Liability Management is Arriving in the Netherlands — What Does That Mean for Your Business?

If your business operates in the Netherlands (or you're thinking about setting up here) there's a shift happening in the world of corporate debt and restructuring that's worth paying attention to. A type of financial strategy, liability management, long common in the United States, is now making its way into the Dutch market. It's changing how companies handle debt when times get tough. And it's raising important questions about what the rules actually are — and what directors need to watch out for.

What Is Liability Management?

In simple terms, liability management is when a company renegotiates or reshapes its debt — without going through formal bankruptcy. The goal is usually to buy time, reduce the debt burden, or access new funding. Think of it as a way to fix a problem before it becomes a crisis.

The trouble is, some of these strategies can be quite aggressive. A company might move assets out of reach of certain creditors, or give priority to a new group of lenders at the expense of others. In the US, courts have generally allowed this — but the Netherlands is a different story.

What's Happening in the Dutch Market Right Now?

Liability management exercises — or LMEs — are now appearing in Dutch debt structures, particularly where companies have US-based shareholders or sponsors. But the Dutch legal environment treats them very differently to the US. Here's why:

Dutch courts look beyond the contract. In the US, if the loan documents technically allow a transaction, that's usually enough. Dutch courts will also ask whether the transaction was fair to all creditors — even if it was technically permitted.

The intercreditor model is stricter. European loan agreements — particularly those following Loan Market Association standards — often require unanimous lender consent to change the ranking of debt. That makes it much harder to push through an LME without everyone on board.

Directors carry more personal risk. In the Netherlands, directors can be held personally liable if they allow transactions that harm creditors — especially when the company is in or near financial distress.

There's no broad "business judgement rule" to fall back on the way there is in the US.

The Key Dutch Laws to Know

The WHOA (Dutch Scheme of Arrangement)

Introduced in 2021, the WHOA is the Netherlands' main pre-insolvency restructuring tool. It allows a company to put a restructuring plan to its creditors and, under certain conditions, bind even those whodisagree — without the company having to go bankrupt first. It's flexible, and it's increasingly being used alongside or after an LME to formalise the new debt structure.

A WHOA process typically takes around six months. It can be led by the company itself or by a lender-appointed restructuring expert.

Fraudulent Conveyance (Actio Pauliana)

This is the main legal risk for companies pursuing an LME. Under Articles 3:45 of the Dutch Civil Code and Article 42 of the Dutch Bankruptcy Act, creditors — or a bankruptcy trustee — can challenge a transaction if it unfairly prejudiced their ability to recover what they're owed.

The test is fairly objective: did the transaction reduce a creditor's recovery position, and did the parties involved know — or should they have known — that it would? If yes, the transaction can be unwound entirely.

The Cross-Border Conversions, Mergers and Demergers Act

Adopted in September 2024, this law governs how Dutch companies can merge, convert, or demerge with companies in other EU countries. It's relevant if your business involves cross-border restructuring — for example, moving or merging a Dutch entity with one based elsewhere in Europe. Civil law notaries can refuse to process a transaction if there are signs it's being used for fraudulent purposes.

Why This Matters — Even If You're Not in Distress

You don't have to be in financial trouble for this to be relevant. Here's why:

If you're a lender or investor, understanding how LMEs work — and how they might be challenged in Dutch courts — is essential before you put money into a deal.

If you're a director, you need to know that signing off on an aggressive restructuring transaction could expose you to personal liability — even if it was technically allowed under the loan documents.

If you're setting up or restructuring a business in the Netherlands, knowing the rules around debt, creditor rights, and cross-border structures will help you avoid expensive surprises down the line.

What You Should Do Right Now

Know your structure. If your business has debt, understand how it's ranked, what the loan documents allow, and where your creditors sit in the recovery waterfall.

Get advice early. If you're considering any kind of debt restructuring — or if a lender is pushing for one — take legal advice before you act. The difference between a well-structured LME and one that gets unwound in court can be significant.Think about directors' duties. If you're a director of a Dutch company, make sure any major financial decisions are properly documented and that you've genuinely considered the impact on all creditors — not just the ones at the table.

Keep an eye on the law. Pre-packaged sales — a fast and clean restructuring tool that's common in the UK and US — are still not available in the Netherlands. Legislation is being developed, but it's not here yet.

The landscape is changing, and staying informed matters.

What We Recommend

At RPS Group, we help businesses navigate exactly these kinds of situations — whether you're setting up in the Netherlands, restructuring an existing entity, or trying to understand how new rules might affect you. Liability management is no longer a US-only issue, and the Dutch legal framework around it is still evolving. Getting ahead of that curve is one of the smartest things a business can do right now.

If you have questions about how any of this applies to your situation, we'd be happy to talk.