European leveraged finance transactions (i.e., acquisition financing by fund sponsors of European targets) are often structured through Luxembourg or the Netherlands because those are creditor-friendly jurisdictions for the creation, perfection and enforcement of (certain) security interests. Structuring through Luxembourg or the Netherlands provides a high degree of transaction flexibility compared to other jurisdictions.
A mortgage bank has the power to foreclose and sell the collateral if the debtor is in default. However, this power does not apply in full. There is a risk of abuse of power in this respect. The circumstances, motives and actions of the parties play a major role in this. In this situation, the interests of the mortgage bank and the debtor are diametrically opposed. The mortgage bank has an interest in claiming the outstanding claim and the debtor has an interest in maintaining his immovable property.