Dutch football club ADO Den Haag has filed for WHOA proceedings after its major shareholder failed to pay €2 million due to the club, leaving it unable to meet its financial obligations.
The decision
At the request of ADO, the court in The Hague appointed a restructuring expert and allowed a two-month cooling-off period. ADO also asked the court to authorise the transfer of one of its players to another football club, SC Heerenveen. SC Heerenveen had sought assurance that the transfer would not be annulled if ADO went bankrupt. The court, however, refused to authorise the transfer.
Section 42a of the Dutch Bankruptcy Act
According to section 42a of the Dutch Bankruptcy Act, a legal act that has been performed with authorisation cannot be nullified on the basis of fraudulent conveyance (actio pauliana). The court will authorise a transaction if:
- performing the legal act is necessary to enable the debtor to continue its business during the composition process, and
- at the time the approval is granted, it can reasonably be assumed that the legal act serves the interests of the creditors as a whole and none of the interests of individual creditors are materially prejudiced.
Why did the court refuse to authorise the transfer?
The court stated that it was unable to determine whether the transfer fee was in line with market conditions and therefore whether it would be disadvantageous to creditors. It was also unclear, and it could not be assumed, that the transfer agreement was an attempt to obtain financing to enable ADO to continue its business during the composition process, even if the proceeds of the sale could be used to meet liabilities. This meant that the requirements under section 42a had not been met.
Find out more
To discuss the issues raised in this article in more detail, please reach out to a member of our Restructuring & Insolvency team.
