Financial difficulties
Court Approval of a Private Composition Act
The Court Approval of a Private Composition Act (WHOA) came into force on January 1, 2021. This change in the law has significantly altered Dutch insolvency law.
Compulsory composition outside bankruptcy under the WHOA
The WHOA allows a debtor to offer a compulsory composition to creditors and other stakeholders (such as shareholders) that may help avoid bankruptcy. Previously, the possibility to have a compulsory composition declared binding only existed in suspension of payment proceedings or bankruptcy proceedings.
Binding of creditors to WHOA composition
The composition becomes binding on the creditors if the court homologates the composition. Even if creditors have voted against the composition, they can be bound by the composition. One of the requirements of the law is that the composition must be reasonable and fair. The creditors are given the opportunity to vote on the composition and are divided into different classes for this purpose. For example, a mortgagee will be assigned to a different class for the part of his claim that is covered by the mortgage right than a creditor without privilege (i.e. an unsecured creditor).
The content of the composition under the WHOA
The debtor has a great deal of freedom in designing the composition. The proposed composition may entail a change in the rights of those involved (creditors and shareholders). For example, a creditor may have to settle for only partial payment of his claim or conversion of part of the debt into share capital.
Legal regulation of the WHOA
The legislation of the WHOA is quite complex. Various requirements are imposed on the contents of the composition. For example, the expected value of the company after the composition should be stated (the reorganization value), as well as the expected proceeds from the liquidation of the debtor’s assets in the event of bankruptcy (the liquidation value). Valuations should therefore be carried out.
On this basis, the ‘no creditor worse off rule’ can be tested, which means that the court can reject the request for approval of the composition at the request of a creditor if the creditor would be in a worse position as a result of the composition than in the event of liquidation of the debtor’s assets in bankruptcy.
In addition to the debtor, creditors and stakeholders, other persons may also play a role, such as a restructuring expert, observer and other experts to be appointed by the court.
Lawyers counseling WHOA
We are happy to assist you if you wish to offer a composition in order to avoid bankruptcy or if you are faced with a debtor who wishes to offer a composition.
More about Companies in financial difficulties:
Please click further if you would like to know more about how we can advise you on the following areas/topics:
SPECIALIZED LAWYERS
These are our lawyers who are specialized in this area.
Irene Nuijen
Administrative Assistant
+31 (0)10 209 27 50
nuijen@lvh-advocaten.nl
(more…)
Hans Rijntjes
Richard Ouwerling
Carola Plomp
Secretary
+31 (0)10 209 27 75
plomp@lvh-advocaten.nl (more…)
Sebastiaan Knook
Secretary
+31 (0)10 209 27 64
knook@lvh-advocaten.nl
(more…)
Jamie Janssen
David Harreman
Jacolien Leuvenink
Rob Steenhoek
Mike Pfeifer
Ben van Nieuwaal
Laura Kleijne
Bouwe Bos
Peter de Graaf
Anna-Rhodé van den Dool
Gentia Niesert
Claudia Rondberg
Receptionist
+31 (0)10 209 27 77
rondberg@lvh-advocaten.nl
(more…)
Carolina Corijn
Legal assistant
+31 (0)10 209 27 52
corijn@lvh-advocaten.nl
(more…)
Bram van Ruijven
Legal assistant aviation
+31 (0)10 209 27 64
vanruijven@lvh-advocaten.nl
(more…)
Sebastiaan Knook
Legal assistant aviation
+31 (0)10 209 27 52
knook@lvh-advocaten.nl
(more…)
Anouk van Houdt
Annique Wennekes
Peter Verheijden
Ina Erwich
Maxime Visser
Manager backoffice
+31 (0)10 206 17 84
visser@lvh-advocaten.nl
(more…)
More about companies in financial distress
Actions against non-competition agreements
Many employees have a non-compete agreement, and many employers come into contact with potential employees who have a non-compete agreement. The question that then arises is, can the employee join a new company? Or in other words, is the non-competition clause legally valid, can the current employer successfully invoke the clause, or can the non-competition clause perhaps be (partially) voided?
Requirements for CO2 reduction in state aid to KLM?
An important topic in aviation is the reduction of CO2 emmission. Aircraft burn kerosene and therefore emit CO2. Recently, the preliminary relief judge of the District Court of The Hague issued a judgment in the context of CO2 reduction by the Dutch airline KLM and the state aid that KLM received due to the corona pandemic. What conditions for CO2 reduction can be attached to that state aid?
Employee leaving sick: what about premium differentiation?
Are you familiar with the financial consequences of a sick employee leaving your company? The Sickness Benefits Act and WGA premiums are differentiated. This means that the premiums depend on the inflow of employees who became ill on the last day of their employment or within 4 weeks after the dismissal date. In this article we discuss the premium differentiation and the calculation of this premium.
