The successful use of Dutch WHOA schemes in international restructurings
25-09-2023
The Dutch 'Wet Homologatie Onderhands Akkoord' (WHOA) is proving to be a useful tool in international restructuring. In 2023, Vroon, Steinhoff and Diebold Nixdorf have all successfully used the WHOA in major restructuring plans. In this Legal Update, we shall provide a brief summary of these three cases.
Vroon
International shipping company Vroon used a combination of the Dutch WHOA and English Scheme to complete a multi-jurisdictional restructuring. Two out of the 10 classes of stakeholders voted against the WHOA-plan in the Netherlands, but were eventually bound to the restructuring when the Dutch Court approved the plan on May 26th 2023.
In parallel proceedings, Lamo Holding B.V., an intermediate Vroon holding company, initiated an English Scheme of Arrangement with the aim of binding certain foreign creditors to the plan and facilitating recognition of the plan in the common law jurisdiction of Singapore, a major international shipping hub. Unlike the WHOA, an English Scheme can only be sanctioned if it gets approval of each class of creditors. The Scheme included two classes of creditors that both voted in favor of the restructuring plan.
The shareholders of Lamo Holding B.V. were the only stakeholders to challenge the English Scheme. They opposed the Scheme, as their ownership stake would dilute upon implementation of the international restructuring plan. The English court dismissed the shareholders plea. The judge ruled that their issue was a matter of the parallel Dutch WHOA-proceedings, and not the English Scheme. The English court sanctioned the Scheme on the same day that the Dutch court approved the WHOA-plan.
This combination of the Dutch WHOA and English Scheme provides an excellent example of the ability of the WHOA to deal with out-of-the money-shareholders in complex multi-jurisdictional restructurings, also when non-EU jurisdictions are involved.
Steinhoff
Another example of a multi-jurisdictional restructuring is the Steinhoff case. Steinhoff International Holdings N.V. went through financial difficulties that ultimately led to around €10.4 billion worth of debt obligations. The proposed consensual restructuring plan to extend the maturity dates of these debts was first rejected by the shareholders. To avoid bankruptcy, Steinhoff subsequently proposed the consensual restructuring plan under the Dutch WHOA.
The plan was offered to three classes of creditors and one class of shareholders. All classes of creditors supported the plan, but the shareholders voted against it. Steinhoff argued that if the plan was not approved, bankruptcy could be expected in which case no distribution to shareholders would be possible. The argument of the shareholders, that they were 'in the money', was rejected by the court. On June 21th 2023, the Dutch Court approved the WHOA-plan.
Since Steinhoff initiated a public WHOA proceeding, the confirmation ruling is recognized throughout the European Union (except for Denmark). This further demonstrates the use of the WHOA within an international context and provides an example on how the WHOA can be used as a tool for an EU-wide restructuring.
Diebold Nixdorf
More recently, banking technology group Diebold Nixdorf submitted a Chapter 11 petition to the United States Bankruptcy Court for the Southern District of Texas. On June 1st 2023, certain entities of Diebold Nixdorf also initiated Dutch WHOA-proceedings in order to implement a parallel restructuring plan in the Netherlands. The US court approved Diebold Nixdorf's Chapter 11-reorganization plan on July 13th 2023. The Dutch court subsequently approved the WHOA-plan in the beginning of August. In accordance with Chapter 15 of the Bankruptcy Code, the US bankruptcy court recently issued an order recognizing the Dutch WHOA-plan, allowing for it to be executed in the United States.
Diebold Nixdorf's balance sheet was deleveraged by approximately $1.3 billion as a result of the reorganization, which also provided financing for roughly $1.25 billion in exit term loans. The creditors of the 'pre-petition' Diebold received most of the equity in the restructured entity.
The case of Diebold Nixdorf shows that the WHOA can be applied in many different cross border situations, also when a US-jurisdiction is involved.
Would you like more information about (international) reorganization plans or WHOA proceedings? Please feel free to contact one of our specialists from the Restructuring & Insolvency team.
This is a Legal Update by Daniël Schuilwerve.
