Law and regulation of Covid-19 loan moratoriums in the Netherlands

In order to face the extraordinary circumstances under the COVID-19 crisis, on 24 November 2020 the Dutch parliament adopted new legislation on, among other things, temporary payment suspension (Tijdelijke wet COVID-19 SZW en JenV incorporating the Tijdelijke Betalingsuitstelwet 2020). This new legislation was published on 16 December 2020 and entered into force on 17 December 2020. This act includes a set of more general temporary measures in relation to the COVID-19 crisis and also offers debtors the possibility to submit to the court a request for postponement of bankruptcy or for suspension of a creditor’s/creditors’ claims if the debtor is able to show that prior to the COVID-19 measures being implemented (i.e. 16 March 2020) the debtor was able to pay its debts, and since the measures, its revenues have declined by 20% or more. Other conditions in order to qualify for suspension of payment under this act are the perspective of debt repayment on expiration of the suspension term as allowed by the court and that the suspension of payment is not unreasonably detrimental to the creditor(s) requesting the bankruptcy. Debtors qualifying as banks, insurers or investment firms under article 1:1 of the Dutch Financial Supervision Act (Wet financieel toezicht) are excluded from the scope of this new legislation. The provisions of this new act applying to temporary payment suspension apply until 1 February 2021 but may be extended by royal decree for a further 2-month term.

Besides the new legislation on temporary payment suspension, on 19 March 2020 a number of Dutch banks had granted small- and medium-sized enterprises 6 months’ suspension on the repayment of loans. This moratorium applied until 31 July 2020. It applied to corporate loans to a maximum of EUR 2.5 million and was granted to enterprises that were basically financially healthy. Although this moratorium measure has now ended, banks may enter into tailor-made moratorium arrangements with each individual client borrower. The same applies for loans exceeding EUR 2.5 million.

Dutch banks are also committed to help private customers through these difficult COVID-19 times. Consumers who, due to a loss of income, face difficulties with paying the mortgage, are advised to contact their bank. Banks seek to offer every customer a tailor-made and suitable solution.

Entrepreneurs can also apply for a payment extension for income tax, corporate tax and turnover tax (VAT). This measure applied until 1 October 2020 but a (further) extension may now be requested until 1 April 2021. Entrepreneurs may also apply for payment extensions for various other taxes such as excise duties, landlord levies, environmental taxes, insurance premium taxes and betting and lottery taxes. This measure exempts from the obligation to pay any fines for late payment, and the collection interest rate for delayed payment has been temporarily decreased to nearly 0%. This latter measure applies until 31 December 2021. The tax interest rate has also temporarily been set to the lowest possible percentage. Repayment of outstanding tax obligations further to a granted moratorium under these measures may be made over a maximum period of 3 years, starting 1 July 2021.

In addition to the above support measures, lenders are generally expected to act with leniency towards borrowers.

Dutch insolvency law has not been amended yet. At this stage, the pre-COVID-19 regime still applies but Dutch courts now give priority to requests for (preliminary) suspension of payments (surseance van betaling, the Dutch voluntary reorganisation procedure for eligible borrowers) and urgent requests and applications for bankruptcy. Non-urgent cases will be adjourned for a period of at least 4 weeks.

Not applicable.

See above.

For the suspension on the repayment of loans, the duration was 6 months. Banks may enter into tailor-made moratorium arrangements with each individual borrower, including for loans exceeding EUR 2.5 million.

(Further) extension of tax obligations applies until 1 April 2021.

A suspension of payments under Dutch insolvency law can be granted for a maximum of 3 years. In case of a suspension of payment under Dutch insolvency law, a cooling-off (afkoelingsperiode) period may be granted by the court for up to 4 months.

Banks may allow tailor-made moratorium extensions with each individual borrower.

Presently, a possible (further) extension of granted moratorium on tax obligations may be applied for.

The COVID-19 moratorium and financial support measures are not mandatory but have to be applied for. An enterprise can opt in if it wants to be protected by the measure. The suspension of payments under Dutch insolvency law is a voluntary reorganisation procedure for eligible borrowers.

Generally, as was the case for the bank loan moratorium, the financial support measures apply to corporate loans only. However, under the exceptional COVID-19 circumstances, Dutch banks are also committed to help private customers through these difficult times. Consumers who, due to a loss of income, face difficulties with paying their obligations under a loan or their mortgages, are advised to contact their bank. Banks seek to offer every customer a tailor-made and suitable solution.

The suspension of payments under Dutch insolvency law applies to companies and legal entities and to natural persons carrying out a business or practising an independent profession. It may cover both corporate and consumer loans.

For moratorium on bank loans: all lenders being a client with the bank that allows for a suspension of payment may be affected.

For tax obligations moratorium: all lenders that qualify as taxable entities in the Netherlands.

For suspension of payments under Dutch insolvency law: ordinary creditors, who are not allowed to enforce payment of their claims. Preferential and secured creditors are not affected, unless a cooling-off period has been granted.

For moratorium on bank loans: depending on the terms and conditions established by the relevant Dutch bank, including branches of foreign banks duly established in the Netherlands, for the granting of the moratorium on bank loans. As the moratorium on loans was granted by major Dutch banks on a voluntary basis (for instance ABN Amro, BNG Bank, Deutsche Bank, ING, Rabobank, Volksbank and Triodos Bank), and is now applied by these banks on a case-by-case basis and only applies to such banks, cases of the granting of loans by foreign lenders are not directly foreseen. For the granting of the moratorium it does not make a difference whether the loan agreement in question is governed by Dutch law or by foreign law, as long as the terms and conditions for qualifying for the moratorium are met by the borrower requesting the moratorium.

For tax obligations moratorium: depending on whether the lender is a taxable entity in the Netherlands.

For suspension of payments under Dutch insolvency law: no.

Generally, a moratorium on bank loans will relate to the current financial obligations under the relevant loan(s). However, under the COVID-19 crisis circumstances, banks may tend, on a case-by-case basis, to allow longer repayment terms and/or extensions also relating to future repayment obligations under new loans.

(Further) extension of tax obligations moratorium may be granted until 1 April 2021.

A suspension of payments under Dutch insolvency law relates to loans prior to the date on which the suspension of payment has been granted by the court.

Whether the moratorium on bank loans applies to principal only, or also to interest and/or fees, will depend on the terms and conditions of the relevant loan agreement and, accordingly, on the terms and conditions of the allowed bank loan moratorium.

For tax payment obligations, the obligation to pay any fines for late payment and the collection interest rate for delayed payment has been temporarily decreased to nearly 0%. The tax interest rate has also temporarily been set to the lowest possible percentage.

A suspension of payment under Dutch insolvency law also applies to interest and/or fees, preferential and secured loans excluded.

Depending on the type of benefit granted and on the terms and conditions of the allowed bank loan moratorium or lease payment obligations moratorium. The moratorium may accordingly result in an extension of the maturity of the loan.

In case of suspension of payment under Dutch insolvency law: if the parties under a loan agreement have not agreed upon any consequences of such a moratorium, and should the claim of the creditor be unsecured, then the loan will be affected by the moratorium. However, this will not automatically result in an extension of that loan by the moratorium period.

Generally, yes. However, in the case of a moratorium on bank loans, this may depend on the terms and conditions of the relevant loan agreement and, accordingly, on the terms and conditions of the allowed bank loan moratorium.

In the case of suspension of payment under Dutch insolvency law, not for preferential and secured creditors.

Depending on the terms and conditions of the relevant loan agreement and, accordingly, on the terms and conditions of the allowed bank loan moratorium. If, for instance, a bank has granted a 6-month suspension on the repayment of certain loans, or suspension of payment is granted by the court under Dutch insolvency law, it may be that, under the terms and conditions of such suspension of repayment, an event of default other than non-payment still triggers termination of a loan.