Minister for Legal Protection Dekker has issued a bill submitted to the House of Representatives, which lifts the ban on the transfer or pledging of claims (Act on the Lifting of Prohibitions on Pledging). This will give SMEs greater scope to raise loans.
Pledge
A pledge is the option to provide a claim as security for the fulfilment of debts incurred. The creditor may enforce the pledged claim if the debtor fails to meet his or her obligations.
The transfer of a claim takes place by way of assignment. The assignor of the claim receives a purchase price from the assignee for the value of the assigned claim. Once the assignment has been validly served on the debtor, the debtor may only discharge the debt by paying interest and capital to the assignee.
Prohibition on pledging and/or transfer
Under the current Article 83(2) of Book 3 of the Civil Code The debtor may stipulate, as a condition of a loan, that the creditor may not assign and/or pledge his or her claim.
These prohibitions are frequently used, particularly by large parties, in sectors such as the construction industry. The prohibition on pledging and/or transferring assets is agreed upon to prevent the parties from having to deal with a changing group of creditors.
Void
The draft bill, the Act on the Repeal of Prohibitions on Pledging, stipulates that prohibitions on pledging and transfer are void if they relate to:
- a monetary claim in one’s own name;
- arising from the conduct of a business or profession.
Excluded are monetary claims:
- from a current or savings account;
- under a credit or loan agreement, where several parties are (or will be) involved on the lender’s side;
- from or at a clearing house, central counterparty, settlement agent, clearing house or central bank;
- which will be paid into a G account.
This invalidity also applies to clauses which are indirectly intended to prevent the pledging or assignment of claims, such as a penalty clause or a confidentiality clause. A partial prohibition on pledging or assignment is also void.
A negative pledge (a declaration that no stronger security interest will be granted to any other party) and a pari passu clause (a statement that no assets have been provided as security and that none will be provided) are not covered by the declaration of nullity.
Transitional law
The nullity also applies to prohibitions on pledging and transfer in legal relationships existing at the time the bill comes into force. For these existing contracts, the nullity takes effect three months after the Act comes into force.