WHOA adopted by Dutch House of Representatives
Nieuwegein, May 2020
In an earlier article we wrote about a new Dutch law with the name "Act Homologation private agreement for the prevention of bankruptcy" (in short: "WHOA"). The bill is a change to the existing Bankruptcy law. It aims to provide organisations the possibility to restructure their debt position without a bankruptcy via a compulsory settlement. The law was passed by the Dutch House of Representatives on May 26th, 2020.
In short the law will give debtors, whose debt position puts the continuation of an otherwise viable business at risk, the option to restructure their debt position without a bankruptcy. They can offer their creditors an agreement, on which creditors will vote in classes (which are basically groups of creditors with certain conditions). For an agreement to be homologated, it is not necessary for all classes to vote in favor of the agreement. As long as the agreement is in accordance with the minimum requirements provided in the WHOA, a judge can homologate it, even if there are classes that have voted against the agreement. It is a useful instrument that will especially show its worth in times of (economic) crisis for troubled organisations.
Drawing up a promising agreement will involve both financial experts and lawyers. The procedure will, for instance, require a business valuation to be made. Together with lawyers from CMS, we have made an interactive workshop in which the most important aspects of the procedure are tackled. If you are interested in this workshop, you can contact Koos van Delft, Michiel Tempelman or Matthijs van Essen.
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