Q&A WHOA (Dutch Scheme)

The WHOA (Homologation Private Agreement Act) provides a framework for reaching an arrangement with creditors and shareholders outside formal bankruptcy proceedings. Even parties that vote against the arrangement can, under certain conditions, be bound by it.

This makes the WHOA procedure a powerful instrument. Debts can be restructured, agreements amended and the organisation stabilised, or, where appropriate, wound down in a controlled manner.

A WHOA procedure typically starts once it becomes clear that the organisation will no longer be able to meet its obligations in the future. In many cases, a commencement notice is filed to enable measures such as a cooling-off period.

Creditors and shareholders are divided into classes, after which the arrangement is submitted for a vote. Each class votes separately. If sufficient support is obtained, generally a two-thirds majority, the arrangement can be submitted to the court.

The court assesses whether the WHOA procedure has been conducted properly and whether the arrangement is reasonable. If confirmed, the arrangement binds all parties involved.

Timing is critical. The WHOA procedure is designed to enable early intervention. In practice, delays often reduce the available options. Acting at an early stage generally provides greater flexibility and increases the likelihood of a successful outcome.

Many agreements can be amended or terminated under the WHOA procedure, even without the counterparty’s consent, provided the court grants approval.

Employment contracts form an exception and fall outside the scope of the WHOA.

The court assesses both the process and the substance of the arrangement. Key considerations include:

• correct classification of creditors and shareholders
• complete and transparent information
• creditors must not be worse off than in bankruptcy

In addition, statutory requirements apply, such as minimum recovery thresholds. If these are not met, confirmation may be refused.

If the arrangement is not confirmed, options may be limited. A new WHOA procedure cannot usually be initiated immediately.

In such cases, the risk of insolvency increases. In certain situations, creditors may initiate a process through a restructuring expert, although this does not guarantee a successful outcome.

The WHOA procedure is intended for situations where it is foreseeable that the organisation will no longer be able to meet its obligations in the near future.

The key question is whether restructuring can restore viability or lead to a better outcome than insolvency. This requires a careful assessment of both financial and legal factors. 

A successful arrangement starts with a thorough analysis of the financial position, including debts, assets and stakeholders. Based on this, a proposal is developed and discussed with creditors.

Strategic considerations are essential, including the classification of creditors, the timing of engagement and the overall structure of the arrangement.

Tax debts often form a significant part of the overall debt position. The Dutch Tax Authority therefore frequently plays a central role in a WHOA procedure.

Specific conditions apply, including the requirement that the arrangement offers a better outcome than bankruptcy and respects the preferential position of the Dutch Tax Authority.

A private WHOA procedure offers confidentiality and stability, while a public procedure provides access to additional legal measures, such as a cooling-off period.

The choice is strategic and, once made, cannot easily be reversed. Careful consideration at an early stage is therefore essential.

An arrangement under the WHOA procedure often provides a better outcome than bankruptcy, but this is not always immediately apparent.

Active assessment is required. This may involve reviewing the proposal, raising objections where necessary and substantiating the position taken.

If shareholders’ rights are affected, they are entitled to vote. The board may initiate the WHOA procedure without prior shareholder approval, but the vote of shareholders remains relevant in the process.

The board remains in control unless a restructuring expert is appointed. In that case, control shifts to the restructuring expert.

In all cases, cooperation and transparency contribute to an effective process.

Lease agreements can, under certain conditions, be amended or terminated through the WHOA procedure, subject to court approval.

This makes it important for landlords to understand their position and respond in a timely manner.

There is no right of appeal against a confirmed arrangement. This means that all relevant arguments must be presented before the court hearing.

The court may appoint a restructuring expert to prepare and present the arrangement. In that case, the board steps back from the process.

An observer may also be appointed to monitor the process and safeguard the interests of creditors.

A WHOA procedure requires careful coordination, timing and strategic decision-making.

We provide a clear overview of the available options and support the organisation throughout the process, from initial analysis to implementation, always with a focus on practical solutions and the best possible outcome.