Pledged shares sold privately through a debt-for-equity swap
On 30 October 2026, the Amsterdam District Court published a decision of the interim relief judge of 11 August 2026 on the enforcement of a pledge over shares. The judge allowed a private sale in which the purchase price consisted largely of a debt-for-equity swap.
What happened?
A lender had lent EUR 3.2 million to a company and its subsidiaries. The shareholders had pledged their shares to the lender. After several Events of Default, the lender declared almost EUR 4 million due and payable; no payment was made. The lender asked the interim relief judge for permission to sell the pledged shares privately under a share purchase agreement that had already been concluded.
The court's decision
The main rule when enforcing a pledge is a public sale, but the interim relief judge may allow a different method of sale (Article 3:251(1) of the Dutch Civil Code). The purchase price consisted of EUR 1 in cash plus a debt-for-equity swap, reducing the debt to EUR 1.5 million. In addition, the lender provides a new loan of EUR 600,000. According to a valuation report, the shares had a negative value, and the shareholders did not put forward a defence. The judge considered that a public sale would not be expected to yield a higher price and that there was no better offer. The fact that the shareholders lose their shares does not count: that possibility is inherent in granting a pledge. The request was granted.
Why this matters
A pledge over shares is a common form of security in acquisition and growth financing. This decision shows how its enforcement in a restructuring can result in a debt-for-equity swap, and that the court focuses mainly on the expected proceeds and any better offers.
Practical tips
When arranging financing, define what constitutes an Event of Default and which enforcement routes the lender has.
Support a request for a private sale with an independent valuation and show that a public sale would not yield more.
As a shareholder, come forward with an alternative offer or a defence in time; without a defence, a well-supported request will quickly be granted.
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This blog provides general information and is not legal advice. For advice on a specific situation, please contact us.
