In brief

In its decision of 30 June 2026, the Netherlands Commercial Court of Appeal (NCCA) ruled that certain first-lien noteholders can appeal the Dutch share pledge enforcement of shares in Selecta Group B.V. 

The NCCA decided to lift the statutory prohibition on appeal because it views that the “minority noteholders” were interested parties that should have been summoned for the Dutch share pledge enforcement hearing in first instance. The NCCA’s decision is still subject to an appeal to the Supreme Court, but if upheld, the minority noteholders can contest the original share pledge enforcement the Netherlands Commercial Court (NCC) authorised on 13 May 2025. 

The Dutch litigation does not stand alone. The minority noteholders are also challenging Selecta’s LME transaction in New York. 

Background

The dispute arises out of the restructuring of the Selecta Group that was completed in June 2025. Prior to the restructuring, Selecta's capital structure comprised of an RCF, first lien and second lien notes. Through a series of transactions (often described as an LME), Selecta’s debt was reduced and the company transferred to its lenders. For more details on this restructuring, listen to our podcast.

A critical step in Selecta’s restructuring was the enforcement of the Dutch share pledge that allowed the transfer of Selecta Group B.V. to a newly incorporated English company named Seagull Bidco. On 30 April 2025, the majority first lien noteholders instructed the security agent to take enforcement actions following an event of default, by way of a sale of the shares in Selecta Group B.V. to Seagull Bidco for EUR 1 and non-cash consideration comprising a substantial reduction of the group’s debt. That same day, the security agent filed an application with the NCC for a private sale and notified the noteholders thereof through the clearing agencies. Selecta Group B.V. (as the company), the Selecta Group AG (the direct shareholder that granted the pledge over the shares in the company) and the security agent (pledgee) all waived their right to be heard by the NCC as part of the share pledge enforcement and the NCC granted its permission to the sale in record time on 13 May 2025. The shares transferred on 11 June 2025. The minority noteholders had never been summoned to the Dutch share pledge enforcement proceedings and claimed to have only discovered the restructuring in mid-June when it was already a fait accompli. 

The Dutch share pledge

Dutch law provides two enforcement routes for a pledge. The default route is a public auction (Section 3:250 DCC), the objective of which is to obtain the highest possible proceeds and to minimise the risk that the secured creditor might collude with the purchaser of the secured assets to the detriment of the pledgor and other creditors. Where valid reasons exist to sell the pledged assets by another procedure, Section 3:251(1) DCC provides for a private sale with permission of the court. Alternatively, Section 3:251(2) DCC allows for a private sale with consent of the pledgor after an event of default provided that other creditors that have security over the shares or levied an attachment also agree. 

The underlying purpose of both provisions is that the interests of the pledgor and the other creditors are safeguarded as much as possible. If permission for a private sale is requested, it is for the court to assess whether those interests are sufficiently safeguarded in that private sale.

The private-sale route is market practice for the enforcement of shares and courts recognise that this generally results in better proceeds than a public sale. The Dutch share pledge is an effective and widely used tool in Dutch restructuring practice — examples include HEMA and IHC. It allows a secured creditor to credit bid its debt, achieves an effective transfer of shares and delivers legal certainty through prior court permission. The starting point for the price is the value of the shares — typically distressed fair market value or liquidation value, which tends to be lower than a going-concern reorganisation value. The court applies a relatively narrow test: whether the proposed sale achieves the maximum possible value of the shares, or at least a higher value than a public auction. To prove this, the pledgee needs to submit valuation evidence. Market testing is preferred, but not always required. 

Because a secured lender can bid the nominal value of its debt, any competing bidder must in effect refinance the secured lenders at par. A competing bid is only relevant as part of the court’s considerations regarding the main bid (i.e., whether the main bid satisfies the legal test) and also in that context a relevant factor if the competing bid is sufficiently certain and unconditional. In almost all well-prepared cases, permission from the court is obtained. 

Section 3:251(1) DCC contains a statutory prohibition on appealing the court's permission or rejection of a private sale, reflecting the rationale of transactional speed and legal certainty. Pursuant to established case law of the Supreme Court, this prohibition can be lifted in exceptional circumstances: (i) where the court acted beyond the scope of the provision, (ii) wrongly failed to apply the provision, or (iii) disregarded fundamental procedural forms (in effect, a fundamental fair-trial breach).

In 2019, the NCC and NCCA were introduced to allow parties to resolve commercial disputes before the Dutch courts in the English language. As the NCC and NCCA are a popular choice for Dutch pledge agreements with an international dimension, it became the key forum for share pledge enforcements in larger cases. 

The Court’s reasoning

The NCCA rejected the argument that interested-party status is confined to the formal parties to the pledge or the formal holders of the security. Although the minority noteholders are technically not the holders of the security (because the security agent is), the NCCA considered them to be interested parties: their legal and economic interests were directly affected by the court’s permission, and holding through clearing systems does not exclude a beneficial holder. According to the NCCA, the protective purpose of Section 3:251(1) DCC extends to minority noteholders whose recovery is materially affected and contractual restrictions in the intercreditor agreement cannot displace the court’s statutory duty to consider their interests.

The NCCA lifted the prohibition on the fair-trial ground: it argued that the NCC disregarded fundamental procedural forms by issuing its judgment without summoning the minority noteholders or giving them any opportunity to be heard. The NCCA argued that notification through the clearing agencies, the press release and prior correspondence did not amount to formal notice to appear, and the noteholders were entitled to await formal notice from the court: their failure to act on informal notification did not bar them from invoking this ground.

This decision is still subject to Supreme Court appeal, and the outcome is by no means certain. There is a view that runs counter to the NCCA’s judgment, namely that beneficial holders,  who do not hold security rights themselves, when entering into the credit documentation have made a conscious structural choice to operate through the intercreditor framework, which deliberately channels enforcement rights through the security agent and restricts individual creditors from acting directly, reinforced by the no-action clause in the first-lien indenture. According to this view, individual creditors’ proper forum is solely the intercreditor agreement, not section 3:251(1) DCC proceedings. The intercreditor framework often already contains its own minority protections, including fair market value, cash consideration and fairness opinion requirements. According to that view, adequate safeguards exist within the contractual architecture without opening up Section 3:251(1) DCC proceedings to every beneficial holder. 

Decision and next steps in Selecta

The NCCA has declared that the minority noteholders are   interested parties and lifted the statutory bar on appeal. The cases now proceed to the merits — the substantive question being whether the NCC correctly granted its permission to the private sale, and if the interests of the pledgor and other creditors were sufficiently safeguarded. This interim ruling is essentially on standing only and is not indicative of the underlying merits.

As interested parties, the minority noteholders are entitled to inspect the full case file. That material may potentially also be used in the parallel proceedings in the US.

An interim appeal to the Dutch Supreme Court is permitted against this judgment on standing before the case proceeds to the merits analysis (and we would expect the parties to make use of the appeal). 

If the litigation does proceed to the merits analysis it is to be remembered that the shares had already been transferred. Should the court find that the permission was wrongly granted, the legal basis for the enforcement sale falls away. This does not necessarily mean that the egg needs to be unscrambled. Instead, the possible effect is that the sale does not benefit from the court’s authorisation – but if the mechanics for the sale set out in the intercreditor agreement were followed, it is arguable the transaction was still implemented or can still be implemented without the court’s authorisation. 

It is also worth noting that a transfer of the shares might have been achievable (or still is) through enforcement with the pledgor's consent after an event of default (as another option to enforce Section 3:251(2) DCC)) or if the distressed disposal mechanics in the intercreditor agreement do not require actual enforcement but allow for a sale if the debt is enforceable. 

What this means in practice

• Standing of minority creditors: The NCCA found no reason for limiting the concept of 'interested parties' to formal contractual parties to the share pledge or formal holders of a security right. Beneficial noteholders whose legal and economic interests are directly affected by the outcome of the proceedings are in scope, regardless of how their interest is held. That conclusion is, however, not uncontroversial and can be appealed to the Supreme Court. The NCCA’s decision may also not necessarily entail that noteholders should in all circumstances be summoned and may be case specific to the Selecta transaction, where the minority noteholders' position (in their view) substantially deteriorated as a result of the Selecta restructuring (considered as a whole).
• When in doubt, summon: If this judgment is not overturned on appeal, it is advisable to summon all parties who could be considered to be “interested parties”. Counter-intuitively, summoning opposing creditors generally reduces risk in the Dutch share pledge enforcement proceedings: the court's substantive review is focused and takes a holistic view of value, so their involvement does not meaningfully increase the chance of a refusal — while failing to summon them risks lifting the appeal prohibition, one of the key procedural advantages.
• The Dutch route remains effective: the Dutch share pledge remains an effective tool that allows for credit bidding (with a holistic view to value), a prohibition on appeal (if interested parties have been summoned) and quick procedure (in English). Unlike some other jurisdictions (notably Luxembourg) the Dutch route does require prior court authorisation (or consent of the pledgor). In many cases, that step can be an advantage rather than a burden: once a Dutch court has provided its permission for the enforcement, it is very difficult for a dissatisfied party to reopen the question of whether the price was right. Complete out-of-court enforcement can leave the door open to follow-on litigation about fairness and price; the Dutch route, when properly executed, closes it.