Hunkemöller: A Preview of Contentious LMEs in the Netherlands

A recent decision of the Amsterdam District Court (ECLI:NL:RBAMS:2026:346) centres on an petition for preliminary disclosure measures pursuant to Article 196 of the Dutch Code of Civil Procedure (Rv). The decision is particularly interesting because it offers insight into the increasingly aggressive (international) restructuring market, in which creditor‑on‑creditor violence appears to be on the rise through, among other things, the use of Liability Management Exercises (LMEs).

Liability Management Excercises
LMEs are gaining traction. Under the umbrella term LME fall various out‑of‑court restructuring tools that may be used by a debtor to create liquidity. By making use of an LME, a debtor can implement an out‑of‑court restructuring without requiring the consent of all creditors. Each of the various forms of LMEs essentially involves exploiting gaps in the underlying financing documentation in order to effect an out‑of‑court restructuring. Through an LME, a creditor can improve its own position vis‑à‑vis other creditors. This non‑consensual, if not hostile, nature of an LME means that LMEs may also take on a contentious character.

Background
Before addressing the procedural aspects of the decision, this blog first considers the background and structure of the LME used. The respondents in the proceedings are Hunkemöller International B.V. (“Hunkemöller”), its (indirect) shareholder, and its (former) statutory directors (“Respondents”). The applicants are an ad hoc group of bondholders in Hunkemöller (“Applicants”).

In 2022, a refinancing took place at Hunkemöller. As part of that refinancing, loans were extended to Hunkemöller and Hunkemöller issued bonds in the amount of EUR 272,500,000. The bonds were held primarily by the Applicants for an amount of EUR 84,325,000 and by various entities belonging to Redwood Capital Management LLC (“Redwood”) for an amount of EUR 186,075,000. The bond terms are set out in an indenture governed by the law of the State of New York. In addition, an intercreditor agreement was entered into between, inter alia, the security agent (holding securities on behalf of the bondholders), other providers of debt financing, and Hunkemöller.

Subsequently, an up‑tiering transaction took place in 2024. Up‑tiering is a well‑known form of LME in which financiers providing new financing to a debtor obtain an increase in ranking vis‑à‑vis financiers that do not provide such new financing. In this case, Redwood provided a new loan to Hunkemöller, as a result of which Redwood’s financing obtained a higher ranking than the financing provided by the Applicants.

This was followed by a further restructuring in 2025. In that restructuring, Redwood (in consultation with the management of Hunkemöller) enforced its security interests, resulting in Redwood becoming the 100% shareholder of the Hunkemöller group and, according to the Applicants, the Applicants being expropriated from their bonds.

Petition
Multiple proceedings are ongoing in the United States, including proceedings aimed at having the up‑tiering transaction partially declared null and void or annulled. In the present proceedings, the Amsterdam District Court is requested, pursuant to Article 196 Rv, to order preliminary disclosure measures.

The background to this request is that the Applicants intend to initiate proceedings against the (former) directors and the indirect shareholder of Hunkemöller, in which, inter alia, damages would be claimed. One of the allegations made against them is that, by cooperating in the up‑tiering, they acted unlawfully towards the Applicants. Prior to initiating such proceedings, the Applicants wish to further establish their legal position. They therefore seek inspection of, inter alia, minutes, correspondence between the (former) directors, and financing documentation relating to the up‑tiering. In addition, they request the court to order a preliminary examination of witnesses.

Applicable law
All Respondents are resident in the Netherlands. After declaring itself competent to rule on the application pursuant to Article 4(1) of the Brussels I bis Regulation, the Amsterdam District Court assesses which law is applicable. As proceedings are conducted before a Dutch court, Dutch law applies to procedural matters pursuant to Article 10:3 of the Dutch Civil Code (BW). In addition, Dutch law also applies to the substantive law pursuant to Article 10:119 BW, as the application relates to a potential directors’ liability claim and Hunkemöller is a company incorporated under Dutch law.

Notably, in assessing the substantive law, the court refers to both subsections (d) and (e) of Article 10:119 BW. Subsection (d) concerns liability of directors towards the company. However, this does not appear to be a case of internal directors’ liability.

Bond terms and intercreditor agreement
The bond terms governed by New York law contain a no‑action clause and a no recourse against others clause. These provisions stipulate, inter alia, that directors are not liable for obligations of Hunkemöller as issuer of the bonds, and that legal actions by individual bondholders in connection with the bond terms are excluded. In an intercreditor agreement governed by English law, the English courts are designated as having jurisdiction over disputes arising from that agreement.

The court provisionally assumes that these provisions do not preclude a claim by the Applicants based on tort. As regards the provision in the intercreditor agreement, this appears correct at first glance, as the Applicants are not parties to that agreement and therefore are not bound by it.

Court assessment
The court finds no formal grounds preventing consideration of the application. However, it dismisses the application on substantive grounds. One of the reasons for dismissal is that the Applicants insufficiently specify the alleged wrongdoing attributable to the (former) directors and the indirect shareholder. In addition, the court considers that, for ‘ordinary’ directors’ liability, it is also required that the company itself is liable or has otherwise acted unlawfully. Only once the proceedings in the United States and possibly in England have been concluded will it be established whether this requirement is met. Finally, the court notes that the Applicants have not argued that there is directors’ liability independent of the conduct of the company concerned.