As of 1 January 2015 the harmonized financial institution resolution rules from the Bank Recovery and Resolution Directive will be implemented in national Dutch legislation. Among other things these rules confer upon the Dutch Central Bank the so-called "bail-in power". Pursuant to the bail-in instrument, the Dutch Central Bank will have the power to cancel and/or reduce the unsecured liabilities of a financial institution under resolution or convert such liabilities into equity.
In a ruling dated 16 October 2015, the Dutch Supreme Court has confirmed the enforceability of security surplus arrangements in the event a security provider is declared bankrupt. In addition, the Dutch Supreme Court has confirmed that, unlike statutory recourse claims (regresrechten), contractual recourse claims can be construed in such a manner that they come into existence (as conditional claims) before payment by the guarantor of the debt owed by the debtor, after which they become unconditional.
Recently, the Dutch Supreme Court has given an interesting ruling relating to the consequences of commingling (vermenging) of multiple objects for a security right created over one of those objects.
Dutch Supreme Court 14 August 2015 (ECLI:NL:HR:2015:2192)
In a judgment dated 13 October 2015 in proceedings between a bank and its client the Arnhem-Leeuwarden Court of Appeal ruled that the bank was allowed to terminate the credit agreement with the client on the grounds that the client had caused a reduction in the value of shares pledged to the bank.
Arnhem-Leeuwarden Court of Appeal 13 October 2015 (ECLI:NL:GHARL:2015:8354)
Blog on The Hague Court of Appeal, 17 February 2015, ECLI:NL:GHDHA:2015:281 (FGH Bank N.V. v. Aannemingsbedrijf Fraanje B.V.)
Twenty-one major global banks have already signed a relaunched stay protocol developed by the International Swap Dealers Association and other leading industry organizations in coordination with the Financial Stability Board. The purpose of the protocol is to help ensure the orderly resolution of a troubled bank by having firms voluntarily agree to abide by foreign resolution regimes in connection with cross-border transactions. A prior protocol was signed by 18 major banks in November 2014. The relaunched protocol increases the types of covered financial contracts.
Court of Appeal Arnhem-Leeuwarden: a shareholder loan does not in itself have a subordinated character. If subordination has not been specifically agreed, other creditors may file a claim on the basis of tort law or on the principles of reasonableness and fairness in order to achieve a similar result, in other words as if the shareholder loan had been subordinated.
A federal judge in New York – the Hon. Richard J. Sullivan – mostly granted JP Morgan Chase Bank’s motion to dismiss claims brought on behalf of unsecured creditors of Lehman Brothers Holdings Inc. related to JPM’s requirement that Lehman Brothers Inc., LBH’s broker-dealer subsidiary, pledge and post extra collateral in September 2008, shortly before LBI filed for bankruptcy protection on September 15, 2008.
Enactment
On 11 September the Belgian Act that introduces certain measures to restrict the activities of vulture funds (the “Act”) was published in the Belgian Official Journal.
The Trustee for the Liquidation of MF Global Inc. – the defunct futures commission merchant that filed for bankruptcy in October 2011 – received approval from the US Bankruptcy Court overseeing its dissolution to make a final, cumulative 95 percent distribution on all allowed general unsecured creditor claims.