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Blog 2019

2019-07-doc1 Insolvency - Legislative developments in the Netherlands

Legislative developments in the Netherlands

The Dutch Bankruptcy Act (DBA) first entered into force in 1896. Over the first 100 years amendments were made over the years, the rules governing bankruptcy liquidation fundamentally remained the same. In 1998 special rules to deal with debt restructuring of natural persons have been included.

Early 2000, eight years after the entry into force of the New Civil Code, an attempt was made to revise the rather ineffective procedure of postponement of payment (surseance van betaling). The Commissions plans in 2007 were in general welcomed in by insolvency practitioners and by courts, however were not prioritized in politics.

Some 6-7 years voices became louder that the DBA needed a revision, especially to create a functional procedure re restructuring of near to insolvent, but viable businesses. This ultimately led to the launch of the legislative program ‘Recalibration of Bankruptcy Law’ (Herijking Faillissementsrecht) in 2012.

The legislative program aims to improve Dutch insolvency law by way of three main pillars or focuses: (i) combatting insolvency fraud; (ii) introduction of the ability to restructure companies; and (iii) generally modernisation of Dutch bankruptcy law.

First pillar: insolvency fraud

With regard to insolvency fraud, two bills entered into force on 1 July 2016. The first bill increases the possibility to use criminal law in cases of insolvency fraud. The second bill concerns the disqualification of directors for five years if they manifestly improperly performed their tasks during a period of three years before the insolvency.

A third and final bill in the pillar’s context focusses on the strengthening of the position of IPs, especially regarding fraud alert duties into force on 1 July 2017.

Art. 68 establishes the duties of the IP (‘curator’). His legal task is to manage and settle the estate. In 2017 a new paragraph 2 has been added: ‘The insolvency practitioner: a. examines in the management and settlement of the bankrupt estate whether there are any irregularities that have caused the bankruptcy, at least in part, complicating the liquidation of the bankrupt estate or have increased the deficit in the bankruptcy; b. informs the supervisory judge about this confidentially; and c. shall, if he or the supervisory judge deems it necessary, report or report irregularities to the competent authorities.’

Evidently in debate is how to reconcile the task to manage and administer the estate for the benefit of the collective group of the creditors and the specific task – for the general public interest – to report irregularities.

Second pillar: corporate restructuring

In 2013 the Dutch government introduced the first draft bill regarding the second focus of the aforementioned program, the draft Bill on Continuity of Undertakings I. This draft bill aims to regulate the pre-pack (Dutch variant of the English instrument) as it has developed in practice since 2011. The Bill should not take away its advantages, still granting restructuring practitioners sufficient leeway to apply the pre-pack to very different cases. The draft bill went to Dutch Parliament but was halted after the publication of the opinion of the attorney-general to the ECJ in the Estro case. A few weeks later followed the CJEU 22 June 2017, C-126/16, ECLI:EU:C:2017:489. The Court of Justice of the EU held (in short) that Directive 2001/23/EC of 12 March 2001 on the approximation of the laws of the Member States relating to the safeguarding of employees’ rights in the event of transfers of undertakings, businesses or parts of undertakings or businesses, and in particular Article 5(1) thereof, must be interpreted as meaning ‘… that the protection of workers guaranteed by Articles 3 and 4 of that directive applies in a situation, such as that at issue in the main proceedings, in which the transfer of an undertaking takes place following a declaration of insolvency and in the context of a ‘pre-pack’ where that ‘pre-pack’ is prepared before the declaration of insolvency and put into effect immediately after that declaration, and, in particular, a court-appointed prospective insolvency administrator investigates the possibilities for continuation of the activities of that undertaking by a third party and prepares for acts which must be carried out shortly after the insolvency to enable such continuation and, moreover, it is irrelevant in that regard that the ‘pre-pack’ is also aimed at maximising the proceeds of the transfer for all the creditors of the undertaking in question.’

Only in June 2019 a consultation of the Ministry has been published asking for view how to deal with employee protection in pre-insolvency situations.

In 5 September 2017, a draft bill named the ‘Act on the Confirmation of a Private Restructuring Plan in order to Prevent Bankruptcy’ was presented. This draft bill introduces a statutory framework for a pre-insolvency restructuring similar to the UK scheme of arrangements. Although the exact timing for implementation of these and other proposals remains uncertain, the draft bills show a clear trend in the Netherlands towards a more rescue-friendly environment and a more competitive formal insolvency law regime within Europe.

Finally, the third pillar: modernization

On 1 January 2019, the Modernisation of Bankruptcy Procedure Act (MBPA) (in Dutch: Wet Modernisering Faillissementsprocedure) entered into force. This act, which will apply to bankruptcies opened on or after 1 January 2019, is aimed at updating Dutch bankruptcy law to bring it more in line with modern practice.

The MBPA implements measures aimed at achieving four distinctive goals: (i) increased digitalisation and transparency increased digitalisation and transparency, (ii) increasing the speed of the bankruptcy procedure, (iii) providing for a more made-to-measure procedure; and (iv) increased specialisation and expertise. The latter goal has led to the possibility of a supervisory judge to appoint an expert – at the costs of the estate – to support the judge in cases that require particular expertise and the possibility for the appointment of more than one supervisory judge in a bankruptcy liquidation case.

Next

Other pending possible future legislation are considered for the following topics: (i) consumers and (pre-paid) gift cards, (ii) secured rights in insolvency (hardly influenced by insolvency; ideas for paying IPs because of the many asset-less estates, (iii) security rights for loans given by a shareholder. The latter is normally subordinated, but its position is secured by other means, (iv) insolvency and privatised institutions (e.g. schools; hospitals)

Finally, to assist the Ministry a ‘Committee on Insolvency Law’ has been established for four years. Its chairman being prof. Michael Veder.

International cooperation between courts

The Netherlands takes into account best practices for cooperation in cross-border insolvency cases, as set out in principles and guidelines on communication and cooperation adopted by European and international associations active in the area of insolvency law, and in particular the relevant guidelines prepared by UNCITRAL. For the European Union best practices have resulted in EU Cross-border Insolvency Court-to-Court Cooperation Principles and Guidelines (also ‘JudgeCo’ Principles and Guidelines. In October 2016 the Judicial Insolvency Network held its inaugural conference in Singapore, which concluded with the issuance of a set of guidelines titled ‘Guidelines for Communication and Cooperation between Courts in Cross-Border Insolvency Matters’ also known as the JIN Guidelines. The JIN Guidelines address key aspects of and the modalities for communication and cooperation amongst courts, insolvency representatives and other parties involved in cross-border insolvency proceedings, including the conduct of joint hearings. On 1 May 2019 the District Court Midden-Nederland adopted its version of these JIN Guidelines.

Available via https://www.rechtspraak.nl/English/Pages/International-Insolvency.aspx#cb01f363-fd8e-4073-8fe3-1113887a8b5a5a3194d6-d64d-45e7-929b-bc40836492a26

This is a 5  minute impression provided in June in Cologne during tha annual meeting of International Experience on Exchange of Insolvency Law (IEEI) https://www.insolvenzrecht.jura.uni-koeln.de/16370.html

IEEI-members – From Bob Wessels – July 2019

2019-06-doc5 A Standing International Forum of Commercial Courts (SIFoCC)

Since a few years a Standing International Forum of Commercial Courts (SIFoCC) is active. Membership of SIFoCC involves access to a unique international network of judges to share knowledge and expertise, to discuss common problems and identify and prepare for major future change and development.
Membership is open to jurisdictions with an identifiable commercial court or with courts handling commercial disputes. The judiciary of the country becomes the member, rather than any individual judge. Opportunities via membership include the establishment of a sustainable peer-to-peer relationships at judicial level, sharing best practice and support in its wider application, and assistance in building capacity. Through these activities SIFoCC wants to serve better all in the judicial industry: users, markets and other courts, to join forces to make a stronger contribution to the rule of law than commercial courts can do separately, and, ultimately, contribute to stability and prosperity worldwide.
The present membership of SIFoCC include commercial courts in New York, Delaware, Australia, Singapore, Ireland, and London (England & Wales), Sctland and Northern Ireland, Canada and New Zealand. SIFoCC is building its global network by having included courts from the Gulf States (Dubai, Qatar, Abu Dhabi and Bahrain), Hong Kong. Courts from Europe (Hamburg and the English-language Netherlands Coomerical Court) were included, as were offshore jurisdictions (e.g. Bermuda, Eastern Caribbean, The Cayman Islands).
SIFoCC agreed to progress the following areas of work in the first instance (i) a multilateral memorandum on current best means of enforcement of commercial judgments between members, (ii) a working party on how best practice might be identified and litigation made more efficient, (iii) a structure for judges of the commercial court of a number of developing countries to be able to spend short periods of time together as observers in the commercial court of another SIFoCC country, and (iv) practical arrangements for liaison with arbitral bodies to identify and resolve areas of difficulty.

Where only 'courts' can become a member it is hoped that individual judges can easily share experiences and be involved in the development of a programme to can directly tackle their needs. As said many times, problems emerging in a global economy need global solutions; courts are taking steps in a right direction and judges as indivicuals should be involved along the way. More information, see https://www.sifocc.org.

 

2019-06-doc4 The Night Watch in the Dutch courts?

Yesterday, Thursday 27 June 2019, 'Operation Night Watch' kicked off in the Amsterdam Rijksmuseum. The painting will undergo a major cleaning-up and restoration. It's last restauration was over 40 years ago, following an attack on the painting with a knife in 1975. During the Rijksmuseum’s continued monitoring program, it has been discovered that parts the Night Watch have changed over the years. The kick-off yesterday launches, open for the public, a thorough examination process to gain a better understanding of the condition of the painting and develop a the best possible treatment plan.

Although an interested bystander can visualise the the active group of persons under the command of Frans Banninck Coq depicted in the Night Watch, it is only known since 2009 that in all there are 34 people. Whilst the painting dates of 1642, only around 1653 an ornamental frame (or cartouche) was added to the painting with the names of the persons who had paid for their portait. All eighteen musketeers, including captain Frans Banning Cocq (lord of Purmerlant and Ilpendam) and lieutenant Willem van Ruijtenburch (lord of Vlaerdingen), have been listed on the cartouche, not, for example from left to right, rather according to the length of their engagement to the Civic guard (‘schutterij’) of District II of Amsterdam at that time. The painting measures 379,5 x 453,5 cm, but originally it was larger. The current painting is a shortened version of the original Night Watch. Where is that huge painting painted? Would there have been any space in what now is the Rembrandthouse. Rembrandt acquired his new house in 1639 and inhabitated the ‘… house opposite of the new Anthonis Sluys’, some five minutes walk away from the Kloveniersdoelen. This was the building for which the Night Watch was made. He probably painted the enormous canvas in a small galary or a shed in the courtyard of his house, in ‘... the Galerijtgen’. If this is correct, I am just curious whether, technically, it still can be determined.

Payments to Rembrandt

Rembrandt did not make the work for free. Over fifteen years after the delivery of the paining, in 1659, two musketeers have stated that sixteen of them each paid Rembrandt about one hundred guilders, one more than the other, depending on whether he was more or less prominently visible. They declared so at the request of Louis Crayers, a lawyer in his capacity as guardian or Rembrandt’s son Titus van Rhijn. The depositions given indicate that Titus’ guardian, apparently considered the amount due and owing to Rembrandt on the day of Saskia’s death, 14 June 1642. In his function as guardian of Titus it was important to establish the value of Rembrandt and Saskia’s estate at the time of her death. This reference time was indicative as Titus had a substantial stake in his mothers’ inheritance.

In 2019: a fake Night Watch in the Dutch courts

In March 2019, the Arnhem-Leeuwarden Court of Appeal decided in a dispute about a copy of the Night Watch. Appelant is the widow of an artist, who had nade a copy of the Night Watch by Rembrandt, based on the work that Rembrandt originally painted. As the sides and top had been partially removed over time, the copy is larger than the work exhibited in the Rijksmuseum. The copy has been exhibited since 1992 at Expo Madrid in Dalfsen. Jan van der Horst worked on it for five years. Amounts have been paid to the maker since 1992, a total of 96,000 guilders up to 2006. At the time of the artist’s death, Expo Madrid exhibited twenty-three of his paintings. These paintings were handed over to appellant after his death, with the exception of the copy of the Night Watch and a few other works after. Expo Madrid believes that it is the owner of these works, but the widow is demanding the release of these paintings and a prohibition on revelation and reproduction of the copy of the Night Watch. It forms the basis for her claims that she is the owner and joint creator of the copy.

The Court of Appeal rejects the claims. It considers that the intention was to make a true-to-life copy of the Night Watch. For the missing pieces, a photograph was used of the copy of the original composition of the Night Watch. The Court notes that the widow has not brought any images or pictures on which the work was based and therefore the court cannot compare the copy and the original: ‘The court cannot therefore determine whether the maker has given the Night Watch its own interpretation of the dog (tail between the legs or upwards), the red spots and the dark balls at the shooters, the old orange or the plug of paper, the name in the chasuble and the legs of some figures.’ The Court continues to consider that no evidence has been presented to substantiat that a faithful as possible copy as possible of the original Night Watch in its original dimensions was made. The artist signed his copy of the original Night Watch ‘… with his own name and replaced the eye of one of the figures with his own eye. The mere replacement of the name in this context does not demonstrate (free) creativity. Replacing an eye is apparently meant to adjust the color of an eye. However, the court of appeal cannot determine the visual impact of this change on the entire work, but it can be assumed that it is of insufficient importance to be able to speak of an own personal stamp of the artist’.

In the opinion of the Court of Appeal, an agreement concluded between the parties also gives no reason for restitution of the copy of the Night Watch and the other paintings. Leaving the question about ownership aside here, Dalfsen seems still the place to go to see the copy.

 

2019-06-doc3 Nieuwe druk Wessels Insolventierecht III (5e druk, 2019)

Nearly 500 pages for the most recent edition of my book Wessels Insolventierecht III 2019! Insolventierecht (Insolvency law) is a 10-volume Dutch series, which I started 20 years ago, in 1999. Presently, all the books cover over 3500 pages, analysing and commenting all typical insolvency queries Dutch courts and literature are dealing with. Last year I made a begin with the fifth edition for all the volumes, with Volume I appearing in October 2018 and Volume II, totally reworked, published early 2019. Volume III covers avoidance transactions, set-off and security rights in insolvency. I’ll continue in Dutch now.
Wessels Insolventierecht III, Gevolgen van faillietverklaring (2), 5e druk, 2019 is in juni 2019 verschenen! In mei 2018 kondigde ik op mijn blog de start van de bewerking van de gehele serie aan, zie http://www.bobwessels.nl/blog/2018-05-doc3-start-bewerking-serie-wessels-insolventierecht/. Voor trouwe gebruikers meldde ik dat er lichte wijzigingen in de opzet van de serie zijn doorgevoerd: een hechtere verankering in het burgerlijk procesrecht en het vermogensrecht, een ruimer uitzicht op toekomstige wetsontwikkelingen, aandacht voor opvattingen van nationale spelers in het veld (Recofa, Insolad), voor Europese ontwikkelingen (ELI recommendations en statements van CERIL) en de idee van een ‘deliberate public participatory drafting process’, in mijn blog van mei verder uitgewerkt. Dat heeft voor Deel III enkele zeer bruikbare commentaren opgeleverd. Voor de begeleiding van de 5e druk is een hoofdredactie ingesteld met mr dr B. Engberts, raadsheer Hof Arnhem-Leeuwarden en lid van de commissie insolventierecht, prof. mr T.T. van Zanten, partner Wijn & Stael; hoogleraar RU Groningen en mijzelf. Taak van de hoofdredactie is om de continuiteit en de kwaliteit van de serie, met inbegrip van het aantrekken van bewerkers, te waarborgen. Voor nagenoeg alle Delen zijn inmiddels bewerkers aangetrokken. Deel III is tot stand gekomen in goed overleg met en met medewerking van mr. dr. ing. A.J. Verdaas, van Ronald Verdaas Advocatuur (Utrecht) en Onderzoeker, Onderzoekcentrum Onderneming & Recht, Radbout Universiteit.
Nu het boek zelf.
Wessels Insolventierecht III 2019 bevat een gedetailleerd commentaar op de art. 42-60 Faillissementswet. De belangrijkste onderwerpen in dit deel zijn de vernietiging van vóór faillissement verrichte rechtshandelingen uit hoofde van art. 42 e.v. (actio pauliana) en de rechtsgevolgen van een dergelijke vernietiging, de problematiek van verrekening ter gelegenheid van faillissement (art. 53-56), de regels ten aanzien van de positie van separatisten, in het bijzonder pand- en hypotheekhouders (art. 57-59a), en de schuldeiser die een retentierecht heeft (art. 60). Enkele vraagstukken die met deze onderwerpen samenhangen krijgen ook aandacht. Te denken valt aan de toepassing van de pauliana bij concernfinanciering en sterfhuisconstructies en – naast de actio pauliana – aan andere acties die de curator tot zijn beschikking kan hebben en die tot vermeerdering van de boedel kunnen leiden, zoals de toepassing van bijzondere nietigheidsacties voorvloeiend uit Boek 2 BW, inclusief bijzondere regels inzake schuldeisersbescherming, en de regeling van de bestuurdersaansprakelijkheid ex art. 2:138/248 BW. Bij de toepassing van de zekerheidsrechten gedurende faillissement is ingegaan op de Separatistenregeling, de regeling van de omzetbelasting bij het uitoefenen van verhaal en het fiscaal voorrecht en bodemrecht, met inbegrip van de met ingang van 1 januari 2013 versterkte positie van de fiscus. De meest recente literatuur is weer verwerkt en veel nieuwe rechtspraak, verschenen na de afronding van de vorige druk, aan de tekst zijn toegevoegd. Dat maakt dit boek tot een uiterst actuele uitgave die iedere in faillissement gespecialiseerde jurist zou moeten lezen. De verwerkte rechtspraak en literatuur zijn bijgewerkt tot medio maart 2019.
Voor produktinformatie: https://www.wolterskluwer.nl/shop/boek/gevolgen-van-faillietverklaring-2-/NPGEVFAI2-BI19001/

2019-06-doc2 Rembrandt studied in Leiden in 1620. But also in 1622?

'I doubt you will find any new document on Rembrandt, as all written documents, all notarial deeds, all registrations, all shreds of evidence on any aspct of his life is known and docemented', an American art historian and Rembrandt specialist told me a year and a half ago. In science you never can predict: this week (on 4 June 2019) all Rembrandtonians were amazed as a previously unknown document about Rembrandt’s life as a student at the University of Leiden became public.  A Leiden University registration in 1620 was known, but now another registration has been found in the University’s archives relating to 1622. Exciting news, therefore, also for a study I am in the process of writing: Rembrandt. His legal and financial life (working title), see http://www.bobwessels.nl/blog/2017-11-05-rembrandt/
So, what’s the state of affairs?
Rembrandt, born on 15 July 1606, is enrolled at the University of Leiden on 20 May 1620 as an art student (‘litterarum’ or in present Dutch ‘letteren’).(1) The proof of this registration can be found in the University of Leiden Library, the so-called The Catalog Studiosorium, ie the original registration book of the university of that time. It reports in Latin on 20 May 1620: ‘Rembrandus Hermanni Leydensis Studiosus litteraturum annorum 14 apud parentes’, which means that the 14-year-old art student Rembrandt, son of Harmen, lives with his parents in Leiden.(2) The author of the relevant page on the University’s website submits that in all likelihood the registration takes only one year: ‘And the question is whether the then fourteen-year-old Rembrandt – a registration age that occurs frequently at that time – actually attends lectures. Did he sometimes register with additional benefits such as duty-free beer and exemption from duty at the militia?'.
Van de Wetering notes that registration at the University may have been done for tax reasons.(3) It is reported that, to attract students in Leiden in these days, students had the right each year to buy tax-free 194 liters of wine and ten wooden casks of beer, around 1500 liters.(4) As to the suggested exemption for militia duties concerned, Schwartz elaborates that an exemption from civil patrol (‘schutterij’) duty may have been the most important reason. Rembrandt’s father himself, in 1611, had been placed on an inactive list from the Leiden Civic Guard, because of an accident in the mill (the misfiring – ‘door ‘t affspringen’ – of a musket). Although being recovered from the injury, he was unable to use his hands for handling a gun. Also Rembrandt’s older brother Gerrit had suffered an accident and was disabled on both hands.(5) Taking into account that the Twelve Years’ Truce was nearing its end and the Leiden Civic Guard had to act against remonstrants mercenaries (‘waardgelders’) as well as other accidents in the family, this may have been a very good reason – so Schwartz – for Rembrandt ‘… to use his knowledge of the Latin language to pocket an exemption’.
Be it as it is, in 1620 no University for Rembrandt, but an apprenticeship with a professional painter. Literature follows the suggestion made by Rembrandt’s first biographer, Orlers, in 1641. He observes that Rembrandt’s parents were compelled to take him out of school prematurely and, at his own request, he was to be apprenticed to a painter from whom he would learn the basic foundations and principles of this, ie painting (‘… de eerste fundamenten ende beginselen van dien.’). Rembrandt by then is around 14 years of age. His biographer reaches a logical conclusion: ‘As a result of this decision they took him to a good painter (‘welschilderende’), Mr. Jacob Isaacxsz. Van Swanenburgh, to be instructed and taught by him’.(7)

And now, a new document has been discovered about Rembrandt’s student years in Leiden.(8) On the website, it is explained that students in Leiden had to rematriculate every year. Rematriculations were recorded in student registers (‘recensielijsten’). The student register of 1622 (no offering specific dates) is the only student register to have been preserved in the archive of the University Library for the years 1608-1649. The website describes that on the document found, Rembrandt’s name again occurs as: ‘Rembrandus’, with underneath: ‘* 14 15 Hermanni bij sijn ouders’ (Harmensz., living with his parents), with 14 crossed-out.(9)

The website notes that a new source has become available for reconstructing Rembrandt’s early years in Leiden, from 1606 till (around) 1632, when he went to Amsterdam. The website continues: ‘His rematriculation in 1622 is evidence that he was at least enrolled for two years, and possibly even longer. How serious a student Rembrandt was, is something which the historical matriculation and rematriculation documents held by the University Library cannot tell us. It makes it clear, however, that his time at Leiden University was more significant to the painter than was first assumed’. The website further suggests that the document, which is being kept at the University Library, ‘… proves that Rembrandt studied at Leiden University for longer than has always been assumed’. Hmmm. Enrolling for 1620 and 1622 does not say anything about 1621 (assuming that a meaningful ‘academic’ period equaled a year), nor whether Rembrandt may have been – what the Dutch sometimes call – an evening-student (‘avondstudent’). And what about the beer, the wine and the military duties?
What it clear is that the Leiden University Library has found a Rembrandtonian treasure, whilst marking the 444 years of Leiden University.

Notes:

(1) Bikker (2019), 17, provides as date of registration 16 May 1620.

(2) http://nieuws.leidenuniv.nl/nieuws-2014/rembrandts-sporen-aan-de-universiteit-leiden.html. See also RD 1620/1. This Catalog also is named ‘volumen inscriptionum’ and covers 1618-1631, the register of all matriculations by Leiden students for that period. Rembrandt was registered by rector Reinerus Bontius (Reinier de Bondt), professor in medical science. Counting back, being 14 years of age on 20 May 1620, with a birthday being 15 July, his year of birth must have been 1605, see Schwartz (2006), 15, adding for his book that many other ‘facts’ have their soft side.
(3) Van de Wetering (2017).
(4) Büttner (2014), 18.
(5) See RD 1621/1. Schwartz (1984) suggests that the cause was an accident with muskets in the unregulated Leiden militia. It also could have been an accident in the mill.
(6) See RD 1611/1.
(7) Van Swanenburg’s art studio and workplace was located at what now is the Langebrug 89 in Leiden, presently housing the Young Rembrandt Studio, which includes a seven minutes video mapping, to explain Rembrandt’s life and work in Leiden.
(8) See https://www.universiteitleiden.nl/en/news/2019/06/document-discovered-about-rembrandts-student-years-in-leiden. Rembrandt's age therefore remains a soft fact.
(9) The archive document on the rematriculation of ‘Rembrandus’ in the Volumen recensionum from 1622 (ASF 30) is displayed on the website.
Requests for a list of relevant literature can be made via info@bobwessels.nl