A right of pledge (pandrecht) is a limited property right that allows a creditor to recover a money claim with priority from a specific asset. Under article 3:227 of the Dutch Civil Code (BW), a pledge covers movable goods, receivables and other assets that are not registered property; registered property is secured by a mortgage (hypotheek).
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How is a right of pledge created?
Dutch law offers four main routes. A possessory pledge (vuistpand) requires the goods to be placed under the control of the pledgee or a third party (article 3:236 BW). A non-possessory pledge of movables (bezitloos pand) is created by a notarial deed or a registered private deed while the debtor keeps the goods (article 3:237 BW).
Receivables can be pledged openly, by deed and notice to the debtor of the receivable (articles 3:236(2) and 3:94 BW), or silently, by a notarial or registered private deed without notice (article 3:239 BW).
How does a pledgee enforce the pledge?
If the debtor is in default, the pledgee may sell the asset without a court order (article 3:248 BW). The standard method is a public sale. A private sale requires approval from the preliminary relief judge (voorzieningenrechter) or an agreement made after the right to enforce has arisen (article 3:251 BW). A clause allowing the pledgee to simply keep the asset is void (article 3:235 BW). After notice, the debtor of a pledged receivable must pay the pledgee (article 3:246 BW).
What happens to a pledge in bankruptcy?
A pledgee is a secured creditor (separatist) who can enforce as if there were no bankruptcy (article 57 Bankruptcy Act). The supervisory judge can impose a cooling-off period of up to two months, which can be extended once by two months (article 63a Bankruptcy Act). On machinery and stock located on the debtor’s premises (bodemzaken), the Tax Administration’s preferential right ranks above a non-possessory pledge, and the pledgee must notify the tax collector before selling such assets (article 22bis Collection of State Taxes Act 1990).
Frequently asked questions
Does a silent pledge cover future receivables?
Only receivables that exist or arise directly from an existing legal relationship when the deed is made (article 3:239(1) BW). Lenders therefore re-register pledge lists periodically.
Does the pledge pass with the claim?
Yes. A pledge is an accessory right (article 3:7 BW) and transfers with the secured claim on assignment (article 6:142 BW).
Related terms
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