WHOA

With the introduction of the WHOA legislation (Dutch Homologation of Private Agreement Act) in early 2021, companies can restructure their debts with the approval of the court, without the need for suspension of payments or bankruptcy.

This page outlines the key elements of this law, focusing on the entrepreneur’s perspective.

What is the WHOA for? 

The law is primarily designed to offer companies that are fundamentally healthy but burdened with excessive debt, a new future perspective, preventing bankruptcy. The WHOA can also be used if the entrepreneur wants to exit the business. In that case, the remaining value in the company is distributed among creditors, and bankruptcy can also be avoided. Overall, this legislation can prevent damage and quickly lead to the desired outcome.

What does a WHOA restructuring process look like?

A general overview of the WHOA restructuring process is as follows:

• Insolvency test
• Viability diagnosis
• Recovery plan (turnaround plan)
• Classification of creditors into classes
• Offer to creditors
• Agreement proposal to creditors
• Voting on the agreement
• Homologation of the agreement

Restructuring Expert 

A company may initiate a WHOA process independently. Given the required specific expertise, it is recommended to engage an advisor. This approach allows the entrepreneur some control over the process. The company may also request the court to appoint a restructuring expert (HD).

Other Considerations

This article does not cover all the ins and outs of the new law. However, the following points are important to highlight:

• Long-term agreements (e.g., lease contracts and rental agreements) can also be included in the intended restructuring, with requests for modification or termination. This does not apply to employment contracts.
• The court will not automatically homologate the proposed agreement but will assess whether it meets the minimum requirements. To maximize the chances of success, a well-supported recovery plan must be in place, and both the proposal and process must comply with the requirements.
• If a homologation request is denied, no new agreement proposal can be submitted for homologation within three years. This means the process must succeed on the first attempt, with no second chances.
• A cooling-off period can be requested at the start or during a WHOA process. The cooling-off period can last up to four months, with one extension possible for an additional four months.

Using WHOA Yourself

The WHOA is a complex law and requires specific expertise, as well as negotiation skills. We advise entrepreneurs to ensure proper preparation and engage advisors with proven experience in (complex) restructurings.

Take advantage of our WHOA consultation hours! Have a short, no-obligation conversation with us about the possibilities and challenges of the WHOA process and what’s involved. Feel free to invite your controller or accountant.

Restructuring Debt Without WHOA

It is not mandatory to use the WHOA for debt restructuring. It is also possible to make agreements with creditors without involving a court or formal procedure. This consensual agreement (or private settlement) has the advantage of greater flexibility and is usually less costly. The most suitable approach depends on the specific situation. 
 

Disclaimer:

This page does not cover all aspects of the WHOA. Therefore, no rights can be derived from it. The objective is to inform entrepreneurs about the WHOA and the opportunities the law offers at a high level.