Michelle Sangers, 13 May 2025

The WHOA

If it is plausible that the company will not be able to continue paying its debts, the company can offer a settlement proposal to its creditors and shareholders under the Act for homologating a private agreement (Wet Homologatie Onderhands Akkoord: WHOA). When the court approves the agreement, creditors and shareholders are forced to cooperate with the agreement. This is called a compulsory settlement (dwangakkoord). The agreement aims to restructure the company’s debt (reorganisation settlement) or wind down its business in a controlled manner (liquidation settlement).

How does the WHOA procedure work?

In the Series the WHOA, you can read what the WHOA procedure looks like in outline and when – and by whom – a WHOA procedure can be started. You will also find a handy roadmap there: roadmap WHOA procedure. An initial evaluation of the WHOA procedure shows that it does indeed provide relief for ailing viable companies, but that there is room for improvement when it comes to awareness of the procedure and the costs involved.

What are the benefits of a WHOA procedure?

In this blog, we reflect on the benefits of WHOA proceedings for (the board of) the company and for creditors/shareholders, in the context of the blog series: the legal positions of limited liability corporate bodies in times of financial hardship.

Benefits of WHOA proceedings for (the board of) the company

1. A major advantage of the WHOA for the company’s management is that (some) creditors/shareholders can be forced to cooperate in restructuring the company’s debt (reorganisation agreement) or in a controlled resolution of non-viable companies(liquidation agreement).
2. Furthermore, there is a lot of freedom in the design of the agreement. For example, it is possible to restructure loans (e.g. via a debt for equity swap), cancel debts (partially) or adjust loan maturities.
3. Not all creditors/shareholders need to be included in the arrangement. For those creditors/shareholders, the arrangement does not apply.
4. During WHOA proceedings, a cooling-off period can be imposed, meaning that during that period creditors may not seize or take collection measures.
5. Because the company can in principle continue to operate during a WHOA process, image damage can be mitigated and the value of the company maximised as much as possible.

Advantages of WHOA proceedings for creditors/shareholders

1. In a WHOA, creditors/shareholders typically receive a higher distribution percentage than in bankruptcy.
2. Creditors/shareholders have a say in the proceedings and can thus actively participate, vote against and object. They also receive information about the company’s financial condition. In bankruptcy, this is often not the case.
3. Creditors/shareholders are relatively protected by the courts. For example, the court disapproves an agreement if the fulfilment of the agreement is insufficiently guaranteed (see section 384 Insolvency Act).
4. Also, with a reorganisation agreement, there is a chance of preserving business relationships and employment by mostly keeping the company afloat.
5. Because the company can, in principle, continue to operate during a WHOA proceeding, image damage can be limited and the value of the company preserved as much as possible.

If you would like to know whether the WHOA procedure could be of use to you, please feel free to contact us.

Stel je vraag!

Any questions?

Michelle Sangers

+31 20 5313049

sangers@wieringa.nl

Naam(Required)

Telefoon

E-mailadres

Vraag(Required)

Comments

This field is for validation purposes and should be left unchanged.