WHOA

Is your business still viable but facing difficulties because of an excessive debt burden? The Wet Homologatie Onderhands Akkoord (WHOA) provides a legal framework that allows you, as a business owner, to restructure debts without requiring all creditors to agree. The purpose of the WHOA is to safeguard the continuity of your business while serving both your interests and those of your creditors as effectively as possible.

What is the WHOA?

The WHOA (Wet Homologatie Onderhands Akkoord) entered into force on 1 January 2021. Under the WHOA, a business in serious financial difficulty can offer its creditors a restructuring plan under which they may have to accept payment of part of their claims. This can help prevent bankruptcy.

Preventing bankruptcy with new options under the Dutch Bankruptcy Act

The WHOA provides for an out-of-court restructuring plan that can be imposed on dissenting creditors, enabling a business in financial difficulty to restructure. Previously, the Dutch Bankruptcy Act provided for compulsory compositions only in bankruptcy and in suspension-of-payments proceedings. Bankruptcy is aimed at liquidating the business rather than continuing it. Suspension of payments is intended to facilitate continuation of the business, but in many cases it offers insufficient scope to do so and merely serves as a prelude to bankruptcy. These arrangements were therefore often unsuitable for restructuring businesses.

The WHOA changes this by introducing a new restructuring option under the Dutch Bankruptcy Act and giving businesses a second chance.

Why choose the WHOA?

Because it can prevent bankruptcy, the WHOA may also be attractive to creditors, particularly where it allows them to recover a larger proportion of their claims than they would receive in bankruptcy. Without the WHOA, a restructuring agreement can generally succeed only if all creditors consent.

Under the WHOA, a minority of dissenting creditors can nevertheless be bound by the proposed restructuring plan. The WHOA also makes it possible, in certain circumstances, to terminate specific agreements before their agreed expiry date.

The confidential and public WHOA procedures

If you wish to make use of the WHOA, you must choose between a confidential procedure and a public procedure through which the restructuring plan can be established.

In a public procedure, the restructuring proceedings must be made known to third parties through the insolvency register, the Trade Register of the Dutch Chamber of Commerce and the Dutch Government Gazette.

In a confidential procedure, the preparation of the restructuring plan is not made public.

Why obtain legal assistance?

The WHOA can be complex, and involving a lawyer is often useful for the following reasons:

Preparation of a restructuring plan: a lawyer helps you prepare a detailed and legally robust restructuring plan.
Communication with creditors: a lawyer negotiates with creditors and ensures clear and accurate communication, helping to prevent disputes and misunderstandings.
Legal questions and uncertainties: if questions or uncertainties arise regarding the legislation, the procedure or the implications of the WHOA, a lawyer can provide legal advice.
Filing with the court: a lawyer submits the request for court confirmation of the restructuring plan and handles the required documents and formalities.
Guidance during the court confirmation procedure: a lawyer guides you through the homologation procedure before the court to ensure that the process complies with the applicable rules and to address any disputes that may arise.
Protection against bankruptcy: if bankruptcy is imminent, a lawyer can help initiate a WHOA procedure quickly and seek the available protective measures.

Why instruct our insolvency lawyers?

If you are experiencing financial difficulties, it is important to choose a lawyer with experience in WHOA proceedings and corporate restructuring in order to maximise the prospects of a successful outcome. At RWV, we have lawyers with that experience.

We support and guide you at every stage, from preparing a restructuring plan to assisting you through the court confirmation procedure. By obtaining our expert assistance, you improve the prospects of achieving a court-confirmed restructuring plan and thereby preserving the continuity of your business.