WHOA: the sup­port­ing meas­ures

Private Consent Act


Published 10 December 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, the vari­ous sup­port­ing meas­ures the WHOA is offer­ing are dis­cussed.


Cool­ing-off peri­od

Upon request, the court can set a cool­ing-off peri­od of four months.  This peri­od can be exten­ded to a max­im­um of eight months.  Dur­ing this peri­od, cred­it­ors can­not claim their goods and these goods can be con­sumed, provided that the con­sum­mated goods are paid for.


Pro­tec­tion for res­cue fin­an­cing

Dur­ing the WHOA pro­ced­ure, upon request, the court can pro­tect cer­tain leg­al acts against ret­ro­spect­ive nul­li­fic­a­tion based on fraud­u­lent pref­er­ence. This is pos­sible if the leg­al act is neces­sary for the con­tinu­ation of the enter­prise and if this is in the interest of the joint cred­it­ors, while the interests of an indi­vidu­al cred­it­or will not be harmed sub­stan­tially. So new fund­ing can be pro­tec­ted.


Pre­ser­va­tion of agree­ments / pro­tec­tion against ter­min­a­tion

Dur­ing the WHOA pro­ced­ure, con­tract parties can­not ter­min­ate their agree­ments with the debt­or by reas­on of a default pri­or to the WHOA pro­ced­ure or based on an “ipso facto” change of con­trol pro­vi­sion.


Pos­sib­il­ity to can­cel unfa­vor­able agree­ments

The reor­gan­iz­a­tion plan under the WHOA may include a request for amend­ment of cer­tain agree­ments. Should the coun­ter­party refuse, the debt­or can can­cel the agree­ment against a max­im­um notice peri­od of three months. A pos­sible com­pens­a­tion for dam­ages caused by this pre­ma­ture ter­min­a­tion can be included in the reor­gan­iz­a­tion plan. This pro­vi­sion is not applic­able to labor agree­ments. For more inform­a­tion about this sub­ject, we refer to the blog below.


Approv­al of share­hold­ers not required

Even when the art­icles of asso­ci­ation or the share­hold­ers agree­ment stip­u­late dif­fer­ently, a dir­ect­or can start a WHOA pro­ced­ure without the per­mis­sion of the share­hold­ers.  A pos­sible dis­missal of a dir­ect­or by the share­hold­ers due to start­ing a WHOA pro­ced­ure can be can­celled by the court.


Deal cer­tainty pro­vi­sions

Dis­cus­sions about oth­er valu­ations, clas­si­fic­a­tion, enti­tle­ment to vote, the entry require­ments can all be brought before court for res­ol­u­tion in an early stage.  This sac­ri­fices the debt­or the oppor­tun­ity of inter­im adjust­ments and gives the debt­or more assur­ance that the reor­gan­iz­a­tion plan will be approved by the court.  In this respect, it is also import­ant that no appeals against decisions in a WHOA pro­ced­ure are pos­sible.


Sus­pen­sion of a bank­ruptcy request

When a bank­ruptcy applic­a­tion and an applic­a­tion for the appoint­ment of a restruc­tur­ing expert to pre­pare a com­puls­ory set­tle­ment, are brought before the court sim­ul­tan­eously, the court will first decide on the request for appoint­ing a restruc­tur­ing expert. If such a request is gran­ted, the court sets a cool­ing-off peri­od dur­ing which peri­od the applic­a­tion for the declar­a­tion of bank­ruptcy will be sus­pen­ded.