SECURITIZATION AND THE TRANSFER OF RECEIVABLES UNDER THE LAWS OF THE NETHERLANDS ANTILLES
When should the notification be given?
Netherlands Antilles Special Purpose Vehicles (‘SPVs’) are frequently used in cross-border financing transactions, including (synthetic and cash) securitizations, repackagings, collateralized debt obligations (‘CDOs’) and collateralized loan obligations (‘CLOs’) and leasing transactions, MTN and other note issuance programs.
Under Netherlands Antilles law receivables can be transferred unless a statutory or contractual provision or the nature of the receivable restricts or prohibits its transfer.
Transfer of a receivable under Netherlands Antilles law requires:
(i) a written instrument evidencing the assignments (‘cessieakte’); and
(ii) notification to the debtor of the receivable which is being assigned.
Typically, originators in securitization transactions do not want notification to be given to their debtors, which is why it has become practice to sell the receivables and postpone the required notification until the occurrence of certain trigger events.
As notification is a requirement for such transfer; notification needs to be given while the originator still has power and capacity to dispose of its assets. In order to protect the SPV against the situation where notification is no longer effective to make the transfer (so basically where the originator has been declared bankrupt (‘failliet’) or has been granted a suspension of payments (‘surseance van betaling’)) an undisclosed right of pledge (‘stil pandrecht’) is granted, of which notification can be validly given at any time.
Notification of the pledge to the debtor would give the SPV as pledgee the right to collect the receivables. In international transactions, another way to avoid notification would be to opt for a foreign law that does not require notification to be given for a valid assignment.
Karel Frielink
Attorney (lawyer) / Partner
