WHOA

The WHOA (Dutch Act on the Homologation of Private Agreements) provides companies in financial distress with an effective way to reduce a (too) high debt burden and avoid bankruptcy.

If a company reaches an agreement with a majority of its creditors, the court can approve that debt agreement. This binds even the dissenting creditors to the agreement. Shareholders can also be compelled to surrender their shares in a WHOA agreement. The WHOA can be used for the restructuring of viable companies, but also for the controlled closure of a business (a liquidation agreement).

Who can use the WHOA?

The WHOA is accessible to all types of businesses, from sole proprietorships and SMEs to large corporations and groups of companies. Associations and cooperatives can also make use of the WHOA.

To gain access to the WHOA, there must be a – threatening – bankruptcy situation: if no action is taken, the company will likely go bankrupt in the short term.

In most cases, the management of the company will initiate a WHOA process. However, creditors, the works council, or shareholders can also take the initiative by requesting the court to appoint a restructuring expert. This expert can then autonomously prepare and offer an agreement to all creditors and shareholders.

How does a WHOA process work?

A WHOA agreement is nothing more than a private agreement between a company and its creditors and shareholders. The homologation (i.e., the court’s approval of the agreement) is the final step of a WHOA process. This homologation is only necessary if not all creditors have consented to the proposed agreement. It serves as a lever to persuade creditors to agree to the deal. To achieve homologation by the court, many formalities must be fulfilled.

The key steps are:

  • Establishing the enterprise value based on valuation reports.
  • A correct distribution of all creditors into different classes.
  • Consultation with creditors and shareholders regarding a draft agreement.
  • Voting on the agreement by all creditors and shareholders.
  • Homologation by the court.

During a WHOA process, the company can request the court to take protective measures, such as lifting imposed seizures, pausing bankruptcy petitions, or granting a cooling-off period. If there are disputes with creditors, for example regarding the valuation of the company or class classification, the court can issue interim decisions.

These various steps are explained in separate articles.

The WHOA Act

Offering a WHOA agreement is a complex process that can only be successfully completed with the right guidance. It is important not to make mistakes in valuations, class distributions, correspondence with creditors, the construction of the agreement, etc. There are many legal grounds on which the court can or even must reject an agreement. Expert guidance is therefore necessary.

The Act on the Homologation of Private Agreements is (still) a new act that came into effect in 2021. GMW lawyers have already gained considerable practical experience with the WHOA as one of the few law firms in the Netherlands. For instance, GMW lawyers facilitated the first homologation of a WHOA agreement in the Netherlands in February 2021, where a company in the events sector reduced a debt burden of over €1.5 million to €350,000. Since then, GMW lawyers also represent shareholders or creditors who are involved in a WHOA agreement by a debtor and act as experts or observers appointed by the court. GMW lawyers have been involgend in more than 30 WHOA procedures, making our office one of the most experienced law firm in this expertise in the Netherlands.

The GMW WHOA solution?

1. Initial consultation

2. Providing information

3. Calculating enterprise value

4. Drafting the agreement

5. Consultation with creditors

6. Voting on the agreement

7. Confirmation via the court

Advantages of the WHOA Solution

Expert guidance

You will receive a tailored plan, including personal and expert guidance.

Cost efficient

Through automation, the WHOA has been made accessible for SMEs, allowing you to navigate this process at a competitive rate.

Quick and successful

Reaching an agreement with creditors is a complex process. You will be assisted quickly and efficiently.

Frequently Asked Questions

Click on the question to read the answer.

  • How can I prevent bankruptcy?

  • What is the WHOA?

  • What is the purpose of the WHOA?

  • How does the WHOA work?

Scientific articles

  • K.C. Mensink, Het wetsvoorstel homologatie onderhands akkoord ter voorkoming van faillissement: nieuwe kansen en mogelijkheden van de WHOA; Tijdschrift voor Curatoren (TvCu) 2018/1.
  • K.C. Mensink, Liquidatieakkoorden onder de WHOA, Tijdschrift voor Curatoren (TvCu) 2020/4.
  • K.C. Mensink, De fixatiedatum in de WHOA: Transacties in de Twilight zone na de start van een WHOA procedure, Tijdschrift voor Curatoren (TvCu) 2021/4.

Lawyers

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Christiaan Mensink

Company law, Insolvency law Read more about this lawyer

Daniël Huijboom

Company law, Insolvency law Read more about this lawyer

Wladimir Schmidt

Company law, Insolvency law Read more about this lawyer
All lawyers

Are you looking for an insolvency lawyer in The Hague?

GMW lawyers will be happy to help you with all your insolvency and restructuring issues. Do you have a question? Feel free to contact us.

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