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Welcome / Blog Archive / English / 2023-02-doc1 Russia sanctions impacting insolvencies

2023-02-doc1 Russia sanctions impacting insolvencies

I wil discuss how Russia sanctions have permeated a Dutch insolvency and I will make a case for a pan-European approach towards the impact of public law measures on insolvency law.

ATB case. The case at hand concerns Amsterdam Trade Bank NV (ATB), which operates out of the Netherlands and has 23,000 private account holders. The bank has Russian connections in that Russia’s Alfa Bank JSC is its 78% shareholder, and its Russian ultimate beneficial owners (UBOs) have been listed on the EU’s sanction list. The resulting asset freeze prohibits European persons and companies from providing finance to ATB. Though ATB itself was not listed on the EU’s sanctions list in February 2022, it was listed on the US sanctions list per 6 April. The effect of the sanctions on the bank was that it could not trade anymore and, consequently, its directors applied for bankruptcy liquidation (“faillissement”), which was adjudicated by the Amsterdam court on 22 April 2022.

In the cloud. Typically, the IPs appointed in the bankruptcy liquidation opened their search for information. They believed the bank’s cloud computing environment contained a large part of ATB’s administration, so the IPs demanded access, invoking, among other things, article 105b of the Dutch Bankruptcy Act, which concerns an obligation to be informed by third parties. One of the questions that the court had to solve was whether a court-appointed IP in the Netherlands (a “curator”) could have access to the sanctioned bank’s cloud. Must Microsoft give the IPs access?

Legal background. As part of a larger package of anti-fraud measures, article 105b came into effect in the Netherlands as from 1 July 2017. It provides that third parties who, in the exercise of their profession or business “in any way whatsoever” have in their possession all or part of the administration of the bankrupt, are obliged to keep the administration and the books, records and documents belonging to the bankrupt, and make other data carriers available to the insolvency practitioner in full and undamaged, upon request. This includes, if necessary, the means to make the content readable within a reasonable time – see article 105b(1) – which also indicates that third parties include “accountancy organisations and an external auditor”. Based on the parliamentary history of the provision, the wording “in any way whatsoever” means that the administration can be made available in many ways – via complete takeover of the administration at an external location, electronic link to business bank accounts, cloud computing or otherwise. Microsoft refused to cooperate, raising the argument that it could not do so after EU and US sanctions rules were introduced with the start of the war between Russia and Ukraine.

Preliminary relief judgment. However, the preliminary relief judge in Amsterdam was not convinced. He held it unlikely that granting access to the IPs was in conflict with the spirit of the sanctions rules. The judge ruled first that there was an urgent interest on the part of the IPs in this liquidation proceeding to have information available. Second, the judge concluded that a suggested route through various authorities to achieve an exception in favor of the IP to the sanction rules would take months and was not aligned with the interests of the many thousands of creditors that the bankruptcy liquidation is settled expeditiously. Finding that it was not plausible Microsoft would be acting in violation of European and American sanctions (or the spirit thereof) by granting access to ATB’s Microsoft environment in the context of a bankruptcy liquidation, the judge ordered Microsoft (i.e. Microsoft Ireland Operations, established in Dublin), to grant the IPs access to the cloud environment and prohibited it from destroying the cloud and/or the data contained in it, or destroying its accessibility, in whole or in part. The judge also applied a penalty of €10 million per day or per violation for non-compliance with his judicial order and non-compliance with the prohibition, up to a maximum of €100 million. In essence, the court acted in the interest of the creditors, mainly account holders, for a speedy settlement of the insolvency, weighing this interest against the (probably limited) risk that Microsoft would run under EU and US sanctions.

Critique. I limit myself to two criticisms of the court’s chosen approach. First, in Dutch insolvency case law, in the event of a violation of public law regulations, a court-appointed IP is quickly regarded as an offender. Where violations of the sanctions legislation take place or continue after the moment the insolvency proceeding has commenced, there is a danger that the IP will be directly confronted with specific public law or criminal law sanctions. The choice to protect the interests of creditors is a noble one, but all these account holders may fall directly under the Dutch Depositors Guarantee Scheme (to be compensated by the Netherlands Central Bank, DNB), which would take the sting out of this judicial approach.

It cannot be ruled out that the judge was irritated by Microsoft’s litigious attitude (its attorney represented two Dutch Microsoft BVs and the Irish company), since he stressed that the IPs were dealing with “… a major and powerful American party that any risk that it possibly runs worldwide due to the sanctions, no matter how small, at all costs avoiding doing so only by being led by its own interests. Leading up to this short lawsuit (the attorney of) Microsoft has played tricks by not disclosing which Microsoft company had to be sued… The trustees serve on an appointment by the court they fulfil, in accordance with the rules of the Bankruptcy Act, a statutory task.”

Second, it cannot be ruled out that the sanctions legislation itself (from the Netherlands, from the EU and from the US) is unclear, complex in its scope of application and insufficiently geared to insolvency situations in which players, such as an IP or a creditors committee, are others than the original players.

If it is really desirable to give sanctions a higher value than the interest of creditors, this should be recognised in law. In order not to have this regulated by each country separately, an EU measure should be considered.

EU approach. I am thinking in terms of something like the parallel rule codified in national insolvency laws based on Council Regulation (EU) 2015/1588 of 13 July 2015 on the application of Articles 107 and 108 of the Treaty on the Functioning of the European Union, to certain categories of horizontal state aid. The latter is the Dutch implementation act for that rule, in article 362(3) of the Dutch Bankruptcy Act, which stipulates: “… the court shall refuse to homologate a compromise (‘akkoord’) if it does not provide for the repayment of state aid granted pursuant to a Commission decision as referred to in Article 1 of the Act. State aid recovery must be recovered”. That rule, by the way, also applies to the rather fresh Dutch WHOA restructuring agreement.

It’s just an idea. Either way, we should agree first whether the application of anti-Russia sanctions justifies a disruption of the system of insolvency law. Are the sharp edges of these sanctions targeted towards insolvency office holders themselves, directed at transactions regarding the estate of the insolvent debtor, or even against creditors? We should seriously consider more in general whether the impact of public law measures and sanctions (e.g. regarding the environment, public security, public health or privacy) and their influence on insolvency law deserves a European approach.


District Court Amsterdam 3 May 2022, ECLI:NL:RBAMS:2022:4452.

This is a slightly adapted version of a regular column Bob Wessels is writing for Global Restructuring Review (GRR) on the topic of cross-border restructuring and insolvency in a European context. GRR is a subscription-only publication and the column appeared in GRR on 16 January 2023. See