Imtech granted Suspension of Payments

Imtech granted Suspension of Payments

Arnold van Steenderen
13 August 2015

Royal Imtech N.V. announced on 11 August 2015 it had filed a request to the Rotterdam District Court to be granted a suspension of payments (in Dutch: “surseance van betaling”). The Court has granted the request and has appointed administrators. It is expected filing for suspension of payments may optimize the chances that substantial parts of the Imtech Group may continue doing business. This will be primarily in the interest of Imtech’s employees and possibly also in the interest of other stakeholders. What about the position of secured and unsecured creditors?

 The Dutch Bankruptcy Act provides for three different types of insolvency proceedings, i.e. bankruptcy, suspension of payments and (for natural persons only) debt reorganization. The principal types of security taken by creditors on immoveable property (including leasehold) and registered moveables (ships and aircraft) is created by means of a notarial deed of mortgage. This deed must be registered with the relevant register. A security over moveable property can be created by means of a right of pledge. Here, there is a distinction to be made between a possessory pledge, where possession of the collateral is transferred to the pledgee or to a third party and a non-possessory pledge, where possession of the collateral remains with the pledgor. The possessory pledge does not need to be created by means of a notarial deed and registration, whereas a non-possessory pledge must either be drawn up in the form of a notarial deed or need to be registered with the tax-authorities. 

In many cases suppliers of goods try to protect their title to the goods before payment by a retention-of-title clause in the sales agreement. This can be done either by a specific clause in the agreement, or by reference to general terms and conditions containing such a clause. The protection given by a retention of title clause is limited. As soon as goods have been processed and form part of newly fabricated goods the seller will lose the right to reclaim the goods supplied. 

In insolvency proceedings the position of an unsecured creditor will be subordinate to preferential and secured creditors. It will no longer be possible to start legal proceedings against the debtor for recovery, whereas legal proceedings already pending will be stayed. As a consequence of the suspension of payments now granted to Imtech the Board of Directors need the prior approval of the administrators (or one of them) appointed to enter into obligations that affect the assets of the company. This will certainly be the case when the Board wishes to divest and sell certain parts of the Imtech group. This situation changes upon the Court declaring Imtech bankrupt. Statistics shows that in approximately 90% of all cases started with a suspension of payments shortly thereafter the bankruptcy proceedings will be opened. In that case the administrators appointed in the suspension of payments situation will carry on as bankruptcy trustees. Given this fact it may be of no use for unsecured ordinary creditors to initiate or continue legal proceedings during the stage of suspension of payments. The efforts put into this may soon prove to be wasted because of bankruptcy proceedings being opened. The preferential and secured creditors (mortgagees and pledgees) are not affected by the suspension of payments, provided the Court has not declared a cooling-off period for a certain period of time.  

Update: On Thursday 13 August 2015 the court declared Royal Imtech B.V. bankrupt 

In the event you have any questions in relation to the Imtech bankruptcy situation do not hesitate to contact us for further guidance.  

Arnold van Steenderen

13 August 2015