Niet gecategoriseerd – Wintertaling

DE ONBEKENDE TOVERSPREUK, Het Europees bankbeslag als grensoverschrijdend incassomiddel

Roos Gelaudie — Mon, 17 Mar 2025 13:18:12 +0000

Written by Bas van Vliet and Yuan Groeneveld.

When a debtor holds funds in a foreign account or a foreign debtor has a Dutch bank account, securing their claim can be challenging. The European Account Preservation Order (EAPO) can offer a solution. But how exactly does this procedure work, and how does it compare to the Dutch prejudgement garnishment (conservatoir derdenbeslag).

Approximately eight years after its introduction, practice shows that the European bank attachment is still relatively unknown. In this blog, we provide insight into the possibilities this instrument offers. We will explain what the EAPO entails, compare it to the Dutch prejudgement garnishment, outline its advantages and disadvantages, and discuss when a creditor can utilise the EAPO.

What is the EAPO Regulation?

Since its entry into force on 18 January 2017, EAPO has made it easier for creditors to secure funds held in foreign bank accounts until a final judgment is rendered in the proceeding on the merits.[1]This prevent debtors from transferring their assets before the court issues a ruling. The ultimate aim of EAPO is to facilitate cross-border debt recovery in civil and commercial matters.

Previously, a creditor had to file a separate applications for account preservation in each country where the debtor held a bank account. This meant that the creditor had to deal with different legal systems and procedures, resulting in additional time and costs. With the introduction of EAPO, creditors can now obtain a single order from one court to impose account preservation on multiple bank accounts across almost all EU member states, with the exception of Denmark. For example, a Dutch court can order the account preservation of a debtor’s bank account in Spain.

Comparison with Dutch prejudgement garnishment

When a creditor suspects that a debtor holds funds in a bank account, they can request the preliminary relief judge to freeze the assets. This prevents the debtor from transferring or spending the money before a final judgment is issued. In the Netherlands, this is done through a prejudgement garnishment.

Imposing a prejudgment garnishment on a Dutch bank account is relatively straightforward. The creditor, through their lawyer, submits a digital request for a prejudgment garnishment – known in Dutch as a “beslagrekest” - to the preliminary relief judge. If granted, a bailiff garnishes the debtor’s bank account(s).

But what if the debtor holds a bank account in another EU country? In that case, the EAPO can provide a solution.

The advantages and disadvantages of the EAPO Regulation compared to the Dutch prejudgment garnishment

The EAPO Regulation offers several advantages for creditors dealing with a debtor's bank account in another EU country, but it also has certain drawbacks.

Advantages
The EAPO Regulation eliminates the need for creditors to initiate separate account preservation procedures in each country where the debtor holds a bank account. Instead, the creditor can initiate the procedure in a single jurisdiction by requesting the court that has jurisdiction over the proceedings on the merits to issue an account preservation order. Additionally, the application for an EAPO is submitted using standardised forms rather than a formal prejudgement garnishment request (beslagrekest). Another advantage is that the debtor is not notified of the application for an EAPO before the order is issued. Furthermore, if the court rejects the EAPO application in whole or in part, the creditor has the right to appeal. In addition, the EAPO application form can be filed without the assistance of a lawyer. However, in practice, we get the impression that the Dutch courts significantly complicate this process.

The EAPO also enables creditors to request account information from the same court, including whether the debtor holds a bank account in a specific country, the name of the bank, and the IBAN number of the bank account.

Disadvantages
The EAPO is subject to strict evidentiary requirements. If a creditor applies for an EAPO before obtaining a judgement, they must provide security, as specified in the standardised application form. In the event of the dismissal of the claim in the proceedings on the merits, the creditor must compensate the debtor for any damages caused by the temporary freezing of their bank account(s). Only if the creditor can provide sufficiently convincing evidence that the main claim is likely to be upheld are they exempt from the obligation to provide security. Additionally, the creditor must provide evidence showing that there is an urgent need for a EAPO order and that the claim in the proceedings on the merits is likely to be upheld. In practice, if the debtor has acknowledged or has not contested the claim, security may not be required.

Moreover, the EAPO imposes a maximum amount that may be seized. If the balance in the bank account exceeds this limit, only the specified amount imposed in the order may be seized. This differs from the Dutch prejudgement garnishment, which allows for the seizure of the debtor’s entire positive bank balance. Additionally, unlike the Dutch prejudgement garnishment, the EAPO does not allow for a so-called “repetitive seizure” on funds deposited into the bank account after the seizure date.

Finally, the costs of filing an EAPO application vary per country. In the Netherlands, the costs for an EAPO application are equivalent to the costs for a Dutch prejudgement garnishment request. As of 2025, these costs amount to EUR 714 for legal entities and EUR 331 for a natural person.

When is the EAPO useful?

The EAPO exists alongside the national procedure of EU member states, allowing creditors to choose between them. The EAPO is particularly useful when a debtor holds multiple bank accounts in different EU countries, as it enables the creditor to secure funds without initiating separate account preservation procedures in multiple jurisdictions. For bank accounts located in the Netherlands, creditors may prefer the Dutch prejudgement garnishment due to the mandatory security requirement and the limited scope of the EAPO.

Conclusion

Although EAPO is still relatively infrequently used, it can be highly beneficial when freezing multiple bank accounts across different EU member states simultaneously. It offers several advantages over the local routes, particularly in countries where account preservation/prejudgement garnishment via national procedures is (almost) impossible. If you have any questions after reading this blog, please feel free to contact us. We are happy to assist you exploring (international) garnishment possibilities.

[1] The European Account Preservation Order for debt recovery between EU countries.

Podcastaflevering Marein Smits

Roos Gelaudie — Mon, 16 Dec 2024 10:34:11 +0000

In this episode Takeover Lawyer of the Year 2024, partner and CEO of Wintertaling, Marein Smits, shares her unique vision of engagement and ownership within Wintertaling. Two years ago, she gave everyone ownership of the law firm, leading to a transparent and collaborative way of working.

Here are some highlights from the episode:

🔺 Involvement first: Marein emphasizes the importance of involvement of all employees. Everyone has a voice and a stake in the office, which ensures transparency and shared decision-making.

🔺 Wintertaling on the Zuidas: Although Wintertaling is a smaller firm, it is among the top firms on the Zuidas in terms of quality and type of business. Marein sees Wintertaling as the challenger to the established order.

🔺 International quality: The firm is ready to operate at the highest level and work with bankers and investors worldwide.

🔺 Unique structure: At Wintertaling, everyone, regardless of experience or expertise, has an equal voice in decisions. This ensures strong involvement and a good working atmosphere.

🔺 Transparency and trust: Decisions are made transparently and everyone is encouraged to express their opinions, even if they differ.

🔺 Cooperation and atmosphere: Wintertaling is known for its good atmosphere and caring for each other. There is room for both billable and non-billable time, and everyone is heard.

🔺 No hourly standard: Unlike other Zuidas offices, Wintertaling does not have a strict hourly standard. The focus is on quality and commitment to the office.

🔺 Moral Ambition: Marein believes in the trust and equality of people. This forms the basis of their way of working and creates an intrinsically motivated team.

Listen to this inspiring episode where Marein talks with Luuk Willems and Axel Mpeti to learn more about how Wintertaling is setting an example in the legal profession by putting transparency and engagement at the center.

#30 The self-organizing law firm as a challenger to the Zuidas

Wintertaling – Software in M&A | Een praktische kijk op de praktijk

Roos Gelaudie — Wed, 09 Oct 2024 13:54:45 +0000

As digitalisation and A.I. advance, many companies are creating and using software in their products and operations. Determining software ownership is crucial in a company takeover to ensure the business will continue to run smoothly which justifies the purchase price. This blog examines key issues related to software in company takeovers.

Copyright

Copyright is crucial in software development. Typically, the software's developer holds the copyright of its ‘creation’ and has exclusive rights to use, copy, modify, reproduce and share its creation.

Example

Suppose Mr X develops software (the X-Software Component) for Ms Y's company. If Mr X is an employee and Ms’ Y company its employer, then Ms Y's company owns the copyright. If Mr X is commissioned to develop the X-Software Component, Mr X is the ‘creator’ and therefore the copyright owner, in which case the X-Software Component must be transferred to Ms Y's company to ensure that Ms Y's company becomes the copyright owner. For now, we'll assume Ms Y's company owns the copyright to the X-Software Component.

Suppose Ms Y's company uses the X-Software Component in products for (A) the aircraft industry, (B) agriculture, and (C) education, all three products are likely initially developed within the same company. Separate companies, for each product are usually created only after one product succeeds in the market, leading to A-BV, B-BV, and C-BV over time.

Acquisition

If a buyer is interested in acquiring A-BV, it would want to confirm that A-BV holds the copyright for the entire software used for the aircraft products it produces. Since the buyer pays a significant purchase price, it need assurance that A-BV can continue its operations without interruption in the future. This is particularly crucial if it turns out that A-BV does not own or have the proper user licence for the X-Software Component.

If A-BV owns the copyright to the X-Software Component, the buyer will be satisfied but B-BV and C-BV face a risk in using it for their agricultural respectively education products if A-BV would deny their usage rights. This issue must be resolved during as part of the takeover. If A-BV doesn’t own the copyright to the X-Software Component, the situation is mirrored and A-BV would face the same risk as B-BV and C-BV described in the previous sentence.

Most common ‘solution’: the licence agreement

To partially address the continuity risk, a software licence agreement can be entered into with A-BV as the copyright owner/licensor and B-BV and C-BV as users/licensees. If A-BV doesn't own the X-Software Component's copyright, the buyer can request its transfer to A-BV or alternatively settle for A-BV to become a licensee. partially To partially address the continuity risk, a software licence agreement can be entered into with A-BV as the copyright owner/licensor and B-BV and C-BV as users/licensees. If A-BV doesn't own the X-Software Component's copyright, the buyer can request its transfer to A-BV or alternatively settle for A-BV to become a licensee.

Bankruptcy

A software license agreement only provides a partial A software licence agreement only partially resolves the issue, as a trustee in Dutch bankruptcy may decide to a ‘passive default’ under the software licence agreement if the copyright owner of the X-Software Component goes bankrupt. ‘Passive default’ in the context of a bankruptcy typically refers to a situation where the bankruptcy trustee fails to take actions necessary to fulfil its contractual duties. In the example at hand such ‘passive default’ could relate to neglecting contractual maintenance obligations or refusing to provide for data access in SaaS products. It becomes mor problematic if the bankruptcy trustee sells the copyright to the X-Software Component to a third party, that is not a party to the software licenced agreement and therefore not bound by it. If such third party buyer is a competitor of the licensee that may be detrimental for the licensee and its business continuity may be at risk.

In essence, the two BV’s using the X-Software Component under a license agreement, but not owning the copyright, face a bankruptcy risk under a software licence arrangement. This negatively impacts their business value and future sale price. If Ms Y spots this at an early stage before A-BV, B-BV, or C-BV become the object of an acquisition, restructuring might resolve the issue.

Copyright protection measures

Throughout the years, several copyright protection measures have been implemented to reduce the bankruptcy risk.

(i) The foundation structure (in Dutch: stichting), in which the copyright on the X-Software Component is transferred to a foundation set up for such dedicated purpose, which will act as licensor to (licensees) A-BV, B-BV and C-BV. The foundation may not incur any debts (this is enshrined in its purpose statement) which virtually excludes a bankruptcy risk. However, proper agreements must be made with the licensees that resemble terms and conditions of a software licence agreement.
The Community,(in Dutch: gemeenschap), in which the copyright of the X-Software Component is transferred to A-BV, B-BV and C-BV collectively, resulting in each company holding an ‘undivided share’ in a ‘community owned copyright’. Again, careful arrangements must be made regarding use, reproduction, modification and other rights affecting the X-Software Component, along with excluding the right to claim partition of the community. Furthermore, limited rights and/or security interests can be established on each of A-BV, B-BV and C-BV’s undivided share’ in the community to provide additional protection.
The separation,(in Dutch: splitsing), which splits (i.e. ‘forking’) the copyright on the X-Software Component, allowing A-BV, B-BV and C-BV to become separate copyright holders in their respective sectors: aircraft, agriculture, and education.

In some cases, further development might generate a new copyright for software that includes the X-Software Component, which could mitigate bankruptcy risks. To my knowledge, none of these measures have been tested in bankruptcy court.

Tax authorities

Finaly, bear in mind that tax authorities will scrutinise each copyright transfer for taxable events.

If the X-Software Component is transferred to A-BV, the seller will be taxed on any book profit realised on such transfer. Post-transfer, A-BV will probably capitalise the component on its balance sheet, allowing for tax depreciation. It is essential to address the seller's taxation, A-BV’s capitalisation, and the tax benefit A-BV gains from depreciation during the takeover negotiations. The tax authorities may evaluate the value of the X-Software Component independently, but are likely to take into account the purchase price paid by the buyer for A-BV, especially when the software is crucial to business operations of A-BV and if the period between the X-Software Component’s transfer to A-BV and the takeover by the buyer is brief.

Takeaway

Today, envisioning a business without software seems inconceivable. Software often represents a company's most significant asset and plays a crucial role in acquisition processes. To sidestep potential problems during takeovers, companies should proactively establish the optimal legal framework for the use and potential development of their software well before any sale. This foresight can prevent contentious debates over the purchase price during negotiations, resulting in substantial benefits.

Legal Netlink Alliance 2024 Fall Meeting

Roos Gelaudie — Thu, 12 Sep 2024 09:26:08 +0000

Wintertaling is excited to attend the Legal Netlink Alliance 2024 Fall Meeting in Greensboro, North Carolina, hosted by our esteemed colleagues at Carruthers & Roth.

As we celebrate two decades of valuable membership in this incredible global network, we’re looking forward to an agenda packed with insights from four top-notch speakers across business, academia, research, and justice. With 50+ participants representing 28 law firms from the USA, Canada, France, Romania, Serbia, and The Netherlands, this promises to be a truly inspiring event.

We can’t wait to connect, learn, and continue building strong global partnerships.

‘Ik wil dat medewerkers gezien en gehoord worden’

Roos Gelaudie — Wed, 17 Jul 2024 09:35:47 +0000

At Wintertaling, we believe in a work environment where freedom and connectedness are key. Marein Smits transformed Wintertaling three years ago into a place where everyone feels at home and equality is the norm. Every employee is a shareholder and has a say.

Click here for the complete interview with BusinessWise.

Photo: Marcel Bakker Photography

Boetebepaling in M&A: een praktische kijk op de praktijk

Roos Gelaudie — Mon, 08 Jul 2024 13:05:34 +0000

Written by Thédoor Melchers.

In M&A acquisition agreements, buyers often propose to include a penalty clause in their first draft. The penalty is connected to non-compliance of provisions in the agreement aimed at protecting the value of the company (being transferred). Examples include provisions on confidentiality, competition, non-poaching of customers, suppliers or employees and similar provisions.

The wording of penalty clauses commonly used in acquisition agreements has evolve to a standard provision over the past 25 years. Generally speaking, the provision usually resembles the following:

"In the event of any failure by Seller to comply with Articles [X], [Y], [Z], Seller shall, without any further action or formality being required, immediately pay an amount equal to EUR [●] per failure, to be increased by EUR [●] for each day such failure continues, as a penalty (and not in lieu of damages) to the Buyer or at the Buyer's request to the Company, without prejudice to any other rights or remedies available to the Buyer and/or the Company, including a claim for damages to the extent that the amount of damages exceeds the total amount of the penalty."

In the early stages of negotiations, the seller often simply deletes the penalty clause in its entirety in its mark-up of the agreement. The buyer then reinserts the penalty clause in its entirety into the agreement in its original form. This often creates a stalemate fairly early in the process, which remains in place until the final stage of negotiations.

The penalty clause then (along with provisions on the duration of the guarantees and the amount of the cap and basket of the guarantees) often ends up on the list of 'last outstanding issues' to be agreed at the eleventh hour of the negotiation process. This effectively means that the remaining open issues of both parties are exchanged against each other in order to get to agreed documentation. Thus, negotiations are at that stage no longer based on substantive arguments or textual adjustments that do justice to the interests of buyer and seller. At that point, the (understandable) desire of both parties to be able to sign the acquisition agreement after an intensive negotiation process often wins from diligence and content.

The question is whether this is wise. After all, the (financial) stakes involved in an acquisition are substantial in most business takeovers. It seems a misused opportunity during the negotiation process, given that parties could easily consider alternative solutions instead of just integrally deleting or maintaining the penalty provision.

A number of alternative solutions that could be considered are set out below.

The first thing that could be negotiated is the notice of default which is usually required for the penalty to become due. Not in all circumstances is it necessary the delete the requirement of a notice of default in its entirety. Perhaps it could be worded in a way that removes all or part of the incentive not to report a default (in the hope that the buyer will not find out). Why not take a similar approach as the regulations on GDPR. Such regulations sets out an obligation to report a data breach within 72 hours after the data breach has been detected. Only after the lapse of 72 hours, a penalty will start to accrue.
Furthermore, the penalty clause could distinguish more clearly between the amount and purpose of the penalty. Does the penalty aim to fix the amount of the damage because it is otherwise difficult to determine such amount, or is the purpose of the penalty to encourage the seller to do or refrain from doing something? A one-off high penalty amount seems reasonable if the obligation relates to preventing disclosure of essential trade secrets, while a lower penalty amount, increased with an amount per day that the infringement continues, seems more appropriate for an obligation to take action (e.g. transfer an IP registration after the transfer of the business has taken place). Furthermore, the amount that adds up per day need not be fixed, but can increase or decrease over time.
One might also wonder why the parties do not consider an alternative burden of proof, for example in a contractual arrangement regarding mitigation of the amount of the penalty. For example, the parties could agree that the amount of the penalty will be reduced by [Y]% if the seller proves that the actual damage caused differs from the amount of the penalty by more than [X]%.

The disadvantage is that the text of a penalty clause becomes longer due to the above elements. However, in an industry where provisions in acquisition agreements are already highly standardized and where models and/or AI are increasingly used, this should not be a problem. One would expect the first draft of the standard penalty provision to work as a menu of choices in which the various alternative solutions are presented to the parties. Buyer and seller can thus make a considered choice early in the negotiations as to which alternative elements are appropriate in the given circumstances of their case.

Upon request, we will gladly send you an example of a more comprehensive penalty clause, in which various alternatives are further elaborated! Please direct your request to Thédoor.Melchers@Wintertaling.com.

W&I-verzekeringen voor <25 mio. transacties?

Roos Gelaudie — Mon, 08 Jul 2024 08:30:07 +0000

Written by Thom Schölvinck and Julien van Oosten.

Warranty & indemnity insurance (W&I insurance) is an instrument that is used more and more frequently in the Dutch merger and acquisition market.

In 2023, only 4% of transactions of less than €25 million in Europe used W&I insurance (compared to 42.5% for larger transactions). Nevertheless, there are recent developments that make W&I insurance interesting for smaller transactions.

In this blog, we will successively explain (i) what W&I insurance is, (ii) the reasons for using W&I insurance and (iii) why W&I insurance becomes interesting for smaller transactions as well.

What is W&I insurance?

W&I insurance is a specialized insurance used in mergers and acquisitions to protect buyers and sellers against breaches of warranties and (tax) indemnities in the purchase agreement.

There are two types of policies: Seller policies protect the seller against buyer claims. Buyer policies protect the buyer against financial losses due to breaches of warranties and indemnities in the purchase agreement. Most W&I insurance policies are buyer's policies (96% in Europe).

We use the following assessment criteria for W&I insurance:

(i) policy limits (the maximum payout under a policy, usually as a percentage of the transaction value);

(ii) deductible (paid by the insured - i.e. usually the buyer ! - paid before coverage takes effect and is sometimes shared between buyer and seller);

(iii) coverage period (preferably corresponding to the warranty periods);

(iv) (standard) exclusions (e.g. issues uncovered during due diligence, fraud, and forward-looking statements); and

(v) underwriting process (thorough review of transaction documentation, due diligence reports and warranty annex, by insurer).

Main reasons for W&I insurance

W&I insurance offers undeniable benefits in mergers and acquisitions. For buyers, it sits in competitive bidding and protection against unknown risks and warranty breaches, increasing confidence in the deal and potentially enabling more favourable financing terms.

Different types of sellers have their own reasons for taking W&I insurance. The insurance limits seller's liability by transferring the risk of warranty breach to the insurer, allowing the transaction to close faster with fewer security requirements on the part of buyer.

It helps mitigate risk by transferring financial losses resulting from breaches of warranties to the insurer. For a seller, this enables a 'clean exit', which may be relevant for sellers for whom continuing to bear risk may be a reason to abandon a transaction. Furthermore, insurance can be used where maintaining the relationship between buyer and seller in the future is desirable.

W&I insurance is thus a good way to facilitate negotiations by limiting discussions about disputed guarantee clauses.

Time and money no longer work against W&I insurance: timelines for taking out W&I insurance have become ever shorter in recent years: within two weeks is common and under circumstances, faster is even possible. Costs have fallen dramatically since the early days of this type of insurance, making this tool within reach of the SME vendor as well.

Under current market conditions, transactions around €10 million are insurable for an entry fee starting from €50k (including premiums, including underwriter fee and insurance taxes).

Integrating W&I into the acquisition process

To use W&I insurance successfully in an acquisition, it is essential to discuss the possibilities at an early stage so that the acquisition process is designed accordingly. For instance, proper agreements on due diligence should be made to promote smooth cooperation, reduce the risk of disputes and avoid indemnities in the acquisition contract as much as possible. In addition, the use of W&I insurance can be used as a negotiating point. A strategic use of W&I insurance can thus optimise the acquisition process.

Would you like advice on W&I insurance, or do you have other questions about mergers and acquisitions? Then contact our Corporate | M&A team Marein Smits, Thom Schölvinck, Tim Carapiet-Petit, Lisette Oosterveen, Thédoor Melchers, Esra Koopman, Julien van Oosten and Bart Dreef.

Dubbelinterview Marein Smits (Wintertaling) en Arnold Mars (AFAS Software)

Roos Gelaudie — Wed, 03 Jul 2024 13:48:23 +0000

Marein Smits (60) is a lawyer and in that role has been active in mergers and acquisitions for 25 years. Arnold Mars (42) is CFO of family company AFAS Software. Fambizz talked to them about norms and values, ownership and remuneration.

Written by: Dennis Mensink

Wintertaling is a law firm on Amsterdam's Zuidas business district that often does things just a little differently. AFAS Software also does almost everything just a little differently, with the office building - excuse me: experience centre - where the interview takes place as a shining example. Smits and Mars both have a preference for family businesses. Smits mostly assists family businesses, Mars is co-owner of a family business. Ownership is an essential part of how they look at companies in general.

Educational
Mars has now been at the helm of AFAS for 15 years, together with CEO Bas van de Veldt. AFAS was started in '96 by Ton van de Veldt (Bas' father, ed.) and Piet Mars (Arnold's father, ed.). In 2008, Arnold and Bas were appointed general and a finance director. "It has been a very fun early days, during which we have learned an awful lot ourselves and also made an awful lot of mistakes. Well, the latter, we still do."
Smits has been a partner at a large firm as a lawyer. "Everything involved is very instructive, but it certainly wasn't blissful for me," she says. That is why she moved to a smaller firm about 12 years ago, where she was allowed to invent the wheel herself. And she did so again three years ago. "Then we took a different approach again, because since then we have been using holacracy. Everyone is a shareholder and has voting rights. "That's really different, especially in our world. We want as few wrong drivers as possible, where it's all about the individual rather than the group. I did bomb myself as CEO, And I'm going to do that for the rest of my career and see how that turns out."

Mars: "I like what you're doing. Also kind of exciting. You want to motivate employees intrinsically by making everyone a shareholder. We once did that ourselves, in the early years tooWe stopped doing it. Human capital is a huge scarcity, but a bit of throughput and outflow of staff is also important." AFAS itself has moved towards a profit-sharing scheme for all employees. "That's slightly less favourable fiscally, but that's the way it is for now. You can't buy intrinsic motivation, but I do think: if AFAS is doing well, our employees should also do well. We already reward above average, but the profit-sharing scheme is certainly generous as well. I think it's fantastic that we can offer that."

Productivity thinking
At AFAS, the management strongly believes in productivity thinking, i.e. revenue per employee. "It's better to employ five people in a good way and also pay them very well than to have ten average people and pay them slightly less. You end up losing more for that while they perform less. I think we can move much more towards that: working smarter instead of hiring extra people when there are problems. And ultimately giving the people you have a lot of ownership, motivating them and giving them a very good salary. That is where we as Europe and as the Netherlands will have to move much more towards. I don't mind at all if someone says: I would like to earn 10 per cent more. If he also ends up earning 20 per cent more, well, that's good for everyone anyway. If you create such an organisation, yes, in our case you can get to a turnover per employee of almost 500,000 euros. So you may and can also give people a high income. Not just the usual suspects, but also the facilities organisation, the people from the events team, the consultants and the support staff. Everyone."

Smits sees differences and similarities with Wintertaling. "Because ownership at our office lies with everyone, everyone also benefits from success. We do it together, so we also earn it together. But everyone also has to do things, just like here at AFAS. Convenience is something we have to eliminate. This is also just like with children: some things just have to be done. Can I have a sweet? Then I would always say: you can always have anything, but you have to ask first, and maybe say: wouldn't you eat an apple first? But employees are not children, so imposing things sometimes remains tricky. Especially if you want to create a flat organisation."

When it comes to rewarding entrepreneurs, Smits has assisted many people in her career in selling a business, and that has not taught her that that is "a nice place to be". "Because then you have a lot of money, but then you only have that. I have yet to meet the person, no matter how strong in their shoes, who is very happy with that bag of money they get then, as weird as that may sound." Mars nods in agreement. The AFAS CFO talks about an article he read recently, about a man who wanted to give his company away to his employees. "Like: I have enough and I will give it to my employees. That is technically very difficult, of course, but I think the idea behind it is ironclad. That is a completely different way of thinking that may also be named."

Trust
Which values are important to Smits and Mars within the company? "Trust is the most important one; as colleagues we should be able to trust each other completely. Excellence, or being super good at your job, and professionalism, are other very important values. You are always a flesh-and-blood human being, but you are also in a certain role and you have to 'play' and perform it as well as possible. I sometimes compare the role of a lawyer to that of a flight attendant. It is also a role. Of course you are not a robot, but no matter how annoying you might find someone or a situation: you are doing something for your client and you do that to the best of your ability."

AFAS has named four clear core values: family, doing, crazy and trust. "I personally think the last one is a very nice value. And I also find it very difficult to implement. Take the relationship with Bas, for example. We said fairly early on in our collaboration: we have to be able to trust each other one hundred per cent and that is what our relationship is based on. Besides: trust is zero or a hundred. It cannot be in between . That is very important. You represent each other. So you also want the other person to trust you in how you talk, how you also take care of each other, how you also protect each other. It is interesting the moment you don't understand each other for a moment or you just really disagree. As far as I am concerned, trust does not mean that there should be no discussion or no arguments. On the contrary, there should be. Sometimes you feel that the other person doesn't quite agree on something. Then you call each other in the evening and say something like: I do have the idea that you have a different view on this. That is the development of the relationship."

Delegating
According to Smits, it is also about trust and the qualities of employees. As a manager, daring to hand things over, daring to delegate. "That's also necessary, because I can't do everything myself or sit on it, because a customer is not going to pay twice. Often things also just go well. And sometimes something goes wrong; then you can actually be happy about that too, because someone learns from that. The challenge is for people to take that responsibility themselves and to be guided and trained in that. That they realise sufficiently: this is a delegated responsibility and this is how I have to deal with it."
Mars acknowledges the importance of this: "Delegation is a very important facet to achieve success. I am also quite clear about that. If I have a meeting, it can't be that you delegate everything to one person and that there are always a few people who completely wipe their own street with a little sweep. If you want to position each other in his or her strengths, you also have to look together: who does what? I am also someone who prefers to do a lot of things myself, but I cannot do everything myself. You have people you have to assign everything to, but also people who say: come here, I'll take over."

Idiot
AFAS' core value of 'doing', for example, work hard, play hard, Mars explains. "How we prepare lunch, sports and outings. Lots of facets that reflect the bonding, the culture. But that culture is also formed in working, in working hard. Not just chatting with each other, but always looking at consultations: can we take concrete points from them and how are we going to give substance to them? Can we create speed and differentiate ourselves?"
The core value 'family' is strongly reflected in AFAS' culture. "Are you there for each other when someone has had an accident? And if there is a birth or something else to celebrate, do you send a card? That family feeling comes back strongly."
According to Mars, the most fun core value is "crazy". "The fun element in our work ensures that we just really enjoy our work. That we can laugh every day. I think the element 'crazy' is the most powerful one myself. Of course, you have to use that in the right way because to be labelled an idiot..."

Rules
But what rules belong to core values? Mars: "The question is, of course: what do you want to achieve with rules? Does a rule contribute to a better product or service? That should always be the condition. We have one maxim: work with common sense in the interests of AFAS. With that, we have jettisoned all our staff manuals. Humanly speaking, this is very challenging but also terribly fun. Because everyone thinks it's a great story until they themselves are faced with something at some point. That you think: okay, how are we going to sort this out? Then a rule is really nice, but we then have to talk to each other. That provides us with a lot, by the way."
Smits: "I notice that people themselves feel the need to make up rules when they are not there. That is a serious challenge. Whether that has become more so since everyone is in charge? Yes, I think so. People finally feel really responsible and then they want something to do with it. Transferring shares was so done, but then it only begins."
Mars: "So we don't think from rules, but from people. If a problem comes up, you don't point to a rule, you say: I'm going to solve it for you, I'm going to help you. And you try to do that as decentralised as possible within the organisation, giving employees a lot of space and freedom. There is a lot of flexibility, but sometimes there are a few rules. If we have a Culture Café, everyone has to attend. Then it's not: I have to look after the neighbour's cat. No, you're just there."

Family businesses
When it comes to company ownership and financing, Mars finds it unfortunate that there is so much focus on private equity. He speaks of an "erosion of the Dutch economy" and Dutch values. "I am not against private equity, but I am against eroding your sustainability ambitions, which after all often go together. How do you deal with each other? What do you want to stand for? Does it still include the name of the employee and the customer? As a family business with its own values, you have less pressure from that shareholder. So you can say: well, we'll do it this way, we'll take that risk. There is another form of capital present within family businesses. If investment needs to be made here to get to a more sustainable deployment, it's done within minutes. We are going to do that and through. I think that is beautiful and good for a company. That's partly why I love family businesses so much."
Smits: "In every business, there is a horizon. In family businesses, there is the continuity horizon, looking across generations. In the classic sense of the word, you are then talking about sustainability. Economically, there is also a very different perception of what a business should bring. That, of course, characterises a family business. This is linked to those long, generational terms, which ensure that you can and will also do other things that the competition does not. But do you dare to do that, when nobody else has done it yet?"
Mars: "I think you're right. If you are intrinsically into it, you are also committed to systems. How do you deal with your employees, how do you deal with your relationships, and with your environment? You yourself are just a passer-by in this world. So how, how do you leave that environment? I think that's very close together."

Family statute and STAK
AFAS Software has a family statute naming its shareholders. Those shareholders are in some cases employed at AFAS sometimes not, but they are all members of the Van de Veldt and Mars families. Meanwhile, that generational transfer has taken place. "Our fathers are in their early seventies. One is still in the Supervisory Board and the other has already quit. Of course, it's very nice that the company continues visibly." In a STAK, AFAS has formalised control. "Bas and I can do business in freedom and we are very happy with that. We did define nine anchor points about which we have to consult with the shareholders. Take a change of management or dividend policy, for example. But anyway, that's no trouble of course, because it's very nice to meet regularly as shareholders too.That's what we fortunately do."

Bevindingen van Vereniging Corporate Litigation: drie jaar WHOA in de praktijk

Roos Gelaudie — Thu, 20 Jun 2024 12:06:52 +0000

Written by Sandra Frommelt, Tim Carapiet-Petit and Tessa Visser.

Speakers at the spring meeting of the Corporate Litigation Association last Monday 17 June 2024 gave an update on the Court Approval of a Private Composition (Prevention of Insolvency) Act (Wet Homologatie Onderhands Akkoord in Dutch, in short the WHOA). The WHOA was introduced three years ago within a short time frame as a reorganisation tool and is proving to be a valuable alternative to bankruptcy and suspension of payments.

Despite the fact that many WHOA cases do not reach homologation because parties still manage to reach a mutual agreement, the WHOA procedure appears to work quickly and efficiently. In doing so, an application for homologation can be used broadly; an application is not easily rejected because it would be too early or too late. Even if a company is already de facto insolvent, WHOA proceedings can still offer a solution in some cases.

A major difference and advantage of WHOA compared to bankruptcy is that the entrepreneur retains control during proceedings. There is no trustee in bankruptcy and the company is not shut down. WHOA is characterised by the fact that the 'debtor in possession' can initiate WHOA himself and continue to do business himself.debtor in possession' can initiate the WHOA itself and continue to do business independently.

At the same time, the WHOA provides several safeguards for stakeholders as well as the company. For instance, within a cooling-off period, a private composition can be explored without creditors being able to file for bankruptcy.

The position of shareholders is a special one in a WHOA – no control, but nevertheless not without a future. WHOA proceedings can be initiated without shareholders' consent – even if otherwise agreed in agreements, regulations or articles of association. Nevertheless, in most cases shareholders are better off in WHOA proceedings than in bankruptcy. In bankruptcy, shareholders are at the back of the line, leaving them empty-handed in almost all cases. WHOA proceedings aim to allow the company to continue without stifling debt, giving shareholders a chance to see some return on their investment in the future.

A well-supported and consistent valuation is crucial for successful WHOA proceedings. Two valuations show the difference between reorganisation value (the value after WHOA) and liquidation value (expected proceeds in bankruptcy). Creditors must be better off with a reorganisation in favour of bankruptcy in order for a court to approve the homologation request.

Often, the threat of a WHOA with eventual homologation and possible cram down is enough to induce creditors and shareholders to reach an agreement – a big stick that was lacking before the introduction of the WHOA, as a result of which many private agreements often failed to materialise. Does this make the WHOA the holy grail in reorganisation land? It appears to be a powerful tool, but it is not the only one. Also consider a restructuring through enforcement of a share pledge. Shares can be sold privately or through the courts if a pledge is enforced. That moment can be used to bring about a restructuring. This of course requires that a pledge on shares has been established. Furthermore, this procedure does not always offer the safeguards that the WHOA does, as this sale/restructuring can also take place privately without court supervision. In addition, no cooling-off period can be ordered and thus the pledged shares may still prove worthless if interim bankruptcy is declared.

All in all, after more than 3 years of WHOA, we can conclude that it is a valuable addition to the insolvency practice. However, it is still important to act carefully, and to collaborate with experts in different fields to achieve optimal results.

Questions about this procedure, or about possible options in case of financial difficulties? Please feel free to contact us, we will be happy to advise you.

Aanpassing geschillenregeling; zou het dan nu toch echt?

Roos Gelaudie — Wed, 19 Jun 2024 11:44:00 +0000

Written by Tessa Visser, lawyer at Wintertaling.

After a long run-up, the time has finally come: on 4 June 2024, the Senate adopted the legislative proposal on Adapting the Dispute Settlement Procedure and Clarifying the Admissibility Requirements for Enquiry Proceedings (the "Wagevoe" in Dutch). The planned amendments can be explained as follows.

Dispute resolution

The dispute resolution proceedings include the proceedings for squeezing out a shareholder (Article 2:336 of the Dutch Civil Code), the proceedings for forced exit (Article 2:343 of the Dutch Civil Code) and the proceedings of pricing (Article 2:343c of the Dutch Civil Code).

An action for expulsion can be brought by the company when the conduct of a shareholder harms the interests of the company to such an extent that the continuation of his shareholding can no longer reasonably be required. This concerns conduct in the capacity of shareholder. In practice, this means that the conflict must have occurred within the general meeting of shareholders. Other conflict are not taken into consideration.

A shareholder can bring an action for forced exit himself. He then must claim that his co-shareholders should be forced to take over his shares if his interests are harmed by conduct of those co-shareholders to such an extent that the continuation of his shareholding cannot reasonably be required of him.

The price-fixing proceedings are for the situation where the parties agree that one of the shareholders should exit and agree who that should be, but cannot agree on the price of the shares. The court can then set the price (or have it set).

Reasons for an amendment

In practice, the dispute resolution proceedings have proven to be ineffective and are therefore barely used. The courts handle only a few claims per year under the dispute resolution proceedings, despite the need for an effective settlement of disputes between shareholders. The changes introduced in 2012 with the introduction of the Flex-BV have not led to much improvement.

The reason that the dispute resolution proceedings deserve improvement lies mainly in the area of accessibility: a claim for squeeze-out only qualifies for allocation if the conflict has moved to the level of the general meeting of shareholders, and if, as a result, the company's interests are harmed to such an extent that remaining a shareholder cannot be required. This does not take into account behaviour that is unrelated to what happens in the shareholders' meeting, but is detrimental to the company. Examples include fraudulent conduct and unlawful competition.

In addition, the dispute resolution proceedings are perceived as costly and time-consuming. This, combined with the high standard, means that shareholder disputes are often resolved by other means.

Upcoming amendments

Although the textual changes to the Wagevoe are very limited in scope, their impact will be significant in practice. The main changes are that conduct other than in the capacity of shareholder can also be a ground for squeeze-out, and that not the ordinary court but the Enterprise Chamber of the Amsterdam Court of Appeal will have jurisdiction to rule on these disputes. Furthermore, the exit procedure will also be accessible to holders of depositary receipts.

That the standard will be extended to include conduct outside the capacity of shareholder seems to be a very desirable change. Shareholders no longer have to wait until the conflict also manifests in the general meeting of shareholders, but can intervene before it has to get that far. The interests and continuity of the company concerned will be served by this.

Furthermore, the Enterprise Chamber has proven to be able to act quickly and competently in company disputes; inquiry proceedings are popular for a reason and the turnaround time is considerably shorter than that of commercial proceedings. It therefore seems an obvious choice to house the dispute resolution proceedings with the Enterprise Chamber. The consequence, however, is that only one factual institution will assess an application for squeeze-out. Of course, appeal in cassation will still be a possibility. This is quite a drastic change, especially since the price for the shares will be determined within the same proceedings. This will improve efficiency, though.

Another consequence of transferring the dispute resolution proceedings to the Enterprise Chamber is that proceedings are no longer started with a writ of summons, but with a petition. The most relevant aspect of this is that requests could then also be combined; a request for an inquiry could also immediately be accompanied by a request for the squeeze-out of a shareholder. More efficient than litigating in two different places, but a party submitting a request for an inquiry could thus just as easily be confronted with a counter request for squeeze-out.

Conclusion

The upcoming amendments seem set to make the dispute resolution system more accessible, but also more risky. The next few years will show whether the changes will actually lead to a well-functioning and effective dispute resolution system, which is so much needed in practice.

Do you need advice on difficult relationships within the company, questions on how to avoid this kind of situation or do you have other questions? Feel free to contact us.