Banks, set-off rights, and the WHOA framework: three key insights

Once more, the Supreme Court (ECLI:NL:HR:2026:390) ruled that a bank's systemic role in the payment infrastructure cannot justify a privileged creditor position when electronic payments are received during bankruptcy of an account holder. Yet existing case law on outgoing payments leads to the conclusion that a bank’s systemic role is a burden instead. The result is a legally incoherent double standard that leaves banks in an asymmetric position in Dutch bankruptcy proceedings.

The Advocate-General confirmed that a debtor's right to settle cannot be assigned to a pledgee in a bankruptcy-proof manner, as it is too closely tied to the original legal relationship between the parties. This constrains a commonly considered structuring tool in secured finance. If this stance holds before the Supreme Court, practitioners must instead rely on alternatives such as contractual netting, broad enforcement clauses, or master agreement frameworks, each with their own limitations.

The Wagamama case exposed a drafting error in the Dutch Bankruptcy Act concerning the interplay between the prohibition on bank guarantee recourse and the WHOA framework. The Advocate-General has called on the Supreme Court to correct this flaw. Until it does, structuring WHOA plans involving bank guarantees carries meaningful legal uncertainty for banks, beneficiaries, and restructuring advisors alike.