The recent Supreme Court rul­ing of Octo­ber 25 in case ECLI:NL:HR:2024:1533 sheds light on the leg­al bound­ar­ies of the Dutch Scheme (WHOA), an import­ant tool for restruc­tur­ing out­side of bank­ruptcy. This case revolves around wheth­er cred­it­ors under the WHOA can be required to con­tin­ue extend­ing cred­it under altered con­di­tions. The Supreme Court’s judg­ment cla­ri­fies the scope of the WHOA and the pro­tec­tion of cred­it­ors’ rights with­in this legis­lat­ive frame­work.

Facts and Pro­ceed­ings
In the first instance, the Rot­ter­dam Dis­trict Court con­firmed an agree­ment for IHC Mer­wede Hold­ing B.V. (here­in­after: IHC). It was stip­u­lated that the fin­an­cing banks had to con­tin­ue provid­ing cred­it to IHC des­pite dif­fer­ent con­di­tions. Rabobank, one of the involved banks, opposed this decision, arguing that the WHOA does not allow for impos­ing future cred­it oblig­a­tions on cred­it­ors. Sub­sequently, the Advoc­ate Gen­er­al at the Supreme Court filed a cas­sa­tion claim in the interest of the law, aim­ing to annul the Dis­trict Court’s decision.

Leg­al Issues and Supreme Court Assess­ment

1. Scope of the WHOA and the Concept of “Modi­fic­a­tion of Rights”
   The Supreme Court exam­ines wheth­er the WHOA allows for exist­ing cred­it agree­ments to be mod­i­fied in a way that imposes addi­tion­al oblig­a­tions on fin­an­ci­ers. Art­icle 370 para­graph 1 of the Dutch Bank­ruptcy Act stip­u­lates that an agree­ment may provide for the modi­fic­a­tion of cred­it­ors’ rights. Typ­ic­ally, this involves the reduc­tion or post­pone­ment of exist­ing claims. The Supreme Court rules that this art­icle can­not be inter­preted so broadly as to impose new oblig­a­tions, such as extend­ing addi­tion­al cred­it under altered con­di­tions.
2. Art­icle 373 of the Bank­ruptcy Act and the Ter­min­a­tion of Agree­ments
   Art­icle 373 of the Bank­ruptcy Act provides that a debt­or under the WHOA may amend or ter­min­ate agree­ments. The Supreme Court’s com­ment­ary high­lights that this pro­vi­sion does not provide grounds to impose oblig­a­tions on cred­it pro­viders to extend cred­it under altered con­di­tions. Accord­ing to the Supreme Court, the legis­lature did not intend to force fin­an­ci­ers, through con­firm­a­tion (homo­log­atie), to con­tin­ue cred­it facil­it­ies that do not align with the ori­gin­al con­di­tions.
3. The No Cred­it­or Worse Off Prin­ciple
   One of the corner­stones of the WHOA is that cred­it­ors must not be worse off under an agree­ment than they would be in the event of the debtor’s bank­ruptcy. This is known as the no cred­it­or worse off prin­ciple. The Supreme Court emphas­izes that impos­ing an oblig­a­tion on banks to make new funds avail­able while fin­an­cing con­di­tions are mod­i­fied could con­flict with this prin­ciple. While the agree­ment may modi­fy exist­ing oblig­a­tions under fin­an­cing agree­ments (such as pay­ment defer­rals), it can­not com­pel cred­it­ors to provide new cred­it.

Con­clu­sion
The Supreme Court annuls the Rot­ter­dam Dis­trict Court’s judg­ment. This rul­ing cla­ri­fies the WHOA as a debt restruc­tur­ing instru­ment by emphas­iz­ing that it is not inten­ded to com­pel cred­it­ors to take on new oblig­a­tions under altered con­di­tions. This decision sets an import­ant lim­it for future applic­a­tion of the WHOA. Oblig­a­tions arising from cred­it agree­ments can­not be fun­da­ment­ally mod­i­fied without the con­sent of the involved cred­it­ors. In this way, the Supreme Court expli­citly ensures the pro­tec­tion of cred­it­ors’ con­trac­tu­al rights with­in the frame­work of the WHOA.