EMERGENCY MEASURES IN RESPECT OF NETHERLANDS ANTILLES BANKS
Several measures available to the Central Bank
The Netherlands Antilles Ordinance on the Supervision of Banks and Credit Institutions 1994 provides for several measures that may be implemented with respect to a credit institution, including in view of liquidity or solvency concerns. The legal provisions with respect to a moratorium under the Bankruptcy Act do not apply to a credit institution.
The Bank van de Nederlandse Antillen (“Central Bank”) is the regulatory authority for credit institutions and has the authority to impose requirements on credit institutions with respect to the manner the banking business is conducted, in the interest of the solvency and liquidity of credit institutions (section 21 of the Ordinance).
In addition to such general authority, the Ordinance provides for specific instruments the Central Bank may use or initiate, such as (i) silent restraint (‘stille curatele’), (ii) emergency measure (‘noodregeling’) and (iii) bankruptcy (‘faillissement’).
Silent restraint
In the event the Central Bank (i) determines that a credit institution does not comply with the requirements under section 21 of the Ordinance, or (ii) detects other signs of a development which is or may become dangerous for the liquidity or solvency position of the credit institution, the Central Bank may decide to place restrictions on the powers of certain or all corporate bodies of the credit institution, i.e. that such powers may only be exercised after having been approved by one or more persons appointed by the Central Bank (section 22 of the Ordinance).
Emergency measure
Section 28 of the Ordinance stipulates that if required in the interest of the creditors of a credit institution, which banking license has been revoked, the Curacao court may on the request of the Central Bank implement the emergency measure.
Under section 9 of the Ordinance, a banking license may be revoked. The Ordinance lists numerous grounds for such termination, including (i) non-compliance with the Ordinance or with instructions by the Central Bank (ii) not meeting applicable solvency or liquidity requirements.
Once its banking license has been revoked, the credit institution has to wind up its activities as a credit institution in accordance with Central Bank instructions.
The court will handle a request of the Central Bank to implement the emergency measure with most urgency in a public court hearing. Both the Central Bank and the credit institution have the right to be heard. There is no legal remedy available against the courts decision, other than an appeal to the Supreme Court in The Hague.
After the court has pronounced the emergency measure, only the Central Bank may exercise the powers of management and the supervisory board of the credit institution. The management and the supervisory board are obliged to fully cooperate with the Central Bank. The Central Bank is authorized to dismiss members of management and the supervisory board
The consequence of the emergency measure is that the credit institution can no longer be forced to satisfy its existing and future debts (‘schulden‘), pending enforcements (‘executiën‘) will be suspended and attachments (‘beslagen‘) will be lifted, except for claims secured by way of pledge or mortgage on goods and installments of hire purchase contracts (‘termijnen van huurkoop‘). Therefore, it does not make sense, for example, to initiate preliminary relief proceedings to collect a claim.
Bankruptcy
The court will not accept a bankruptcy petition as long as the credit institution has a banking license.
The Central Bank is to file a bankruptcy petition for the credit institution, if (i) it believes that the credit institution has a negative equity and (ii) either (x) the purpose of the emergency measure is or can no longer be realized or (y) in the event the emergency measure has not been implemented, the absence of a reasonable expectation that such purpose can be realized.
In deviation of the Bankruptcy Act, a credit institution may be declared bankrupt also in the event it has not ceased paying its debts.
Karel Frielink
Attorney (lawyer) / Partner
