WHOA ushers in a new restructuring era in the Netherlands

Quick read

On 1 January 2021, new Dutch restructuring law Wet Homologatie Onderhands Akkoord (or WHOA) came into effect. Here, we run through what WHOA is and cover the first decisions handed down under the new law.

What is WHOA?

Although WHOA is best translated in English as the "Court Approval of a Private Composition", it could just as easily be characterised as the Prevention of Insolvency Act. It aims to enable companies that are still (partly) viable to avoid bankruptcy, and provides a mechanism for companies, creditors and shareholders to enter into a binding private plan with court approval.

If a specialist judge approves the proposed plan, it is binding on all creditors – even those who have voted against it. A private plan can be a very effective tool for averting bankruptcy petitions and for the restructuring of companies.

Recent WHOA decisions

A WHOA procedure starts with a so-called "start-of-procedure declaration" filed with the District Court registry. During the first week of 2021, the first start-of-procedure declarations were filed, and – although the WHOA has only just come into force – the first court decisions have recently been published:

On 15 January 2021, the District Court in the Hague lifted creditor attachments and allowed a cooling off period to allow a company to explore its restructuring options. A cooling off period is a stay during which creditors are prevented from seeking recovery against the assets of the company. On the same day, the District Court in Amsterdam also allowed a cooling off period and appointed an observator who will monitor the process on behalf of the creditors.
On 19 January 2021, the first restructuring expert was appointed over two companies by a court in the Northern Netherlands.

These cases are promising developments and mark the start of a new restructuring era in the Netherlands.