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The WHOA is the remedy for the company in trouble*.

November 3, 2021

Since the beginning of this year, the Act on the Liquidation of Undertakings has been in force and that is just in time for companies that are fundamentally sound but have to take a temporary liquidity bump. Many companies will be directly or indirectly affected by (the measures around) COVID-19. They may have made use of the possibility of deferring payment of taxes, deferring payment of interest and redemptions or other creditors. Obviously, these obligations must be met at some point, but will they be?

JBR Corporate Finance has recently been involved in a WHOA proceeding as counsel to a large company affected by COVID-19 measures, including a mandatory closure during lockdown periods, and thus has gained extensive experience with the proceeding.

The WHOA allows companies to offer their creditors and possibly also their shareholders a private settlement that will structurally reduce their debts, defer obligations or change certain rights.

In order to go through such a procedure, the company must file a statement with the court stating that it is in the process of preparing a settlement. A public or closed procedure can be chosen, whereby in most cases the first option will be the best in order to maintain internal and external peace. Support by a lawyer is required as well as the appointment of a restructuring expert.


Frank Steenhuisen, Associate at JBR on WHOA proceedings
Frank Steenhuisen, Associate at JBR


Without going into all the legal and procedural aspects, we will discuss a number of important elements.

  • During the cooling-off period of two months (possible extension by two months) which starts after the filing of the declaration, creditors cannot recover from the company if they have been informed about the proceedings.
  • In these two months a restructuring plan must be drawn up in which various aspects are addressed. An important aspect is a valuation of the company based on both the reorganisation value and the liquidation value. The creditors may not be worse off than in the event of bankruptcy.
  • Furthermore, creditors and shareholders should be divided into classes. For example, with or without security rights, the smaller claims and rent claims. It is crucial for the success of a settlement that a mutual agreement is reached with at least one class.
  • Ultimately, the court will decide whether a convincing and balanced plan has been presented that offers the company a realistic prospect of continuity, upon which the court can approve the plan and thus declare it binding for all creditors (including dissenting ones).

Our conclusion is that the WHOA is an excellent tool for improving the prospects of a troubled company relatively quickly.

* This article is intended only as an outline of the possibilities offered by the WHOA.