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.
Anna-Rhodé van den Dool
Mike Pfeifer
Peter de Graaf
Maxime Visser
Manager backoffice
+31 (0)10 206 17 84
visser@lvh-advocaten.nl
(more…)
Carolina Corijn
Legal assistant
+31 (0)10 209 27 52
corijn@lvh-advocaten.nl
(more…)
Richard Ouwerling
Laura Kleijne
Annique Wennekes
Peter Verheijden
Jamie Janssen
Ina Erwich
Claudia Rondberg
Receptionist
+31 (0)10 209 27 77
rondberg@lvh-advocaten.nl
(more…)
Gentia Niesert
Hans Rijntjes
Ben van Nieuwaal
David Harreman
Carola Plomp
Secretary
+31 (0)10 209 27 75
plomp@lvh-advocaten.nl (more…)
Rob Steenhoek
Irene Nuijen
Administrative Assistant
+31 (0)10 209 27 50
nuijen@lvh-advocaten.nl
(more…)
Jacolien Leuvenink
Sebastiaan Knook
Legal assistant aviation
+31 (0)10 209 27 52
knook@lvh-advocaten.nl
(more…)
Bram van Ruijven
Legal assistant aviation
+31 (0)10 209 27 64
vanruijven@lvh-advocaten.nl
(more…)
Anouk van Houdt
Bouwe Bos
Sebastiaan Knook
Secretary
+31 (0)10 209 27 64
knook@lvh-advocaten.nl
(more…)
More about companies in financial distress
Medium-sized business premises or other business premises: what is the difference and how do you determine which is which?
There are two different rental regimes for commercial property: rental for medium-sized business premises, such as stores and catering establishments (7:290 business premises) and other business premises (7:230a business premises). The applicable rental regime is indicated by the section of the Dutch Civil Code that applies to that rental regime. Rent for medium-sized business premises is regulated in Section 7:290 of the Dutch Civil Code and is therefore also referred to as 7:290 business premises. Section 7:230a of the Dutch Civil Code regulates the rent for other business accommodation, the so-called 7:230a business accommodation.
Justified employee job reassignment after serious incident?
A question that we as employment lawyers receive with some regularity is whether an employee can be placed in a lower position with a lower salary after one or more incidents. In many cases an employee will not voluntarily agree to this and the question arises whether a unilateral change of position is possible. This question was addressed by the subdistrict court in its judgment of December 31, 2020.
Summons Dismissal: Requirements and Recent Rulings
Many employers are occasionally confronted with an employee whom - in view of the seriousness of the conduct - they wish to part with immediately, i.e. dismiss summarily. But is this really possible? In this article, we will discuss the requirements for summary dismissal and three recent decisions by subdistrict courts that have ruled on summary dismissal.
