13 July 2016

Dutch Supreme Court: pledge on retained property now bankruptcy-proof

This article is only available in Dutch, click here to read it

The Dutch Supreme Court recently ruled that a purchaser who has acquired a good subject to retention of title can establish a pledge on that good, which is unaffected by the purchaser’s bankruptcy. According to the Dutch Supreme Court, the purchaser obtains contingent ownership of the good before the purchase price has fully been paid. The purchaser can pledge or transfer contingent ownership under the same condition to which the good was originally acquired. This means that the purchaser can establish a pledge on the good under retention, which grows into a pledge on the full ownership of the good when the full purchase price is paid. The bankruptcy of the purchaser does not preclude this possibility. Pledgees are advised to stipulate in the deed of pledge that the pledge is also established on goods transferred under retention of title.