WHOA: applic­a­tion cri­ter­ia and the steps to be tasks

Private Consent Act


Published 26 November 2020 Reading time min Author Robin de Wit Insolvency & Restructuring

In vari­ous blogs, we informed you on cer­tain aspects of the Dutch Scheme of Arrange­ment (the “WHOA“).  On 1 Janu­ary 2021, this legis­la­tion will become effect­ive.  In this blog, we will set out the applic­a­tion cri­ter­ia and the dif­fer­ent steps of a WHOA pro­ced­ure.



The WHOA enables enter­prises that face fin­an­cial dif­fi­culties to reach an agree­ment with their cred­it­ors, even if not all cred­it­ors are will­ing to cooper­ate.  After approv­al (homo­log­a­tion) by the court, the agree­ment can be imposed on the non-cooper­at­ing cred­it­ors.  The agree­ment could inter alia provide a change of the cred­it­ors’ rights, such as the defer­ral of pay­ment, a par­tial write-off, the con­ver­sion of debts into shares and the amend­ment of agree­ments.  The object­ive of the WHOA is to pre­vent bank­ruptcy and the asso­ci­ated loss in value, and, as such, the improve­ment of the pos­i­tion of the cred­it­ors.


Applic­a­tion cri­ter­ia

The WHOA is pre­dom­in­antly intro­duced for enter­prises with a high debt bur­den that also have busi­ness activ­it­ies that are viable after a restruc­tur­ing.  Fur­ther­more, the WHOA is intro­duced for enter­prises that wish to cease their activ­it­ies, but whose debts exceed the assets.  These enter­prises could sac­ri­fice a so-called liquid­a­tion set­tle­ment agree­ment.

A debt­or is able to apply for a WHOA arrange­ment if it is reas­on­able to assume – based on the fin­an­cial pos­i­tion of the debt­or – that the debt­or is no longer able to pay his debts.  To cla­ri­fy these cri­ter­ia, the legis­lat­or has giv­en the example of a debt­or who fore­sees that he can­not repay a loan that matures in the upcom­ing year.  The WHOA pro­ced­ure can be ini­ti­ated at an early stage and it is recom­men­ded to use this time before the fin­an­cial pos­i­tion becomes crit­ic­al.  Cred­it­ors, share­hold­ers or the works coun­cil are also able to apply for a WHOA pro­ced­ure.  In that case, the court will also appoint a restruc­tur­ing expert.

The WHOA pro­ced­ure can­not be ini­ti­ated if a WHOA pro­ced­ure has been unsuc­cess­fully reques­ted in the past three years.


Steps to be tasks

Togeth­er with his advisers, the debt­or will have to decide in which way the liab­il­it­ies side of its bal­ance sheet should be restruc­tured.  The debt­or is able to decide on the scope and con­tent of the restruc­tur­ing plan.  The debt­or could decide, for instance, which cred­it­ors should be involved in the restruc­tur­ing plan, such as only the fin­an­cing banks and share­hold­ers or all cred­it­ors.  Fur­ther­more, the debt­or is also able to request the court to amend or ter­min­ate exist­ing agree­ments.  The WHOA offers the pos­sib­il­ity thereto, except for employ­ment agree­ments (we refer to our blog below about this sub­ject).

The vari­ous groups of cred­it­ors should be clas­si­fied in accord­ance with their rank­ing in a bank­ruptcy dis­tri­bu­tion.  Each class of cred­it­ors is able to vote on the restruc­tur­ing plan that has been offered by the debt­or.  The entire class approves the restruc­tur­ing plan if 2/3 of the cred­it­ors in that class (to be determ­ined based on the amount of the claims) vote in favor of the plan.  The approv­al of at least one class of cred­it­ors is neces­sary in order to sub­mit the plan to the court (and, as such, to leg­ally bind the oppos­ing classes to the plan).  Cred­it­ors can object to the homo­log­a­tion of the restruc­tur­ing plan by the court. For fur­ther inform­a­tion about the right to object, we refer you to our blog below regard­ing this top­ic.  Cred­it­ors should be well-informed by the debt­or in order to be able to assess the offered restruc­tur­ing plan.  The inform­a­tion should con­tain a valu­ation of the reor­gan­iz­a­tion value and the liquid­a­tion value of the enter­prise.  These valu­ations are import­ant as the concept is that reor­gan­iz­a­tion value is divided among the vari­ous cap­it­al pro­viders in accord­ance with their rank, while cred­it­ors should always receive more than they would receive in case of a bank­ruptcy (liquid­a­tion value). Small- and medi­um-sized com­pan­ies should, in prin­ciple, receive a min­im­um of 20% of their claim, unless there is a com­pel­ling reas­on not to do so.

Dur­ing the pre­par­a­tion of a restruc­tur­ing plan, it may be neces­sary to use cer­tain options that the WHOA offers.  These options include the so-called “cool­ing-off peri­od”.   A cool­ing-off peri­od can be pro­claimed by the court and pre­vents cred­it­ors from claim­ing their goods dur­ing this peri­od.  The court is also able to pro­tect cer­tain leg­al acts of the debt­or against nul­li­fic­a­tion by the bank­ruptcy receiv­er (based on actio pauli­ana).  To use the above-men­tioned options, a kick-off state­ment should be filed at the court.  For more inform­a­tion on the sup­port­ive meas­ures of the WHOA, please see the blog below.

The debt­or has to decide wheth­er he wishes to start an open or a closed WHOA pro­ced­ure.  An open (pub­lic) pro­ced­ure will be pub­lished in the Dutch insolv­ency register and the Dutch trade register.  The decision also has con­sequences for the jur­is­dic­tion and the inter­na­tion­al recog­ni­tion of the arrange­ment (see also our blog below about this sub­ject).