The Netherlands. Boekel De Nerée Wouter JP Jongepier and Jacques J Knol. The Netherlands

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1 The Netherlands Boekel De Nerée Wouter JP Jongepier and Jacques J Knol A. DOMESTIC FAMILY OF COMPANIES In answering these questions, we have taken a domestic family of companies to mean a corporate family consisting of legal persons having their registered offices only in the Netherlands. 1. If insolvency proceedings must be commenced for the family of companies, does your law permit a joint proceeding, ie, a single court file, a single judge, a single list of creditors, single notice list, or must the case for each member of the family proceed separately with no practical acknowledgment of the related proceedings? There are three independent insolvency proceedings in the Netherlands: (1) bankruptcy (general attachment on the assets of the debtor and liquidation of those assets Title I Bankruptcy Act (Faillissementswet)), (2) moratorium on payments (general deferment of payments to a debtor Title II Bankruptcy Act), and (3) debt restructuring of natural persons (offers natural persons the possibility to obtain a clean slate Title III Bankruptcy Act). The judiciary in the Netherlands is divided into 19 districts, each having a district court. The main rule (Article 2 Bankruptcy Act) in the Netherlands is that bankruptcy is declared by the court of the district where the debtor has its registered offices or is residing. Consequently, in cases of bankruptcy of a parent company and a subsidiary with registered offices in different districts, two different courts can declare a bankruptcy. However, for practical purposes in both bankruptcies the same trustee and the same supervisory judge may be appointed. The courts will, however, avoid appointing the same trustee for affiliated companies if this causes a conflict of interest. Such a conflict can arise, for example, in assessing inter-company loans. In the Netherlands there is no legal regulation for a consolidated handling of insolvency proceedings of group companies. From older case law (for example, Supreme Court, 25 September 1987, NJ (Netherlands Case Law) 1988, 136 (Van Kempen Begeer/Zilfa and DCW); District Court of The Hague, 27 December 1995, JOR 1996/87 (Infotheek)) it can be seen, however, that after bankruptcy has been declared, it is possible, under special circumstances, to consolidate the further insolvency proceedings of the group companies. It can be deduced from legal precedents that the consolidation of two bankruptcies is possible if the assets of affiliated companies cannot be partitioned or if this can only be done at disproportionately high costs. In practice consolidation usually does not occur if there is a conflicting interest between creditors of different legal entities. The manner of deciding whether to consolidate (or not) varies by case. In the Infotheek ruling (District Court of The Hague, 27 December 1995, JOR 1996/87) the court stated beforehand that the bankruptcy judge, who had to supervise the administration and winding up of the assets by the trustee in bankruptcy ( curator ), was authorised to decide whether to consolidate, upon the recommendation of the trustees. In the other published case (Van Kempen Begeer/Zilfa and DCW Supreme Court, 25 September 1987, NJ 1988, 136) the trustees had proceeded with consolidation without the bankruptcy judge having made a decision in this respect (MLH Reumers Nederlandse ervaringen met het geconsolideerde faillissement (Dutch experiences with consolidated bankruptcies), (2004) 33 TvI 152.) European Lawyer Reference Series 177

2 (a) What if the members of the family are organised under, or operate in, different locations within your country? Can a company from a distant location in your country commence its bankruptcy proceeding where its affiliate is located, if the affiliate has already commenced its bankruptcy proceeding? Under Article 2 of the Bankruptcy Act, bankruptcy is declared by the court of the district where the debtor has its registered offices. This rule of jurisdiction has mandatory force and its purpose is to prevent a debtor from being declared bankrupt in more than one district within the Netherlands (Supreme Court, 28 January 1983, NJ 1983, 465.) In view of the fact that only separate legal entities, and a group of companies is not such an entity, can be declared bankrupt and that only the court is competent in whose district the debtor has its registered offices, it is not possible to petition for the bankruptcy of a company in a district where an affiliated company has already been declared bankrupt. If a company has several branches, not in the form of separate legal entities, in the Netherlands, then, in view of the fact that there is one legal entity, only one insolvency procedure is possible. This must be instituted in the district of the statutory place of registry of the company. (b) To the extent your country has different types of insolvency proceedings (such as Chapter 11 reorganisation and Chapter 7 liquidation in the US), do the members of the corporate family all have to proceed under the same type of proceeding? No, the members of a corporate family do not have to proceed under the same type of proceeding. This means that a subsidiary can be granted a moratorium on payments while the parent company is in a state of bankruptcy. 2. Does your law permit, or prohibit, a single administrator/trustee/receiver to administer the assets and the liabilities of the entire corporate family? Yes, it is possible for the court to appoint a single trustee in bankruptcies of companies belonging to the same corporate family, on the understanding that no conflict of interest exists. Several trustees are usually appointed in large-scale bankruptcies. (a) If so, is there a hearing for the court to determine whether the administration by a single party is appropriate? Are secured and unsecured creditors or other parties in interest allowed to object or be heard at such hearing? In the Netherlands there is no public hearing for the court prior to the appointment of a trustee. However, the petitioner is allowed to give requirements with which the appointed trustee has to comply. Such requirements may be included in the petition to the court, in which the court is requested to declare the company bankrupt (AL Leuftink Moratorium on payments (Serie Recht en Praktijk/Law and Practice Series) (No 87, 1995). On the occasion of the court hearing only the petitioner and the debtor are heard by the court. The hearing is not public and, consequently, other creditors or other interested parties are not heard by the court. After an individual trustee has been appointed, the creditor may, however, request the bankruptcy judge appoint more trustees (Article 73 Bankruptcy Act). (b) What about joint representation by other professionals, such as law firms or accounting or auditing firms? The Dutch Bankruptcy Act does not give qualifications as to which persons qualify to act as trustee. However, in most cases civil lawyers (advocaten) are appointed. In large bankruptcies sometimes persons with a specific background, for example an accountant, are appointed co-trustee. 178 European Lawyer Reference Series

3 3. Does your law encourage or discourage overlapping boards or management teams for separate members of a corporate family? In the Netherlands, a natural person or a legal person is in principle allowed to be the managing director of several affiliated companies. If several group companies have the same management board, however, complications can occur due to conflicting interests. Complications can also occur because the directors can make the corporate interest of one company subordinate to the interest of the group. The so-called Tabaksblat code of corporate governance can also be of importance within this framework. This non-binding code of conduct gives rules to improve the management boards of listed companies. However, this set of rules is certainly of influence on corporate governance issues in private companies. (a) If the directors of a parent company are not directors of the subsidiary, but they either directly or indirectly manage the affairs of the subsidiary anyway, do your country s laws render such people de facto or shadow directors of the subsidiary? Yes, when a company goes bankrupt and if mismanagement occurs, not only can the formal directors be held liable for the deficit of the estate, but also the de facto directors. In the Dutch Civil Code (Article 2:138 Dutch Civil Code for the public company and Article 2:248 of the Code for the private company) a de facto director is understood to be the one who has determined, or jointly determined, the policy of the business of a company as if he were a director. The parent company of a company can also, under certain circumstances, be deemed to be the de facto director (Parliamentary documents, Dutch Lower House , No 6, Explanatory Memorandum). (b) Do the duties or responsibilities of officers or directors of a family of companies change when the companies become insolvent? For example does their duty shift from a responsibility to the shareholders to a responsibility to the creditors. What if only one of the companies is insolvent? The directors of a (group) company are charged with managing the company and must be guided by the company interest. If the relevant company forms part of a group, the group interest may be taken into account. After bankruptcy the possibilities for the directors to carry out this task are considerably eroded. After the declaration of bankruptcy, the management board loses its authority over the assets and debts of the company, collectively referred to as the bankruptcy estate. This authority is taken over by the trustee. The management board only remains authorised to carry out acts which normally belong to the duties of management and which are not of a proprietary nature, such as preparing annual accounts and if possible proposing a composition (financed by third parties). In the case of a moratorium on payments, the management board is less restricted in its possibilities of pursuing the company s interest, since in the case of a moratorium the debtor only loses the right to dispose freely of his assets and for every act needs the permission of a court-appointed administrator. No change is made in the pursuit of the company s interest by the management board through a declaration of bankruptcy or granting of moratorium on payments. The company must continue to pursue continuity and realisation of its object as referred to in its articles of association. After all, the purpose of a moratorium on payments is to allow the company some time to straighten out its affairs, after which, upon termination of the moratorium, the debtor can participate in legal matters once more without any restriction (CM van der Heijden Insolventie en rechtspersoon (Insolvency and Legal Person) (Serie recht en praktijk/law and Practice Series) (Kluwer, Deventer, 1996) p 62 ff). In bankruptcy the debtor must also continue to pursue continuity and the realisation of its object. In the best case the bankrupt company can, after all, offer a compulsory composition to its creditors, after which, upon approval by the court, the bankruptcy ends. In European Lawyer Reference Series 179

4 this, the management board has the important task of, where possible, reaching an agreement with the creditors. If a composition is not offered, then the company will be dissolved, and the company will remain in existence only for as long as necessary to liquidate its assets. Once the bankruptcy ends, the company also ceases to exist. It should be noted, however, that upon dissolution of the company, the object of the company is considerably limited. The object of the company is in that case, after all, aimed at liquidation, with the result that legal acts which are not aimed at liquidation are contrary to the altered object of the company. (See C Asser (adapted by JMM Maeijer) Mr C Asser s handleiding tot de beoefening van het Nederlands burgerlijk recht: Vertegenwoordiging en rechtspersoon; De rechtspersoon (achtste druk) (Mr C Asser s guide to the practice of Dutch civil law: Representation and legal person; The legal person) (WEJ Tjeenk Willink, Deventer, 1997, 8th edn) 178. Because a company s interest, in which the group s interest may also be included, should also be pursued after the date of bankruptcy, it does not matter with regard to answering this question whether this concerns a bankrupt group or a bankrupt company within a group. 4. Are there rules and do they change regarding members of the corporate family transferring assets among one another (such as by way of loans, capitalisation, other transactions) when the members are insolvent? Under Article 20 of the Bankruptcy Act, a bankruptcy involves the entire estate of the debtor at the time of the declaration of bankruptcy. The bankrupt, however, does not lose his authority to act by the declaration of bankruptcy, but his acts have no legal consequences for his assets falling under the bankruptcy. This means that it is not possible for a bankrupt company to transfer assets, for example to an affiliated company, without the trustee s cooperation. In addition to the aforementioned impossibility of transferring assets after the declaration of bankruptcy, the trustee can nullify out of court legal acts undertaken before the declaration of bankruptcy if creditors have been prejudiced in their right of recovery by these legal acts (Articles Bankruptcy Act). This out-of-court nullification is possible with regard to both mandatory legal acts and non-mandatory legal acts. In principle, the burden of evidence rests with the trustee to prove the debtor s knowledge of prejudice and the creditors prejudice. Article 43 of the Bankruptcy Act does, however, provide the trustee with a number of presumptions if the disputed act took place in the year prior to the declaration of bankruptcy including acts between or with regard to a group company. Article 47 of the Bankruptcy Act provides the trustee with the possibility of undoing a mandatory legal act in favour of the bankrupt estate. Due payment made while the creditor knew that the bankruptcy had already been applied for or that the payment was the result of an arrangement with the creditor with the intention of preferring this creditor over other creditors. The burden of evidence rests with the trustee in this case. From case law (Supreme Court, 7 March 2003, NJ 2003, 128) it can be seen that the intention to prejudice is easily assumed if the legal acts have been carried out between legal persons with the same shareholder or director. In addition to the aforementioned legal regulations of the Bankruptcy Act, action can be taken by the trustee or a creditor on the basis of an unlawful act to claim back the damage caused to the creditors. (a) Are cash sweep procedures allowed, that is, all cash from all subsidiaries is swept out to one account controlled by one of the family entities and then redistributed among the family members to pay bills? Outside of bankruptcy cash sweep deals are in principle allowed (see, for example, above answer) under Dutch law, but there is uncertainty about the effects in case of insolvency of one of the participant s entities. An excellent administration is necessary to keep track of the resulting inter-company claim and to prevent potential liabilities. 180 European Lawyer Reference Series

5 (b) What if the redistribution results in a healthy subsidiary funding the shortfalls in another subsidiary that is losing money? The redistribution can be deemed acceptable depending on the terms of the object clause in the articles of association of the subsidiary. However, it is advisable for a healthy subsidiary to consider obtaining securities from its group companies in connection with funds lent. 5. How does your law treat claims of one member of a corporate family against other members of the corporate family? (a) Are such claims invalid or unenforceable? No, the institution of a legal action by a company against an affiliated company is lawful and enforceable under Dutch law. There is no law or legal rule that prohibits a legal action to claim performance within a corporate family. (b) If not, are such claims on equal footing with those of third party creditors, or are they subordinated, or is there other treatment required or permitted under your law? Legal actions between companies within a corporate family are treated on an equal footing with claims of a family company against third parties, because the companies within a corporate family are regarded as different legal persons, each having its own entity, which is not affected by a group relationship. However, if a group company is liquidated and an intercompany claim on this company is paid while an outside creditor remains unpaid, the controlling parent company may be held liable for damages, also by a third party. 6. Does your law allow for the pooling of assets and liabilities of all members of the corporate family, so that a creditor of one member becomes, in essence, a creditor of all members (sometimes referred to as substantive consolidation )? Within the Dutch legal system there are several ways for creditors to recover their claims from the assets of several (affiliated) companies. A company can, for example, (1) declare itself jointly and severally liable towards a creditor, (2) provide a surety, or (3) provide a joint and several liability undertaking (a so-called 403-undertaking). (1) Joint and several liability may result from the law, usage or legal act (Articles 6:6-14 Dutch Civil Code). If a company jointly and severally assumes liability, by means of a juristic act, for the debt of an affiliated company, the creditor is entitled to claim full performance from each jointly and severally liable debtor. (2) Surety ship is an agreement whereby a party obliges itself towards another party to perform an obligation to which a third party is or will be bound towards the creditor. The surety offers the creditor a legally effective security regarding obligations, contrary to a legally-effective security regarding property, such as a pledge and a mortgage (Article 7: Dutch Civil Code). (3) A 403-undertaking is a statement based on Article 2:403 of the Dutch Civil Code. In such a statement the parent company assumes joint and several liability for any debts arising from the legal acts of an affiliated company. This statement must be filed in the Trade Register of the company for whom the statement has been issued at the Dutch Chamber of Commerce. In addition to the joint and several liability, the issuing of a 403- undertaking also has the consequence that the affiliated (subsidiary) company, for whom the statement was issued, is exempted from almost all provisions regarding annual accounts law. All shareholders should consent in writing before the approval of the annual accounts. This consent must be filed with the Chamber of Commerce in due time for each book year. European Lawyer Reference Series 181

6 (a) If so, is such pooling automatic or does it require a factual showing and court involvement? No court involvement is required for the aforementioned methods for creditors recovering their claims from the assets of several (affiliated) companies. (b) What proceedings (motion, request, trial, etc) are required for the court to order the pooling of assets and liabilities? As referred to above the pooling of assets is automatic and court involvement is not necessary. (c) Does your country s law contemplate any partial pooling of assets and liabilities? No, the law in the Netherlands does not contemplate any partial pooling of assets and liabilities. (d) If the pooling of assets and liabilities is called for, are there any protections for certain types of creditors, such as creditors with a lien or other security interest in particular assets? The rights of secured creditors on particular assets are not affected by the pooling. 7. How are secured creditors treated with respect to a family of companies? For instance, if a creditor has a security interest in the assets of one member of the family, and a guarantee from another member of the family, are both such claims valid in insolvency proceedings of the entire family? Assuming the security interests are validly vested, such security interests remain valid also in insolvency proceedings of the entire family. 8. Do your laws or courts provide for post-insolvency commencement of new financing that allows continued operation of the business and provides adequate protection to the lender who made the loan? Explain. There is no specific law or rule of law for this in the Netherlands. New financing of the estate is possible and may be secured by a security right on assets. Those security rights have priority over the pre-insolvency non-secured creditors. The claim resulting from postinsolvency financing is a boedelvordering (claim in the estate) that must be paid before payments can be made to unsecured pre-petition claims. 9. Are directors and officers subject to civil or criminal sanctions if: (a) Fraud or misrepresentation of a company s finances are discovered? A distinction must be made between liability of a director in the event of bankruptcy of a company and the liability of a director not in a state of bankruptcy. The various liabilities of a director of a company which is in a state of bankruptcy are as follows: Civil The law stipulates that every director is jointly and severally liable to the estate for the deficit in the bankruptcy if the management board carried out its duties in a manifestly improper manner and it is plausible that this was an important cause of the bankruptcy (Article 2: 138 Dutch Civil Code for the public company and Article 2:248 Dutch Civil Code for the private company). Whether the management performed manifestly improperly depends on what the management board foresaw or could have anticipated at the moment that it was carrying out that task. The Supreme Court confirmed in a ruling (Supreme Court, 8 June 2001, NJ (Panmo)) that for mismanagement there must have been reckless, insouciant, thoughtless and irresponsible behaviour. To apply this statutory provision it must be made plausible that the manifest mismanagement was an important cause of the bankruptcy. The law also stipulates that an 182 European Lawyer Reference Series

7 action may only be instituted on the grounds of improper performance of duties in respect of the duties performed during the period of three years preceding the bankruptcy (Article 2: 138/ 2: 248 para 6 Dutch Civil Code). The institution of an action shall not be barred by any discharge granted to a director. On the basis of the Second Anti-Abuse Act (Tweede Anti-Misbruikwet) directors of a company are jointly and severally liable for certain premium and tax debts of the company if the company has remained in default with regard to the payment, and it is plausible that the nonpayment is attributable to a director as a result of manifest mismanagement. Furthermore, every company must comply with accounting and publishing obligations notably the annual accounts (Articles 2:10 and 2:394 Dutch Civil Code). If a company does not comply with these obligations, it is assumed that the management board has manifestly performed its duty improperly and it is presumed that this improper performance of the duty is an important cause of the bankruptcy (Articles 2:138 para 2/ 2:248 para 2 Dutch Civil Code). In that case a reversal of the burden of proof will occur and it is up to the management board or each individual managing director to prove that there is no causal relationship between the mismanagement and the ultimate bankruptcy. For example, because the bankruptcy was caused by external circumstances. Once mismanagement has been established, then this holds for each of the directors with regard to the entire performance of the duty. The directors liability is also applicable to the performance of duties by the Supervisory Board, the supervisory body of directors of large companies (Article 2: 259 Dutch Civil Code). Criminal In addition to aforementioned civil law sanctions to sue directors of bankrupt companies, a director, managing director or supervisory director of a legal person may also face criminal sanctions in the event of publication of false annual accounts or intentionally allows the disclosures of such documents. With regard to the aforementioned punishable facts, it should be noted that the capacity of the public prosecutors service to prosecute bankruptcy fraud cases is limited. (b) They allow the company to continue to operate while knowing it does not have the ability to pay the debt being incurred? The Supreme Court ruled in Beklamel (Supreme Court, 6 October 1989, NJ 1990, 286) that a director of a company can be directly liable, in person, for an action arising from an unlawful act towards a third party if the director knew, or could have reasonably known, upon entering into an agreement as director on behalf of the company, that the company would not, nor would have been able, within a reasonable period of time, to comply with its obligations and would not be able to offer any assets to pay for the damage suffered by the creditor as a result of the non-performance. If the aforementioned criteria are met, then it must be presumed that the director has acted in such a reproachable manner that he is personally liable for the obligations of the company (Supreme Court, 18 February 2000, NJ 2000, 295). The director s liability has been expanded somewhat in the Sobi/Hurks II judgment with regard to liability for current obligations (Supreme Court, 21 December 2001, RvdW 2002, 6). In addition to the specific case law (Beklamel), based on the creation or maintaining of the appearance of creditworthiness, a general standard has been developed for the liability of directors for the non-performance of the legal person. A director can be held liable if, in the concrete circumstances of the case, he can be seriously blamed personally (Supreme Court, 18 February 2000, NJ 2000, 295). European Lawyer Reference Series 183

8 (c) Same as (b) above but the directors believe that if some event occurs (eg chance to obtain new contract in prospect, new equity infusion, or new financing) it will be able to save the company and pay its bills? From case law (BASF Court of Appeal of Arnhem, 23 February 1988, NJ 1989, 92) it follows that a director must be free to take certain decisions to avoid a bankruptcy, without these acts immediately being designated as unlawful acts if a bankruptcy occurs anyway. The premise is that a reasonably acting director should be able to take such a risk. This depends strongly, however, on the circumstances of the case. To avoid liability, it is advisable that directors base their decisions on reports/advice from independent third parties. From this it can be deduced that a director does have a certain degree of discretionary power. B. INTERNATIONAL FAMILY OF COMPANIES 1. If one or more members of the corporate family is incorporated under or governed by the laws of another country, does that change your answers to any of the questions set forth above? Yes, the possibility, developed through legal precedents in the Netherlands (Supreme Court, 25 September 1987, NJ 1988, 136) to consolidate bankruptcies of affiliated company with inseparable assets, or separable against unreasonably high costs, only relates to affiliated companies which are incorporated in the Netherlands. 2. If insolvency/restructuring proceedings are instituted for corporate family members in different countries: (a) What controls as to where the case must be filed (eg, centre of main interests, principal place of business, location of parent, etc)? Under Article 2 of the Bankruptcy Code, the bankruptcy must be declared by a court in the district of the debtor. For a company this means that the domicile is where, in accordance with statutory provisions or its articles of association, it has its statutory seat (Article 1:10 para 2 Dutch Civil Code). Companies with a statutory seat outside the Netherlands may, with the exception of the cases listed below in which the European Insolvency Regulation is applicable, not be declared bankrupt in the Netherlands. The European Insolvency Regulation only pertains to the legal consequences of insolvency proceedings within the European Union (with the exception of Denmark). Article 3 paragraph 1 of the European Insolvency Regulation stipulates that the court of the Member State in which the centre of the debtor s main interests is situated shall have jurisdiction to open insolvency proceedings. For legal persons the centre of the main interests is presumed, as long as the opposite has not been proved, to be the place of the registered offices. In accordance with Article 4 of the European Insolvency Regulation, the law applicable to insolvency proceedings and their effects shall be that of the Member State in which the insolvency proceedings are opened. Articles 5-15 give exceptions to the aforementioned rule, in case of specific important rights and legal relationships (such as rights in rem and employment relationships). It is also possible to open secondary proceedings in addition to the main insolvency proceedings. These local proceedings can be instituted to protect local interests or if it is more efficient for the administration of the assets. Secondary proceedings can be opened if the statutory place of establishment and the place where the main interests of the company are situated are different. The consequences of secondary proceedings in a member state are limited to the assets of the debtor located within that Member State. Proceedings which have already been instituted within the territory become secondary proceedings after the main proceedings have been opened. A communication and collaboration obligation exists between the trustees of both proceedings and the trustee in the main proceedings has several provisions at his disposal to influence the secondary proceedings (B Wessels Internationaal insolventierecht deel X (International Insolvency Law part X), (Kluwer, Deventer, 2003) blz 196). 184 European Lawyer Reference Series

9 The European Insolvency Regulation does not give any regulations for corporate families, and from case law (High Court of Justice Leeds District, 16 May 2003, JOR 2003, 287) it follows that bankruptcies of affiliated companies must be dealt with independently. (b) Do the courts attempt to exercise jurisdiction over the assets of the company filing domestically no matter where located (for example, overseas), or do they limit their jurisdiction to only those assets located in your country? If a legal action falls under the scope of applicability of the European Insolvency Regulation, then this action will in principle be acknowledged in all the member states (with the exception of Denmark). The point of assumption of the European Insolvency Regulation is that an insolvency procedure is governed by the law of the state in which the proceedings were started up. This means that a trustee may in principle exercise all the powers granted to him by the law of the Member State where the proceedings were started up (Article 18). There are two exceptions to this. One is the situation relating to real rights, whereby the goods are in a different state or in which different conditions are valid. A second type of exception pertains to international private law, where a different rule of conflict is applicable. In the case where the European Insolvency Regulation is not applicable to a cross-border bankruptcy, then Articles of the Dutch Bankruptcy law are applicable. These articles of the Dutch Bankruptcy Act regard the situation in which a debtor has been declared bankrupt in the Netherlands and has goods and/or claims at his disposal abroad. Article 203 of the Bankruptcy Act stipulates that creditors, both Dutch and foreign, who after the declaration of bankruptcy have recovered their claims either in whole or in part from goods situated abroad, are obliged to pay the amount so recovered into the estate. (c) Would your courts enforce a court order from a foreign country that attempted to exercise jurisdiction over assets located in your country but owned by the company that is subject to the foreign insolvency proceedings? In view of the fact that the Netherlands are a party to the European Insolvency Regulation, a declaration of bankruptcy is in principle enforceable in all Member States with the exception of Denmark, with the result that a trustee can in principle exercise his powers in another Member State. In those cases where the European Insolvency Regulation is not applicable, it follows from Article 431 paragraph 1 of the Dutch Code of Civil Procedure that a foreign declaration of bankruptcy does not have any legal effect in the Netherlands. This means that such a foreign declaration cannot be enforced in the Netherlands (District Court of Arnhem, 5 January 1976, NJ 1976, 445). With regard to the execution of foreign court orders, including those relating to bankruptcies, it holds in the Netherlands that without a law or treaty an order given abroad cannot be enforced (District Court of Rotterdam, 29 September 1989 NIPR 1992 no. 277). The trustee will have to bring a foreign judgment before the Dutch court once more to become entitled to enforcement (Article 431 para 2 Dutch Code of Civil Procedure). The matter does not have to be completely handled once more by the Dutch court, if the Dutch court finds that the foreign judgment complies with a number of minimum requirements (L Strikwerda Inleiding tot het Nederlandse internationaal privaatrecht (Introduction to Dutch International Private Law) (Kluwer, Deventer 2000)). (d) Has your country adopted any procedures (such as the Model Law on Cross-Border Insolvency) to address the various issues that arise in dealing with cases of crossborder insolvency? The Netherlands are a party to the European Insolvency Regulation which was implemented on 31 May This Regulation has already been dealt with in the previous questions. The Model Law on Cross-Border Insolvencies has not been implemented in the Netherlands. A major overhaul of the Bankruptcy Act is scheduled for the coming years. European Lawyer Reference Series 185