ECLI:NL:RBAMS:2021:990

judgment AMSTERDAM DISTRICT COURT Netherlands Commercial Court NCC District Court – Court in Summary Proceedings Case number: NCC 21/002 (C/13/697755) Judgment 11 March 2021 Applicant: GLAS TRUST CORPORATION LIMITED, London (The United Kingdom), represented by T.H.D. Struycken and Y.A.Y. Sevink, lawyers Interested parties: AS Adventure Holding B.V. , Amsterdam (The Netherlands), AS Adventure B.V. , Amsterdam (The Netherlands), represented by B.W.G. van der Velden and G.A.G. Kerstjens, lawyers 3. Yonderland Bidco B.V. Hoboken (Belgium). The applicant is referred to below as Glas or the Pledgee. The interested parties are referred to below as the Pledgor, the Company and the Purchaser respectively. Counsel are members of the Netherlands Bar Association. The term “lawyer” above has the meaning as defined in Article 3.1.1 Netherlands Commercial Court Rules (NCCR). 1Procedural history Glas filed its application on 18 February 2021 and uploaded it to eNCC. The Court gave directions on 2 March 2021. It identified the interested parties (belanghebbenden; reference was made to Amsterdam District Court 23 August 2012, ECLI:NL:RBAMS:2012:BY1439) and requested the parties who had not already done so, to inform the Court of their wish to be heard on the application. The applicant and the interested parties indicated that they did not wish to be heard on the application. In addition, the Court was informed that the shareholder of the Pledgor, AS Adventure Coöperatief U.A (the Coop), and the Lenders (see below) had no wish to be heard either. No hearing was scheduled. The Court set a date for judgment. 2Facts – background 2.1. The Pledgor is the sole shareholder of the Company, which in turn is the holding company of a group of Dutch and foreign subsidiaries (the Group). The current holding company at the top of the Group, and the shareholder of the Pledgor, is AS Adventure Coöperatief U.A (the Coop). In 2015, investor PAI Partners SAS (the Sponsor) acquired a majority stake in the Group. 2.2. The Group is predominantly active in the sale of retail clothing and equipment with a specific focus on outdoor activities, such as biking, trekking, skiing, climbing and camping. The Group has operations spread across Europe, including Belgium, France, Germany, Luxembourg, the Netherlands and the United Kingdom. As such, the Group operates a network of around 200 stores as well as an online retail platform. In the Netherlands, the Group is also known as ‘Bever’. The Group employs more than 3,200 employees in total, approximately 900 of whom are employed in the Netherlands. 2.3. The Company is a borrower and guarantor under an English law governed senior facilities agreement (the SFA), originally dated 14 April 2015, as amended from time to time and most recently on 31 July 2019. The SFA was made between the Pledgor as guarantor, the Company as borrower and guarantor, Glas as successor security agent, and Global Loan Agency Services Limited as successor agent (the Agent). 2.4. The payment obligations under the SFA are secured by a share pledge dated 14 April 2015, made by the Pledgor, (the predecessor of) Glas as pledgee, and the Company as the company in which the shares are pledged (the Share Pledge). Article 12 of the Share Pledge provides: “ GOVERNING LAW AND JURISDICTION (a) This Deed is governed by the laws of the Netherlands (including for the avoidance of doubt the obligation of the Pledgor to create the rights of pledge set out in Clause 2.1 (Agreement to pledge Share Collateral) notwithstanding that such obligation may be governed by any other law pursuant to any other Finance Document). […] (c) The courts of Amsterdam, the Netherlands have exclusive jurisdiction to settle any dispute arising from or in connection with this Deed (including a dispute regarding the existence, validity or termination of this Deed) (a "Dispute"). This paragraph (c) is for the benefit of the Pledgee only. As a result, the Pledgee shall not be prevented from taking proceedings relating to a Dispute in any other courts with jurisdiction. To the extent allowed by law, the Pledgee may take concurrent proceedings in any number of jurisdictions.” 2.5. Due to the financial difficulties the Group has experienced over a number of years, it has been struggling to meet the financial covenants under the SFA. This was predominately driven by disappointing results of subsidiaries in the United Kingdom and Germany. In the first quarter of 2020, the financial position of the Group was severely exacerbated by the unexpected and adverse impact of the events related to the COVID-19 pandemic. 2.6. On 17 February 2021, the Agent served an acceleration notice on the Pledgor (in its capacity as parent of the Company). It declared all amounts outstanding under the SFA (over EUR 283 million) to be immediately due and payable, and requested full repayment of these amounts. Simultaneously, the Agent made a demand on the Pledgor as guarantor. The Company and the Pledgor informed Glas and the Agent that they were not able to repay these debts. 2.7. On 18 February 2021, the Pledgee and the Purchaser reached an agreement. The proposed Sale and Purchase Agreement (Proposed Sale) consists of five elements: the Pledgor will be released from all of its guarantee liabilities under the SFA, the current lenders under the SFA (the Lenders) will reduce the overall debt of the restructured group by effectively writing off 30% of their outstanding claims, the Lenders will receive a combination of a cash consideration and a non-cash consideration, consisting of EUR 1 and 50% of the shares in the newly-incorporated holding company of the Purchaser (TopCo), the intragroup debt owed by the Company is transferred and converted into equity of an intercompany receivable owing by the Company to the Pledgor, the current indirect majority shareholder of the Group (the Sponsor) will provide the restructured group with additional liquidity by way of an equity contribution in TopCo in the amount of EUR 25 million; in exchange it will retain an equity interest of 50% of the shares in Topco). 3Application 3.1. Glas, in its capacity as pledgee under the Share Pledge, requests the Court to order, by means of an immediately enforceable decision, that the shares in the Company (the Shares), by way of enforcement of the Share Pledge, be sold and transferred by the Pledgee to the Purchaser under the conditions described in the Proposed Sale, providing that the permission will be valid for a period of six months and with an appropriate costs order under the law. 4Discussion Jurisdiction NCC, use of eNCC, applicable law 4.1. As Glas is incorporated in the United Kingdom and the Company is a Dutch legal person, this is an international matter. The choice-of-court clause in Article 12 of the Share Pledge is valid. The Purchaser also accepted the jurisdiction of the Amsterdam District Court (by letter dated 3 March 2021).

That means that the Amsterdam District Court has exclusive jurisdiction under Article 25(1) of the Brussels Regulation (recast) (1215/2012). This provision of the Regulation applies regardless of the fact that one of the parties is domiciled in the United Kingdom, which is no longer an EU Member State. The chosen forum is located in an EU Member State (the Netherlands), and for the application of this provision the domicile of the parties is not relevant (“regardless of their domicile”). 4.2. Articles 1.3.1 and 1.3.2 NCCR reflect Article 30r Dutch Code of Civil Procedure (DCCP), which is the statutory framework for proceedings to be held in English before the NCC District Court and the NCC Court in Summary Proceedings. This is a civil or commercial matter, the pledge is a particular legal relationship within the parties’ autonomy and the matter is not subject to Subdistrict Court jurisdiction or to the exclusive jurisdiction of any other chamber or court. Glas, the Pledgor and the Company agreed on 18 February 2021 to proceedings in the English language before the NCC (see Choice of Forum Agreement) and the Purchaser also consented to the NCC dealing with the case (by letter dated 3 March 2021). 4.3. No party objected to the use of eNCC in these proceedings. Therefore, eNCC has been used in this matter. As the application was submitted after 1 January 2021, no filings in hard copy were required (see Article 3.2.1 NCCR, Second Edition). 4.4. The Company’s statutory seat is in the Netherlands and Dutch law therefore provides the rules on company and on property law in respect of the Shares. Hence Dutch law will be applied. The parties to the Share Pledge (the Pledgor, the Company and the former Pledgee) also explicitly chose Dutch law as the applicable law. Enforcement of the pledge 4.5. Article 3:251 DCC governs the enforcement of the pledge. Article 3:250 DCC provides that an enforcement sale is to be held in public, i.e. by way of a public auction. Article 3:251 DCC offers an alternative: Article 3:251 Alternative way to accomplish a sale by foreclosure - 1. […] the provisional relief judge of the District Court may, upon the request of the pledgee or pledgor, order that the pledged asset is sold by foreclosure in a different way than the one meant in the previous Article […]. 4.6. None of the interested parties expressed a wish to be heard on the application. They all referred to the judgment of the Court. 4.7. No one disputes that the Company is in payment default, that the Pledgor is in default (verzuim) under the guarantee it granted, and that Glas has the right to enforce the pledge. 4.8. When the right to enforcement arises, a pledgee has the right to decide if and when to proceed with enforcement. The Court on its own initiative has to examine whether, at the time the application was made, the requested alternative to a public auction (in this case: the Proposed Sale) would realise the maximum possible value. This examination is done in the interest of the pledgor, other secured creditors and other creditors in general. The interest of the company whose shares are being sold do not prevail over the interest of the pledgee and creditors, to realise the maximum possible value (reference is made to: Amsterdam District Court, 23 September 2009, ECLI:NL:RBAMS:2009:BJ8848). 4.9. The consideration for the Shares is EUR 1 in cash, plus a write-off of debt resulting in a reduction of EUR 85 million of the Company's liabilities under the SFA. This does not mean that only EUR 1 is paid for the Pledged Shares. Part of the transaction is a write-off of EUR 85 million of outstanding debt. Linked to this transaction is further funding to be provided by the Sponsor in the amount of EUR 25 million. All these elements are to be considered as the value of the Proposed Sale, the consideration offered for the Pledged Shares. 4.10. First, the Court finds, as Glas argues, that it is likely in any case that a private sale would result in a better price than a public auction, taking into account the structure and the complexity of the Group and the need for additional financing. 4.11. There are also no indications that any private sale, other than the Proposed Sale, would realise more value. This is based on the following reasoning. 4.12. First, if no additional liquidity is provided to the Group, it will be unable to meet its payment obligations somewhere in the near future. So far it has been able to defer payment as a result of COVID-19 measures, and use a multicurrency revolving credit facility for temporary working capital funding (in the amount of EUR 45 million) (the RCF). However, this facility has now been utilised to the full extent, and repayment is due on 15 April 2021. A serious injection of capital and reduction of debt are necessary to save the Company. 4.13. Second, the cash consideration of EUR 1 is based on the valuation report made by Mazars LLP on 31 December 2020. The executive summary of the Mazars Report states: “(…) We have arrived at an Enterprise Value on a cash free, debt free, pension free basis for AS Adventure of between €165.0m and €190.0m. The Enterprise Value range is below the Net Debt of the Group of €286.9m and the par value of the Senior Facilities [under the SFA] and RCF (…) of €286.5m and, as a consequence, the Equity Value of the Group is negative and this technically means that there is no value attributable to the shares. (…) In order to arrive at a an Enterprise Value on a Distressed Sale basis, we have applied an approximate distressed discount range of 40.0% to 60.0% to our Enterprise Value range of between €165.0m and €190.0m. This gives an Enterprise Value on a Distressed Sale basis of between €65.0m and €115.0m. In the absence of a capital restructure, the Enterprise Value range is still below the Net Debt of the Group of €286.9m and the par value of the Senior Facilities and RCF (…) of €286.5m. On this basis, the Equity Value of the Group is negative and this technically means that there is no value attributable to the shares. (…) We have determined the Equity Value of the Group on a going concern basis and applied it to the balance sheets of AS Adventure Holding B.V. and AS Adventure Coöperatief U.A to arrive at the Equity Value of the shares in AS Adventure B.V. and AS Adventure Coöperatief U.A. The Equity Value of the AS Adventure B.V., AS Adventure Holding B.V. and AS Adventure Coöperatief U.A are negative and this technically means that there is no value attributable to the shares. (…)”. 4.14. At present the “going concern value” of the Company is no longer relevant, as the Company is nearing bankruptcy. Furthermore, the outstanding debt (EUR 292 million) far outweighs the value of the Group in a distressed sale scenario. Next month, the debt will increase by a further EUR 45 million when the RCF becomes due and payable. This means that it can be validly assumed that the economic value of the Shares is negative. 4.15. Furthermore, the distressed situation of the Group and the restructuring efforts made by the parties in the Proposed Sale were reported in the national and international press several times since September 2020, but no potential investor presented itself. 4.16. This leads to the conclusion that the Proposed Sale will deliver maximum value for the Shares.