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.