullification by the bankruptcy trustee results in an obligation to restore the original situation of the person against whom the fraudulent conveyance has effect In the event that assets are removed from the bankrupt estate such assets have to be re-delivered or if that is not possible a liability arises against a person against whom the fraudulent conveyance has effect to compensate the bankrupt estate for the amount creditors of the bankrupt estate were prejudiced (in cases where an asset cannot be re-delivered because it has been enforced, the compensation will in principle be the objective economical value of that asset at the time of enforcement). In the above instances the presumption of knowledge of prejudice to the other creditors may be overcome by the creditor involved in the transaction demonstrating his lack of such knowledge If the debtor's counterpart in the transaction gave either no or grossly insufficient consideration, the trustee will only have to establish that the debtor knew or should have known that he would cause prejudice to his creditors. Such transactions performed within one year prior to the bankruptcy adjudication are statutorily presumed to have been made with knowledge that creditors' rights 7

8 would be prejudiced. However, evidence to the contrary is still possible by the creditor involved in the transaction demonstrating his lack of such knowledge Any transaction entered into by the debtor pursuant to an existing obligation (as opposed to voluntary transactions referred to above) can only be voided if the trustee (a) proves that the debtor and the counterparty to the transaction conspired to favour this counterparty to the detriment of the other creditors and/or (b) proves that the counterparty entering into the transaction was or could have been aware of the bankruptcy petition having been filed Ultra Vires Under the Dutch Civil Code, a legal transaction entered into by a company can be nullified, in the event that a transaction is not in furtherance of the corporate objects of the company (ultra vires) and the other party to the transaction knew or should have known this without further investigation. Only the company itself is entitled to invoke the nullification of the transaction. Essentially, however, the risk is not so much that the company will rely on the ultra vires concept and attempt to nullify a security right or the underlying transaction, but this risk will only arise when control over the company passes into the hands of a trustee The issuance of security (including, but not limited to, mortgages, pledges and guarantees) by a company to a lender raises the question whether this issuance might be voidable under the ultra vires concept. Especially in respect of the financing of a group of companies (or one company out of a group of companies), the ultra vires doctrine is highly dependent on the specific facts and circumstances Downstream security (a parent issuing security for the obligations of a subsidiary) does not in most cases cause a problem since the issuance of security for the obligations of a subsidiary will usually be considered to be within the corporate object of the company. Assuming that the entering into the transaction in respect whereof security is to be issued is in the interest of such subsidiary, which it normally will be, the granting of the security is in the best interest of the company because the (continued) well-being of its subsidiary ensures the well-being of the (parent) company As for upstream security 6 (a subsidiary issuing security for the obligations of a parent) the Dutch courts have in a limited number of cases accepted the nullification on the basis of the ultra vires doctrine In establishing whether the issuance of security is in furtherance of the company s corporate objects, all relevant circumstances should be taken into consideration. These include: (i) (ii) (iii) (iv) the object clause in the articles of association of the company (whether this specifically allow the granting of security for the obligations of third parties and/or of its subsidiaries); whether the company derives any benefit from the (financing) transaction (this may be direct (i.e. it receives part or all of the proceeds) or indirect (i.e. the group as a whole benefits and, hence the company which is granting security)); whether there is a balance between the liabilities assumed and the benefits derived; and whether the company's continuity is jeopardised if the security were to be enforced. None of these (or any other) circumstances is decisive. Consequently, it is not primarily a legal test whether there is corporate benefit, but rather a commercial test. 6 In order not to overcomplicate matters at this stage we will not distinguish between upstream security and cross-stream security (a subsidiary issuing security for another subsidiary), although this may prove relevant. 8

9 (v) Does your legislation differentiate between transactions (including the granting of security) with consideration and without consideration? Yes, please refer to the general rules as described in section and, more specifically, please refer to (vi) Does your legislation differentiate, in cases of security in general, between security taken concurrently with the granting of the secured debt and security taken in a different period of time? Yes, please refer to the general rules as described in section and, more specifically and assuming the debtor is under the obligation to grant such additional security, please refer to (vii) Are there special provisions for intra-group transactions and transactions between related parties? Yes, please refer to the general rules as described in section and, more specifically, please refer to SPECIFIC QUESTIONS 2.1 Is claw-back subject to specific rules with respect to any type of security available in your jurisdiction? If so, please describe any such rules. No specific rules apply. Please refer to general rules as described in section Are there any total or partial exemptions from claw-back, depending on (for example): (a) The type of security; No specific rules apply. Please refer to general rules as described in section 1.4. (b) The type of transaction secured (including its legal form); No specific rules apply. Please refer to general rules as described in section 1.4. (c) The type of (wider) transaction within which the financing is granted and the relevant security is taken (e.g. financings granted in the context of certain reorganisation proceedings); No specific rules apply. Please refer to general rules as described in section 1.4. (d) The nature of the grantor of security; No specific rules apply. Please refer to general rules as described in section 1.4. (e) The nature of the beneficiary of security; 9

10 No specific rules apply. Please refer to general rules as described in section How does your legal system address the claw-back of quasi-security transactions, e.g. a sale of a property in return for a price payable in instalments may hide a financing transaction secured by the property; which legal regime applies in this case: that of the claw-back of security, or that of the termination of pending (sale and purchase) agreements? In terms of security rights, Dutch law only provides for a distinction between secured creditors and unsecured creditors. Consequently, Dutch law does not recognize the concept of quasi-security and any other agreement than a deed creating a valid security right must be dealt with as a termination of contract. Please refer to section Dutch law does provide for some other concepts of law which may be invoked such as retention of title and/or a seller's right of reclamation but given the scope of the survey we will not discuss these matters any further. 2.4 What are the legal consequences of the claw-back for the parties involved? For example: (a) Is an agreement, deed or transaction subject to claw-back invalid or just ineffective between the debtor an the party to the agreement; A successful claim based on fraudulent conveyance renders the transaction void and the legal act that prejudiced the creditors of the debtor is considered never to have been performed. (b) To what extent can claw-back affect the successful exercise or enforcement of security rights as may have occurred prior to the adjudication in bankruptcy (e.g. claims cashed by the secured lender under a security assignment of receivables prior to the adjudication in bankruptcy)? As a general rule secured creditors may foreclose on the secured assets of their debtor as if there were no bankruptcy. Payments made by the relevant debtor of the pledged receivables to the security provider prior to notification of the right of pledge over the receivables but after bankruptcy or suspension of payments of the security provider will form part of the bankruptcy estate of the security provider. The secured party has the right to receive such amounts by preference on the proceeds of the receivables, but will have to share in the bankruptcy costs. Is there a difference between the case of self-enforcing security (e.g. the cashing of claims referred to above) and a court-driven enforcement (e.g. the enforcement of a mortgage)? A few exceptions apply to the general rule that secured creditors may foreclose on the secured assets of their debtor as if there were no bankruptcy. Firstly, it is important to note that the supervisory judge may at the request of an interested party or ex officio order a cooling down period (please refer to section 1.3.3) during which period secured creditors cannot foreclose on the secured assets to the extent these are in the possession of the debtor or the trustee without the prior authorization of the supervisory judge. 10

11 Secondly, we note that the trustee is entitled to set a reasonable period within which the secured creditor must exercise its rights. If the secured creditor has not foreclosed on the secured assets within this period, the trustee may claim the assets and sell them (with the consent of the supervisory judge). The secured creditor will remain entitled to the sales proceeds, but will in such scenario have to share in the bankruptcy costs which can be substantial. The supervisory judge may extend this period several times at the request of the secured creditors. 2.5 What are the rights of the parties involved once the claw-back had been enforced (as a result of operation of law or court ruling)? For the rights of the security trustee and the debtor, please refer to Section The third party to a transaction that has been rendered void due to fraudulent conveyance will become an ordinary unsecured creditor to the debtor's bankrupt estate. Unsecured creditors are paritas creditorum creditors, which means that all creditors have an equal right to payment and that the proceeds of the bankrupt's estate will be distributed in proportion to the size of their claims. As a general rule, a managing director is liable for improper performance of duties only in cases of serious negligence. Improper performance of duties can for example consist of acting in violation of the articles of association or acting with manifest unreasonableness. In principle, the liability of the managing directors is a collective liability. On the basis of the Third Abuse Act each managing director is jointly and severally liable for the shortfall of the bankrupt's estate if the management board has evidently improperly performed its duties and the improper management was an important cause of bankruptcy. A managing director will be liable in tort if he entered into a contract on behalf of the company, if at the time of the conclusion of the contract he knew or had reason to believe that the company would not or would not within a reasonable period of time be able to fulfil its obligations and would not have assets for the creditor to take recourse against. 2.6 What is the claw-back regime for security granted by third parties/in respect of third party indebtedness? Please analyse from the perspective of the insolvency of the debtor and of the insolvency of the third party grantor of security. Does the possibility for the third party grantor to act in recourse against the insolvent debtor make a difference? Providing third party security or guarantees is permitted under Dutch law and the general concepts of fraudulent conveyance and ultra vires apply to such transactions. Please refer to sections and What is the claw-back regime for security which has been agreed (i.e. the relevant security agreement has been executed) but not yet perfected at the time of the adjudication in bankruptcy of the debtor/grantor? Under Dutch law, if a security right has not been perfected at the time of the adjudication in bankruptcy of the security provider, such security does not come into existence. Authors Wytse Huidekoper Loyens & Loeff N.V. (New York office) Tel: Fax:

12 Web: www. loyensloeff.com Jack Berk Loyens & Loeff N.V. (New York office) Tel: Fax: Web: www. loyensloeff.com 12