Is your company in danger of going bankrupt? Make agreements with your creditors and have these approved by a judge. Because of a new law, the WHOA, you can come to an agreement through the courts even when not all creditors agree. This new law came into effect on 1 January 2021. Read what the conditions are and what you can do.
The WHOA procedure
WHOA stands for the Court Approval of a Private Composition (Prevention of Insolvency) Act (Wet Homologatie Onderhands Akkoord, in Dutch). If all creditors and debtors cannot reach a solution together, a court can still approve (homologate) an agreement. This agreement will automatically apply to all creditors and shareholders involved. Also creditors who do not agree with the plan.
Check the conditions
Before a court approves the settlement, your business must meet the following conditions:
You can no longer pay the debts of your business (insolvency)
Your business is essentially profitable
This agreement is more favourable for your creditors than bankruptcy of your company
You have a feasible plan that meets legal requirements. You can determine the content of the agreement yourself
You ensure a fair and equal distribution of money and assets among all creditors
At least one creditor must vote in favour of the private agreement
The employment conditions of your staff remain the same
Start preparing for the WHOA procedure
You can start by preparing a draft agreement. These are the steps you can take:
Consult with your creditors and shareholders
Make arrangements about, for example, repaying later, cancelling debts or converting debts into shares
Record those agreements in a draft agreement
Present the draft agreement to your creditors and shareholders who you wish to involve in the private agreement
Organise a vote and invite your creditors and shareholders
Report on the outcome of the vote within 7 days after the vote
Send your creditors the report of the vote
Inform the court that you are working on an agreement according to the WHOA
Once the draft agreement is completed, you can submit the agreement to the court for approval.
Speak to an insolvency expert
The WHOA procedure is short, but complicated. Start preparing in time. You can ask a legal or financial adviser to assist you. There are costs associated with this.
Ask for a cooling off period
If you have offered an agreement, you can ask the court for a cooling-off period. For example, your creditors cannot seize assets from your business assets. And the bank may not offset debts against the balance in your bank account. The judge must first give permission for this.
