Avoid bankruptcy with the WHOA
Is your company in danger of going bankrupt? Make agreements with your creditors and have these approved by a judge. The Dutch law WHOA allows you to come to an agreement through the courts, even when not all creditors agree. Read how the WHOA works and what the conditions are.
What is the WHOA?
WHOA stands for the Court Approval of a Private Composition (Prevention of Insolvency) Act (in Dutch). In Dutch, this is called the Wet Homologatie Onderhands Akkoord but is often simply called the WHOA.
Under the WHOA, you can settle your debts through an arrangement with your creditors. If the court approves the arrangement, it will also apply to creditors who do not agree to it.
When can you use the WHOA?
You can use the WHOA if:
- your business is no longer able to pay its debts
- there is an immediate risk of bankruptcy if no solution is found for your debts
- your business has sufficient income to continue operating after the agreement
The WHOA is available to entrepreneurs with almost all legal structures, from the sole proprietorship (eenmanszaak) to the private limited company (BV).
The main advantages of the WHOA
- you do not need to file for bankruptcy
- your business can continue to operate
- not all creditors need to agree
Who does what in a WHOA procedure?
You may hear about many different roles in a WHOA procedure. For example, a creditor, an observer, and a debt restructuring expert. Who will you be dealing with and who does what?
> Read more about the roles in a WHOA procedure.
When does the court approve a WHOA agreement?
The court will only approve an agreement if:
- the agreement complies with the legal requirements
- the agreement is better for creditors than bankruptcy
- you distribute money and assets fairly and equally among all creditors
- your staff’s terms of employment stay the same, you may not change wages, working hours, or other agreements with staff
- enough creditors vote in favour of the agreement
Starting statement
If you want to make use of the WHOA, you must first send a document to the court. This is called the starting statement or the start-of-procedure declaration. It informs the court that you are working on a debt agreement.
Draft the agreement yourself or seek help
You can prepare an agreement yourself. You can also ask the court to appoint a debt restructuring expert. This is an independent professional who helps draw up a debt settlement agreement and discusses this with your creditors. You can download a PDF example of a starting statement in Dutch on rechtspraak.nl.
A WHOA process consists of the following steps:
File a starting statement with the court and choose whether the proceedings are to be public or private.
Cooling-off period
In the starting statement, you can also ask for a cooling-off period. During this time, creditors are not allowed to take any action to recover their money. Nor is the bank allowed to withdraw money from your account to settle debts. This gives you time to prepare the agreement.
The judge decides whether you are given a cooling-off period.
Decide how you want to settle your debts. Set these arrangements out in a draft agreement.
Different classes of creditors
Divide your creditors into classes. A class consists of creditors with the same rights, such as banks or the Netherlands Tax Administration. This is mandatory under the WHOA.
Send the draft agreement to the creditors involved. They must be given time to read the agreement.
The creditors vote on the agreement per class. A class votes in favour if creditors representing at least two-thirds of the total debt amount agree. If your business has shareholders who are affected by the agreement, they are also invited to vote in a separate class.
You must draw up a report of the vote. Does everyone agree? If so, the court’s approval is not required.
Does not everyone agree? Then a solicitor will submit a request to the court. Creditors may lodge an objection.
The court decides whether the agreement applies to all creditors. If the court approves the agreement, everyone must comply with it.