Foundation SOS SNS
Dear all,
As promised I would submit some comments on the cassation-saga.
Not only the Dutch State but also the ‘Stichting Beheer’ (the largest shareholder and subordinated creditor) has filed a cassation-request.
In order to understand the procedure properly, first a short remark on the essence of a cassation
In the cassation the ‘facts’ that the judges from the Enterprise Chamber have established, can’t be challenged anymore. E.g. the verdict that in the case the Nationalization on February 1st 2013 would not have taken place, SNS would have gone bankrupt, is no longer debateable anymore. It is also not allowed to simply state e.g. that the valuation of the expropriated bonds is ‘too high’or ‘too low’.
Technically speaking the High Council evaluates the verdict of the Enterpice Chamber on two grounds:
a. Did the Enterprise Chamber apply the right laws?
b. Did the Enterprise Chamber apply the laws in a right manner?
Apart from that the High Council takes into account the way the motivation of the decision was grounded. Did the Enterpise Chamber motivate their verdict in an understandable, adequate, comprehensive and complete manner?
The Dutch State has filed a document of more than 100 pages (!) in which they try to scutinize the report from the experts as well as the way in which the Enterprise Chamber incorporated the results into their final verdict. It is of course not possible to simply state that the figures the experts have used are incorrect (because these are considered as ‘facts’ or ‘outcomes’). However it can be argued that the assumptions, that have led to the outcomes, are ‘incorrect’, ‘not understandable’ and/or ‘badly grounded’.
Without going into too much detail, examples of challenging the assumption are:
a. The length of the period the liquidator takes to unwind the business (especially mortgages) and after that period sells the portfolio, but also which factor should be used to discount future cash flows (i.e. to recalculate these cash flows towards february 1 2013).
b. Furthermore the Dutch State argues that the experts wrongly make use of case law (e.g. the DSB Bank whereby subordinated creditors revceived a compensation of 100%), because the situation of SNS is in the opinion of the Dutch State not comparable.
c. Finally they blame the experts, because in the opinion of the Dutsch State they have judged with ‘hindsight bias’ (the financial results from SNS after february 1 2013 were very robust and this have influenced the judgement of the experts, according to the State).
De Dutch State concludes that it is al lto arbitrary and random, badly grounded etc. and they ask the High Council to annul the verdict, which implies that the Enterprise Chamber should start áll over again’. In that case, however, the High Council would submit clues on how the expert’s report should be moderated. This will of course not take another eight years, but as you have experienced in legal cases a few years is ‘nothing’.
The ‘Stichting Beheer’ (shareholder and subordinated creditor) complaints that the the subordinated loans they have given to SNS Bank are inadequately considered as shares, which implies that the Stichting Beheer is not entitled to any compensation. As you might recall the value of the shares is considered to be zero, while the value of the bond excluding legal interest is 75% of the nominal value, and because none of the shareholders has filed a cassation request, this outcome fort he shareholders is now final. For us, the outcome of the evaluation by the High Council is not so relevant, because any compensation for the ‘Stichting Beheer’ will hardly influence the amont available for your bonds.
It is almost impossible to predict what the decision of the High Council will be, but my preliminary reaction is that it might be quiet easy for the High Council to set aside all the complaints, given the fact that the valuation process has been carefully carried out (in every situation it is inevitable that you must make choices), the experts have demonstrated adequate professionalism in performing their task and they appear to be really independent. Furthermore the hearing has been fair (adversarial practice). Please realize that this is only my opinion before consulting experts, so any guarantee that this will be the final outcome, can not be deployed.
A final remark on the future of your foundation and its services seems to be relevant. When I accepted the position as chairman of this foundation at the end of January 2013, I could not have foreseen that in May 2021 we still would not have a final verdict and a proper compensation. This goes without saying alsof or all participants in your foundation. Currently we have to make a decision wether to actively participate in the cassation, which of course will require a new effort for a longer period of time. The risk that the High Council eventually will annul the verdict is still there and it is not unthinkable that it will last another 1,5-2 years untill that is clear. In the case the decision leads to an anullment, we might have to wait another few years until the final verdict from the Enterprise Chamber is submitted. However this is a dark scenario and procedures can be a lot shorter/faster. I consider this therefore as a natural moment to decide under which conditions we will enter this new set of procedures. Don’t be affraid that I will step down but I think it is a good idea to organize my thoughts on this subject and give you feedback as soon as possible. The most important factor is how the foundation could be effective as possible and have a real added value.