January 31, 2023

Volume XIII, Number 31


January 30, 2023

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The ‘Top-up’ (Bank) Guarantee in a Dutch Scheme – For as Long as It Lasts…

The Dutch Scheme allows tenants to restructure their debt, including outstanding rent, outside of formal insolvency proceedings under a court-approved restructuring plan. A tenant may also propose amendments to, inter alia, lease agreements. In the event the landlord does not agree to the proposed amendment, the tenant may unilaterally terminate the lease agreement provided that a restructuring plan has been presented that the court will confirm, and the court has approved the termination. Termination becomes effective on the date the court confirms the plan. If the court finds such termination date unreasonable, it may determine that termination becomes effective at a later date, provided that it considers a period of three months after the confirmation date sufficient. The landlord is entitled to damages as a result of the unilateral termination of the lease; however, such claim for damages may also be restructured through the plan.

If the landlord does not agree with the plan and does not vote in favor, it may ask the court to deny confirmation if it can show it is worse off under the plan than in the most likely liquidation scenario in a bankruptcy of the tenant (the so-called “no creditor worse off test”).

In practice, outstanding rent and possible claims to damages the tenant owes to the landlord are often guaranteed by a parent or bank guarantee. Any proceeds to which a landlord is entitled under such guarantee are not taken into account to determine whether the landlord is “worse off” under the plan than in a liquidation of the tenant’s estate in bankruptcy. However, the offering and subsequent confirmation of the plan do not prevent the landlord from drawing under a bank guarantee or the parent guarantee, provided that in the latter case the obligations of the tenant’s parent under the parent guarantee have not been made part of the plan. The landlord may draw under the guarantee at any time during the course of the plan proceedings. If it draws under the guarantee prior to the confirmation of the plan, any rights offered to the landlord under the plan will transfer to the bank or the parent by operation of law, if and insofar as the payment by the parent or bank and the rights conferred under the plan would provide the landlord with value that exceeds the amount of its claim. After confirmation of the plan the landlord may still draw under the guarantee for the amount of the claim it did not receive under the plan and thus be made whole. The bank or the parent may not in that event recover the amount so paid from the tenant.

It is expected that banks will amend the standard terms of the bank guarantees to the effect that a landlord may no longer draw under the guarantee after the confirmation of a plan. However, most parent or bank guarantees that have been in place for some time do not include this restriction, so a landlord still has the opportunity to be made whole.

©2023 Greenberg Traurig, LLP. All rights reserved. National Law Review, Volume XII, Number 335

About this Author

Lilian Welling-Steffens Banking & Financial Services Attorney Greenberg Traurig Amsterdam, The Netherlands
Of Counsel

Lilian Welling-Steffens focuses her practice on structured and secured financing, restructuring, and (international) insolvency. She is also experienced in the area of private international law and property law.


  • General (cross-border) bank and institutional finance
  • (Cross-border) Financial restructuring transactions
  • Security enforcement
  • Non-performing loan sales
  • (International) Insolvency law
  • Structured finance
  • Project finance
  • Asset-based finance
  • Advice on composition plans
31 20-301-7384
 Thijs Elseman Amsterdam Finance Attorney Greenberg Traurig

Thijs Elseman is a member of Greenberg Traurig's Finance & Restructuring Group. He focuses his practice on corporate finance, restructuring and insolvency. Thijs advises corporates, investment banks, financial institutions and private equity investors on a wide range of corporate finance transactions, including bilateral and syndicated loans, acquisition and asset financing and debt and equity capital market transactions. He is regularly involved in complex, distressed financing transactions and cross-border restructurings. Before joining Greenberg Traurig in 2022,...