Wet Homologatie Onderhands Akkoord or WHOA

1. What is the Scheme?
A company that “reasonably expects that it will be unable to pay its debts as they fall due” may offer a restructuring plan to its creditors and shareholders in order to restructure its problematic debts. The restructuring plan can be implemented outside of insolvency and will amend the rights of creditors or shareholders by a 2/3 majority vote in each class and court approval. The restructuring plan can include for example a reduction of outstanding debt, a debt-for-equity swap, issuance of new shares and/or an extension of a maturity date.

2. When can the Scheme be used in practice?
The WHOA has been approved by the Dutch Senate (Eerste Kamer) in October 2020 and it is expected that the new law will enter into force on 1 January 2021 at the latest.

3. Who can offer the Scheme?
A Scheme can be offered by either: (a) the debtor (no shareholder approval is required) or (b) a restructuring expert appointed by the court at the request of the debtor’s creditors, shareholders or works council, or the debtor itself.

4. Tell me about the class composition?
Separate classes of creditors and or shareholders shall apply to the extent the “rights” of such creditors and/or shareholders are distinct in a manner that would not constitute a similar position.

5. How is the voting process organized?
Voting takes place per class and all creditors and shareholders whose rights are affected as part of the restructuring plan must be given the opportunity to vote. A class votes in favour when at least 2/3 of the value that has voted in that class, supports the restructuring plan. The value is based on the outstanding claims for the creditors or the issued share capital for the shareholders, in each case in respect of the creditors and shareholders that have voted.

6. What are the requirements for the Dutch court to sanction the scheme?
If a restructuring plan is proposed to one class and a majority of 2/3 votes in favour, then the Dutch court will approve the plan unless (a) certain “general” or “procedural” grounds for refusal have been met, or (2) a creditor or shareholder receives under the restructuring plan less than the amount that such creditor or shareholder would receive in liquidation.

7. If a class votes against the plan, can it then still be forced into the scheme?
Yes, a restructuring plan can be proposed to multiple classes at the same time. If at least one ‘in-the-money’ class has voted in favour of the restructuring plan, the court can be requested to approve the plan and bind all classes.

8. Can a freeze period (automatic stay) be applied?
Yes. A freeze period can be set for a maximum period of 4 months in the first instance. An extension is possible, but never beyond a total freeze period of 8 months. During the freeze period, enforcement actions are blocked save for those who have been granted court approval.

9. Are shareholders protected by shareholder agreements and articles of association?
No. Consent requirements and reserved matters under existing shareholder agreements or articles of association are not applicable.

10. Can the scheme be used to amend terms of “continuing” contracts (e.g. lease agreements)?
Yes. If the counterparty does not agree to such amendments, then the relevant contract can be terminated by the debtor, subject to sanctioning by the court. Employee contract, however, cannot in any way be affected by a Scheme.

About the author:
Ilse van Gasteren specialises in restructurings & insolvencies, including advice on security enforcement strategies, debt-for-equity swaps, creditor compositions, contingency planning, and going concern sales in insolvency scenarios. She acts for financial institutions, investors and also borrowers on complex local and cross-border restructurings.

For more information about this topic, please don’t hesitate to contact Ilse.

ilse.vangasteren@cliffordchance.com | +31 20 711 9272