8 October 2025
Insolvency, Finance & Collateral: case law alerts
In this article, we explain the importance of properly documenting claims secured by pledges and mortgages.
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17 February 2025
WHOA also available for sole proprietorships and general partnerships
Since its introduction, the WHOA has proven to be a successful method for restructuring businesses in financial distress, preventing unnecessary bankruptcies
We are often asked whether the WHOA is only available for corporations or if sole proprietorships and general partnerships (VOFs) can also use it.
Sole proprietorships and general partnerships
The answer is: yes. Sole proprietorships and VOFs can also use the WHOA to resolve problematic debts. The same rules apply as for other businesses: open and transparent communication about the causes and solutions of financial difficulties, proper classification of creditors, a fair distribution of business value, and most importantly: no creditor may be worse off under the agreement than in bankruptcy (no creditor worse off principle).
Court decision
The court will assess whether one or more creditors would be worse off under the agreement than in a bankruptcy liquidation. The entrepreneur must therefore present a realistic picture of the company’s reorganization value under the agreement compared to the expected proceeds from liquidation in bankruptcy.
Personal assets
This is where the challenge lies. In the bankruptcy of a sole proprietorship or VOF, the entrepreneur is personally liable for business debts. This means that personal assets—such as home equity, savings, vehicles, and other assets—must also be considered when comparing the agreement with the bankruptcy scenario. If personal assets exist, reaching a WHOA agreement for a sole proprietorship or VOF becomes more difficult. More funds will be needed to make the agreement viable, as not only the business value but also personal assets must be taken into account. A relevant example is a ruling by the District Court of The Hague.
However, if the agreement transparently discloses what personal assets exist, how they are (or are not) included in the agreement, and how they factor into the bankruptcy value calculation, creditors can make an informed decision.
Legal guidance
Offering a WHOA agreement is a complex process that requires proper guidance to be successful. There are numerous legal grounds on which the court can, or even must, reject an agreement. Expert assistance is therefore essential.
More information
Would you like to learn more about the WHOA? Visit our dedicated WHOA page or contact us for advice from our WHOA specialists.
