What is the WHOA? Dutch restructuring plans explained

The WHOA allows a Dutch company in financial difficulty to impose a restructuring plan on its creditors and shareholders without going bankrupt, even if some of them vote against it. The main exception: the plan cannot touch employees’ claims under their employment contracts, and it cannot force anyone to provide new money.

The WHOA is the Act on Court Confirmation of Extrajudicial Restructuring Plans (Wet homologatie onderhands akkoord). It has been in force since 1 January 2021 and added Articles 369 to 387 to the Dutch Bankruptcy Act (Faillissementswet, Fw). Below we explain who can use it, how classes and voting work, what the court checks before it confirms a plan, and when the WHOA is the wrong tool.

What is the WHOA in short?

It is a procedure in which a company offers its creditors and shareholders a plan, they vote on it in classes, and the court can then make the plan binding on everyone. Unanimity is no longer required.

Creditors and shareholders are divided into classes. A class approves the plan if at least two thirds of the total amount of the claims or shares of those who voted in that class vote in favour (Article 381(7) Fw). The court can then confirm (homologeren) the plan, so that it binds every creditor in that class, including those who voted against it and those who did not vote at all.

The court can go further. If at least one class of creditors that would receive something in a bankruptcy has approved the plan, the court may confirm it even though other classes voted against it. This cross-class cram-down is what gives the WHOA its force.

It is bounded by safeguards. No creditor may be left worse off than in a bankruptcy. Value must in principle be distributed according to rank, unless there is a reasonable ground to depart from it. And small and medium-sized trade creditors must as a rule be offered at least 20% of their claim.

Before the WHOA, a Dutch company could only bind all creditors to a composition within a suspension of payments or bankruptcy, or by getting every single creditor to agree. Individual creditors could block a sensible deal. The WHOA was designed to prevent bankruptcies that can be avoided. It draws on the English scheme of arrangement and the American Chapter 11 procedure, but it is tailored to the Dutch system.

Who can use the WHOA?

A debtor that is in a situation where it is reasonably likely that it will not be able to continue paying its debts (Article 370(1) Fw). The company must not already be bankrupt or in a suspension of payments.

The WHOA is available to legal entities, such as a private limited company (BV) or public limited company (NV), and to natural persons who run a business or practise an independent profession, such as a sole trader. Banks and insurers are excluded.

The procedure is usually started by the company itself. Creditors, shareholders and the works council (ondernemingsraad) can also ask the court to appoint a restructuring expert (herstructureringsdeskundige), who then prepares and offers a plan (Article 371 Fw).

The size of the business does not matter. What matters is that the business can survive after the restructuring. A plan for a company without a viable future only postpones the bankruptcy.

Which claims can the plan change, and which not?

The plan can change most rights of creditors and shareholders against the company. It cannot change the rights of employees under their employment contracts (Article 369(3) Fw).

Examples of what a plan can do: a partial write-off of debts, a longer payment term, different interest terms, or converting debt into shares (a debt-for-equity swap). Shareholders’ rights can also be diluted or changed.

There is a clear limit. In its judgment of 25 October 2024 (ECLI:NL:HR:2024:1533), the Supreme Court (Hoge Raad) held in cassation in the interest of the law that a WHOA plan can limit creditors’ existing rights, but cannot impose new obligations on them. A plan cannot, for example, force a bank to keep an unused credit facility available on new terms. The WHOA has no instrument to force financiers to provide new money.

For burdensome ongoing contracts, such as a lease that is too expensive, the WHOA has a separate route. Under Article 373 Fw, the company can propose to amend the contract. If the other party does not agree, the company can terminate the contract with the permission of the court, with effect from the confirmation of the plan. The other party’s claim for damages then becomes part of the plan.

What protection does the company get during the preparation?

The court can order a cooling-off period (afkoelingsperiode) of up to four months, which can be extended to a maximum of eight months in total (Article 376 Fw). During that period, creditors cannot enforce against the company’s assets without permission from the court, and a bankruptcy petition is suspended.

This breathing space gives the company time to negotiate and finalise the plan without constant pressure from individual creditors. In addition, the mere fact that the company is preparing a plan is not a ground for its contract parties to change, suspend or terminate their contracts with it (Article 373(1) Fw). A supplier cannot simply stop delivering because a WHOA procedure has started.

Who stays in control of the company?

The existing management. The WHOA is a debtor-in-possession procedure: the board continues to run the business while it prepares and negotiates the plan.

There is no administrator taking over, unlike in a suspension of payments. This continuity limits disruption and lets the people who know the business best lead the recovery. If a restructuring expert is appointed, that expert prepares the plan, but the board still runs the day-to-day business. The court can also appoint an observer (observator) to supervise the process in the interest of all creditors.

What is the difference between a public and a private WHOA?

In a public WHOA, the procedure is announced and falls under the EU Insolvency Regulation, so that it is recognised automatically throughout the EU (except Denmark). A private WHOA stays confidential and is not published.

The company chooses at the start which variant it uses; it cannot switch later. The private variant is attractive when publicity about financial problems would damage the business, for example with customers or suppliers. The public variant is useful for groups with assets or creditors in other EU member states. Recognition of a private WHOA outside the Netherlands depends on the rules of the country concerned.

How does a WHOA procedure work, step by step?

Every procedure is different, but most follow five steps: preparation, drafting the plan, voting, confirmation by the court and implementation.

1. Preparation and start

The company first establishes that it is reasonably likely that it will not be able to keep paying its debts. The board, usually with legal and financial advisers, then prepares a restructuring plan that shows how the debts will be dealt with and why the business has a viable future.

The procedure formally starts when the company deposits a start declaration (startverklaring) with the court registry, or when the court appoints a restructuring expert at the request of a creditor, shareholder or the works council. From that moment the company can ask the court for a cooling-off period and for rulings on specific points.

2. The restructuring plan

The plan is the heart of the procedure. It divides creditors and shareholders into classes based on their rights, for example secured creditors, preferential creditors such as the tax authorities, ordinary trade creditors and shareholders. Creditors with rights that differ so much that they are not comparable must be placed in different classes (Article 374 Fw).

For each class, the plan sets out what the creditors will receive. It must also include information on what they would receive in a bankruptcy, so that each creditor can judge whether the plan is better for him. The plan must describe the financial position of the company and the reasons for the restructuring.

3. Voting

The plan is submitted to the affected creditors and shareholders, who get at least eight days to consider it before the vote (Article 381 Fw). Voting takes place per class.

A class has approved the plan if at least two thirds of the total amount of the claims (or of the issued capital, for shareholders) of those who voted support it. For the plan to be eligible for confirmation, at least one class must vote in favour. Clear communication and early talks with the main creditors are key to winning enough support.

4. Confirmation by the court (homologatie)

After the vote, the company asks the court to confirm the plan. The court checks whether the procedure was fair and whether the plan meets the legal requirements (Article 384 Fw).

The court refuses confirmation, for example, if the classes were not correctly formed, if creditors did not receive enough information, or if performance of the plan is not sufficiently guaranteed. At the request of a creditor that voted against, it also refuses if that creditor would be worse off than in a bankruptcy (the best-interests test). If a class voted against, the court also checks at the request of that class whether value is distributed according to rank and whether small trade creditors receive at least 20% (Article 384(4) Fw).

If the requirements are met, the court confirms the plan, and it becomes binding on all parties involved. There is no appeal against the confirmation decision.

5. Implementation

After confirmation, the company carries out the plan. That may mean paying creditors on the new schedule, issuing new shares or selling assets that are not essential.

The court does not supervise the implementation. If the company does not carry out the plan, a creditor can ask the court to dissolve the plan (Article 387 Fw).

When is the WHOA the wrong tool?

The WHOA is not the right tool if the business itself is not viable, if the main problem is a lack of new financing, or if the debt problem is mainly with employees.

• If the business has no viable future, a plan only postpones the bankruptcy, and the court will not confirm a plan whose performance is not sufficiently guaranteed.
• The WHOA cannot force financiers to provide new money. Without a willing financier or investor, the liquidity problem remains.
• Employees’ claims under their employment contracts cannot be restructured. Reducing staff must go through the ordinary employment law rules.
• For a small business with only a few creditors, an out-of-court settlement may be cheaper and faster.
• A WHOA procedure takes preparation and advisers’ time. It works best if the company starts early, before the cash has run out.

What has the WHOA meant for Dutch businesses?

The WHOA has modernised Dutch law on restructuring. Before 2021, a restructuring often ended in a bankruptcy, with a sale of the business as a going concern (doorstart). Now there is a route that keeps the company itself intact.

Since 2021 the WHOA has been used across sectors, from retail and hospitality to logistics and industry, by small businesses as well as by large groups. Case law is still developing on points such as the formation of classes, the information to creditors and the departure from the ranking rules. The Supreme Court’s judgment of October 2024 on new obligations for financiers is an example of how the courts are setting the limits.

For international business, the public WHOA is recognised throughout the EU, which gives foreign creditors and investors a predictable framework. The WHOA also rewards early action: a board that addresses financial problems in time has a structured way to deal with its debts before the situation becomes critical.

What are the main advantages of the WHOA?

The main advantages are continuity, preservation of value and flexibility.

• Business continuity: the company avoids bankruptcy and keeps operating, so jobs, customer relationships and supply chains are preserved.
• Preservation of value: a restructuring usually preserves more value than a forced sale of assets in a bankruptcy, which benefits creditors and may leave something for shareholders.
• Flexibility and speed: the company largely determines the content and timing, with the court only involved where necessary.
• Cross-border recognition: the public WHOA is recognised throughout the EU.
• Confidentiality: the private WHOA keeps the restructuring out of the public eye during critical negotiations.

In summary

• The WHOA allows a company to impose a restructuring plan on creditors and shareholders without bankruptcy, even against the votes of some of them.
• A class approves with two thirds of the amount of the votes cast; the court can then confirm the plan, even over the objection of other classes.
• Safeguards: no creditor may be worse off than in bankruptcy, value is in principle distributed by rank, and small trade creditors normally get at least 20%.
• Employees’ claims cannot be changed, and a plan cannot force financiers to provide new money (Supreme Court, 25 October 2024).
• A cooling-off period of up to four months, extendable to eight, protects the company while it prepares the plan.

We advise companies, directors and creditors on restructuring, including WHOA procedures and the negotiations around them. Unsure where you stand? Tell us about your situation. We will let you know your options within one working day.

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