WHOA! A judicial enforcement agreement without bankruptcy

Nieuwegein, January 2019

If it is up to the Dutch legislature, it will soon be possible in the Netherlands to restructure the debt position of a company without a bankruptcy via a compulsory settlement. Dutch law currently has no possibility for a legally enforceable agreement. Instead, in practice, there are often worked with informal private agreements that are not enforceable.

The draft act with the name "Act Homologation private agreement for the prevention of bankruptcy" (short: "WHOA") is a change to the existing bankruptcy law. The consultation round was completed on 1 December 2017. The proposed changes will be incorporated into the bill in the coming period. The WHOA is an updated version of the Legislative Proposal Continuity for Enterprises II, which was already the subject of a consultation in 2014. The proposal is inspired by the English Scheme of Arrangement and the US Chapter 11 procedure.

Core of the scheme

The WHOA arranges a private agreement between a company on the one hand and the creditors and shareholders on the other hand about the debt restructuring. The court can then approve this agreement ('homologate'). The homologation ensures that the agreement for all persons involved in the agreement - creditors and / or shareholders - becomes binding. Creditors and / or shareholders who have not agreed to the agreement can therefore be forced to cooperate in the implementation of the agreement. With this compulsory agreement, a bankruptcy can be prevented.

In particular, a compulsory agreement offers a solution for companies that have profitable business activities in their own right, but that are threatened with insolvency because of excessive indebtedness. Moreover, with the proposed forced agreement in the WHOA, the rights of employees resulting from employment contracts can not be changed. This is important for practice, because obligations towards employees can contribute significantly to over-indebtedness for the debtor (often resulting in bankruptcy).

Important elements

  • Mandatory imposition of a private agreement on opposing creditors and shareholders to prevent bankruptcy.
  • Strengthen the reorganization of a company and prevent a minority of creditors from stopping a restructuring.
  • A quick and informal procedure with as little interference as possible from the judge.
  • Great flexibility to fill in the plan.
  • The agreement may make changes to the (claim) rights of unsecured, preferential and secured creditors and in the rights of shareholders, for example, by means of d.m.v. a debt for equity swap.
  • Creditors and shareholders can be divided into different classes, whereby it is possible to offer an agreement to a class.
  • The rights of guarantors and co-debtors towards the debtor and the rights of creditors vis-à-vis these guarantors and co-debtors can also be included in the agreement. This makes it possible to settle the restructuring of a group of companies at once.


The bill has been well received and is a welcome addition to the current restructuring practice. Especially for companies with a healthy business case that are profitable at the core but involve a heavy debt burden, this is an additional restructuring instrument. In this way maximum value retention of companies can be realized.

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