NautaDutilh
Introduction of senior non-preferred debt in the Netherlands
3 April 2018
FCS Financial Law
KEY TAKEAWAYS
A new EU Directive adopted in December 2017 will enable EU banks, large investments firms and relevant group companies (e.g. holding companies) to issue so-called 'senior non-preferred' debt instruments.
Such senior non-preferred debt will rank senior to regulatory capital instruments (CET1, AT1 and Tier 2) and other subordinated debt, but junior to the institution's senior debt (such as deposits and ordinary creditors).
On September 1, 2017, the Board of Governors of the Federal Reserve System (the Federal Reserve) adopted a rule (the Rule)1 that will require global systemically important U.S. bank holding companies (U.S. GSIBs)2 and most of their subsidiaries to amend a range of derivatives, short-term funding transactions, securities lending transactions and other qualifying financial contracts (QFCs). The required amendments will limit counterparty termination rights related to certain U.S. GSIB resolution and bankruptcy proceedings.
On September 21, 2017, the United States Bankruptcy Court for the Southern District of Texas (the Court) held, over the objection of Ultra Petroleum Corp.
On June 26, 2017, the recast EU regulation on insolvency proceedings1 (the Recast Insolvency Regulation) came into force.
Existing Legislation
Introduction
Luxembourg recently adopted a number of legislative reforms aimed at modernising the rules applicable to commercial companies. In relation to the restructuring and insolvency of Luxembourg-based entities, Parliament is discussing the long-awaited Bill 6539 (the so-called 'Insolvency Bill').
In the meantime, a number of reforms which could affect the restructuring and insolvency of commercial companies have been adopted, including:
A bill containing an entirely new Insolvency Code was presented to the House of Representatives on 20 April 2017. The need for a robust insolvency framework has received substantial attention due to the ongoing economic and financial crisis. Many European countries have recently modernised their insolvency legislation or are in the process of doing so.
The new Insolvency (England and Wales) Rules 2016 (SI 2016/1024) came into force on April 6, 2017 (the 2016 Rules). The 2016 Rules replace the Insolvency Rules 1986 (SI 1986/1925) and their 28 subsequent amendments (the 1986 Rules) and represent a continuation of the Insolvency Service’s recent efforts to modernize and implement policy changes under various pieces of primary legislation.
In the framework of the digitization of the Belgian judiciary, a central Solvency Register (www.regsol.be) will be available as of 1 April 2017.
Henceforth, creditors must file their claims electronically. The register will be accessible - subject to different procedural formalities - to magistrates, including substitute judges, clerks of court and public prosecutors as well as bankrupt parties, their creditors and counsel.
In a judgment of 24 March 2017 (in Dutch), the Supreme Court of the Netherlands upheld the longstanding requirement that for a debtor to be declared bankrupt, there need to be at least two creditors.
On January 17, 2017, a divided (2-1) panel of the U.S. Court of Appeals for the Second Circuit (Second Circuit) reversed the decision of the District Court for the Southern District of New York (Southern District) in the Marblegate litigation1 (Marblegate) with respect to the interpretation of Section 316(b) of the Trust Indenture Act of 1939 (TIA).