Dutch Act on Court Confirmation of a Private Restructuring Plan (WHOA)

The Dutch Act on Court Confirmation of a Private Restructuring Plan (WHOA) entered into force on 1 January 2021. This legislative change significantly amended insolvency law.

Compulsory restructuring plan outside bankruptcy

The WHOA enables a debtor to offer a compulsory restructuring plan to creditors and other stakeholders, such as shareholders, which can help prevent bankruptcy. Previously, a compulsory restructuring plan could only be declared binding in suspension of payments or bankruptcy.

Binding effect on creditors

The plan becomes binding on creditors if the court confirms it. Creditors may also be bound by the plan even if they voted against it. The law requires, among other things, that the plan must be reasonable and fair. Creditors are given the opportunity to vote on the plan and are divided into different classes for that purpose.

Content of the plan

The debtor has considerable freedom in structuring the plan. The proposed plan may change the rights of those involved, including creditors and shareholders. For example, a creditor may have to accept only partial payment of its claim or conversion of part of the debt into share capital.

Statutory WHOA framework

The WHOA framework is quite complex. The contents of the plan must meet various requirements. It must indicate, for example, the value expected to be realised if the plan is adopted, known as the restructuring value, as well as the proceeds expected in a liquidation of the debtor’s assets in bankruptcy, known as the liquidation value.

On this basis, the court can assess, among other things, the no creditor worse off rule. This means that the court may reject confirmation of the plan at the request of a creditor if that creditor would be placed in a worse position under the plan than in a bankruptcy liquidation.

In addition to the debtor, creditors and stakeholders, other persons may also play a role, such as a restructuring expert, observer or other experts appointed by the court.

Legal guidance on WHOA

We are happy to help if you wish to offer a restructuring plan to prevent bankruptcy or if you are confronted with a debtor who wishes to offer such a plan.

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