Create a bespoke document in minutes, or upload and review your own.
Get your first 2 documents free
Your data doesn't train Genie's AI
You keep IP ownership of your information
Debt Assumption Agreement
I need a debt assumption agreement where the new debtor agrees to assume the existing debt obligations of the original debtor, with clear terms on the transfer of liability, interest rates, and repayment schedule. The agreement should comply with Dutch law and include clauses for dispute resolution and confidentiality.
What is a Debt Assumption Agreement?
A Debt Assumption Agreement transfers responsibility for a debt from one party to another, commonly used in Dutch business transactions during mergers, acquisitions, or corporate restructuring. When someone takes over another's debt obligations, this agreement makes it legally binding under Dutch civil law and ensures all parties understand their new roles.
These agreements play a crucial role in Dutch financial markets by providing clarity on who must repay the debt, what payment terms apply, and which securities or guarantees transfer with the obligation. The original debtor typically remains liable as a backup unless explicitly released, following requirements set out in the Dutch Civil Code (Burgerlijk Wetboek) Book 6.
When should you use a Debt Assumption Agreement?
Consider using a Debt Assumption Agreement when restructuring business operations in the Netherlands, especially during mergers or company divisions. This agreement becomes essential when transferring debt obligations between entities, like when a parent company takes over its subsidiary's loans or when selling part of your business while keeping specific debts with the original company.
The agreement proves particularly valuable during corporate reorganizations where debt responsibilities need clear documentation. Dutch banks and financial institutions often require these agreements to formalize liability transfers. They're also crucial when negotiating with creditors to maintain existing loan terms while changing the responsible party for repayment.
What are the different types of Debt Assumption Agreement?
- Full Debt Transfer: The most comprehensive type, where both primary and secondary obligations transfer to the new debtor, requiring formal creditor approval under Dutch law
- Cumulative Assumption: Creates joint liability where both original and new debtors remain responsible for the debt - common in corporate group structures
- Conditional Transfer: Links debt transfer to specific events or performance metrics, often used in staged business acquisitions
- Partial Assumption: Covers only specific portions of debt obligations, useful for complex restructuring scenarios
- Security-Preserving Transfer: Maintains existing collateral and guarantees while changing the primary debtor
Who should typically use a Debt Assumption Agreement?
- Original Debtors: Companies or individuals transferring their debt obligations, often during corporate restructuring or business sales
- Assuming Parties: Organizations taking on the debt responsibilities, typically parent companies, acquiring businesses, or strategic partners
- Creditors: Banks, financial institutions, or other lenders who must approve the debt transfer under Dutch banking regulations
- Corporate Lawyers: Draft and review agreements to ensure compliance with Dutch civil law and protect client interests
- Financial Advisors: Guide clients through debt restructuring implications and help negotiate favorable terms
How do you write a Debt Assumption Agreement?
- Debt Details: Gather complete information about the original debt, including principal amount, interest rates, payment schedules, and any existing securities
- Party Information: Collect legal names, registration numbers, and authorized representatives of all involved parties
- Creditor Approval: Secure written consent from creditors for the debt transfer, as required by Dutch law
- Financial Records: Document the assuming party's financial capacity to take on the debt
- Existing Contracts: Review related loan agreements and security documents to ensure alignment with the assumption terms
- Due Diligence: Verify any underlying assets or collateral associated with the debt obligation
What should be included in a Debt Assumption Agreement?
- Party Identification: Full legal names, addresses, and registration details of original debtor, assuming party, and creditors
- Debt Description: Precise details of the debt being transferred, including amount, interest rates, and payment terms
- Transfer Terms: Clear statement of debt assumption conditions and effective date under Dutch civil law
- Creditor Consent: Explicit approval from creditors for the transfer of obligations
- Security Provisions: Details of any collateral or guarantees transferring with the debt
- Governing Law: Clear statement of Dutch law application and jurisdiction
- Signatures: Designated spaces for all parties' authorized representatives
What's the difference between a Debt Assumption Agreement and a Debt Settlement Agreement?
A Debt Assumption Agreement differs significantly from a Debt Settlement Agreement in both purpose and effect under Dutch law. While both deal with debt obligations, they serve distinct functions in financial transactions.
- Primary Purpose: Debt Assumption Agreements transfer existing debt obligations to a new party, keeping the original terms intact. Debt Settlement Agreements modify or resolve existing debt, often reducing the amount owed
- Creditor Role: In assumptions, creditors must actively approve the transfer of debt to a new debtor. Settlements typically involve direct negotiation between creditor and existing debtor only
- Legal Effect: Assumptions maintain the original debt structure while changing the responsible party. Settlements permanently modify or terminate the original debt obligation
- Timing: Assumptions are common in business restructuring and typically occur mid-term. Settlements usually mark the end of a debt relationship or financial difficulty
Download our whitepaper on the future of AI in Legal
ұԾ’s Security Promise
Genie is the safest place to draft. Here’s how we prioritise your privacy and security.
Your documents are private:
We do not train on your data; ұԾ’s AI improves independently
All data stored on Genie is private to your organisation
Your documents are protected:
Your documents are protected by ultra-secure 256-bit encryption
Our bank-grade security infrastructure undergoes regular external audits
We are ISO27001 certified, so your data is secure
Organizational security
You retain IP ownership of your documents
You have full control over your data and who gets to see it
Innovation in privacy:
Genie partnered with the Computational Privacy Department at Imperial College London
Together, we ran a £1 million research project on privacy and anonymity in legal contracts
Want to know more?
Visit our for more details and real-time security updates.
Read our Privacy Policy.