's-Hertogenbosch Court of Appeal denies pledgee's claim that all present and future receivables of the pledgor were pledged to it by a deed of pledge dated 20 January 2014 and ruled that the receivables listed in the schedule attached to the deed of pledge were leading to establish on which receivables a right of pledge was created.

's Hertogenbosch Court of Appeal, 17 October 2017 (ECLI:NL:GHSHE:2017:4570)

Under a bilateral contract between [Recycling] Recycling B.V. (Recycling) and [Beheer] Beheer B.V. (Beheer), Recycling agreed to deliver and dispatch containers filled with waste for Beheer. Recycling sent seven invoices to Beheer for services rendered. [Holding] Holding B.V. (Holding) had a claim against Recycling.

On 20 January 2014, Recycling and Holding entered into a deed of pledge under which Recycling created an undisclosed right of pledge (stil pandrecht) in favour of Holding on its outstanding claims up to that date amounting to a total of EUR 6,059,324.79. The outstanding claims were listed in a schedule attached to the deed. Of the seven claims of Recycling against Beheer (corresponding with the invoices previously sent), only four were mentioned in the schedule. The deed was registered with the Dutch Tax Authorities on 27 January 2014.

On 27 January 2014, Recycling (again) pledged its outstanding claims to Holding, amounting to a total of EUR 6,353,11846. This time all seven claims against Beheer were listed in the schedule attached to the deed of pledge. The deed of pledge dated 27 January 2014 was sent by post on the same date to the Dutch Tax Authorities, which registered the deed on 30 January 2014. Recycling was declared bankrupt on 28 January 2014.

A few aspects of Dutch law are relevant. First, a deed of pledge of receivables must be registered with the Dutch tax authorities to validly create an undisclosed right of pledge over receivables. Secondly, as a result of the declaration of bankruptcy, a debtor forfeits the right to legally dispose of and administer property, rights and interests comprised in the bankruptcy with effect from and including the day on which the bankruptcy order is pronounced.

The Court of Appeal held that since the deed of pledge dated 27 January 2014 was sent by post to the Dutch Tax Authorities on the same day, the deed could not have been (considered to be) offered to the Dutch Tax Authorities earlier than 28 January 2014. As mentioned, Recycling was declared bankrupt on 28 January 2014, with effect from 00.00 hours. Therefore, the right of pledge purported to be established under the deed of pledge dated 27 January 2014 could no longer be validly created. The Court of Appeal ruled that the three claims of Recycling against Beheer that were listed in the deed of pledge of 27 January 2014 but not in the pledge of 20 January 2014, were therefore not validly pledged.

Holding stated that it was intended to pledge all claims of Recycling on Beheer by the deed of pledge of 20 January 2014 to Holding. The claims of Recycling on Beheer not listed in the schedule attached to the deed of pledge were therefore also pledged by the deed of pledge of 20 January 2014 according to Holding.

The Court of Appeal considered that as the undisclosed right of pledge over receivables was created by a deed of pledge including a schedule that explicitly lists the claims to be pledged, such list should be leading to establish over which receivables the security was created. It also observed that the deed of pledge of 20 January 2014 did not contain general wording that could suggest that a general pledge over all claims was created. Furthermore, the Court of Appeal ruled that it is not relevant that it was intended to pledge all claims and that by mistake some of the claims were not listed. The deed of pledge does not state that "all receivables as per 20 January 2014" are pledged. Instead it states that "the outstanding receivables per 20 January 2014 of a total amount of € 6.059.324,79" were pledged and that "these receivables are stated on the attached computer lists".

The ruling of the Court of Appeal demonstrates that if it is intended to pledge all receivables, this should be explicitly mentioned in the deed of pledge. In the absence of such general wording and by using a list of receivables the consequence is that the receivables pledged under that deed of pledge are limited to the receivables included in that list. Therefore, pledgees must ensure that (i) the deed of pledge contains a general pledge provision (all existing and future receivables); and (ii) if a schedule is attached to the deed, such list is complete and correct and that it is made clear that such list is not exhaustive.