Step-by-step guide to applying for WHOA

What do you need to do to get a court agreement on the proposed debt settlement? You can initiate the WHOA process yourself. The roadmap tells you how this works, what you can do yourself and what you need a lawyer for. Step by step. In doing so, you will read how many days it will take approximately at each step.

The WHOA helps businesses at risk of bankruptcy due to high debts. With the WHOA, these businesses can make a restart (reorganisation agreement) or go out of business in a controlled way (liquidation agreement). This roadmap paints a global picture and assumes a positive end result. That is: the judge approves the proposed debt settlement (approval). For each step, you will read which articles from the Bankruptcy Act (Fw) are involved, e.g. 377 paragraph 1 Fw. You will find these articles in the legal text (in Dutch).

WHOA roadmap

• If you see that you will soon be unable to pay your debts, you can use the WHOA.
• If in doubt whether you can use the WHOA, it is wise to seek advice from, for example, your accountant, a lawyer or the KVK Advice Team.
• You may do the preparation, offering and voting of the agreement yourself.
• If you need help with the process, you can ask the court, through a lawyer, to appoint a restructuring expert. The restructuring expert can prepare the agreement and initiate the process (371 paragraph 1 FW). The court appointing the restructuring expert will make adjustments if it finds that the restructuring expert is not performing his duties properly and can replace him in extreme cases (371 paragraph 13 Fw).
• You (or your restructuring expert) will need a lawyer for the request for confirmation (=approval) of the agreement with the court. It is advisable to be assisted by a lawyer from the beginning.
• You (or your restructuring expert) will need a lawyer to apply for a cooling-off period. This is a period during which creditors are not allowed to take any actions. The cooling-off period is maximum 4 months with a possible extension of another 4 months (376 paragraphs 2 and 5 Fw).
• You may continue to take action during the WHOA process (377 paragraph 1 Fw), even if you get help from a restructuring expert.

Step 1

Record agreements in draft agreement (estimate: from 2 days to a maximum of 8 months)

• • File a statement (in Dutch) free of charge with the court registry stating that you will start preparing an agreement (370, paragraph 3 Fw).

In this statement, you indicate whether you want public or closed proceedings. You can also request a cooling-off period in the statement.

There are 2 procedures:

1. A closed agreement procedure (369 paragraph 6 Fw).

These take place behind closed doors. Publicity can lead to reputational damage and loss of turnover, which reduces the chances of a settlement.

2. Public composition proceedings (369 subsection 6 FW)

Public proceedings are published in the Insolvency Register.

• Consult with your creditors and lay down the agreements you make in a draft agreement.
• Divide your creditors and shareholders into different classes based on rights and the agreements you want to make with them.
• The agreement should include information on its value to creditors compared to the value left for them in bankruptcy. The content and design of the agreement must comply with the requirements mentioned in 374 Fw for the classes of creditors and 375 Fw for the content of the agreement.

Step 2

Submit draft agreement to creditors (1 day):

• Make sure that your creditors and shareholders can examine the agreement no later than 8 days (381 Fw) before the vote.

Step 3

Organise a vote (8 days):

• Before putting the agreement to a vote, you can ask the court to review the agreement (378 Fw). A lawyer must submit a request for this; you cannot do this yourself.
• You decide how your creditors and shareholders vote. This can be done physically, in writing and by electronic means of communication (381(6) Fw).
• Creditors vote by class.
• They can only vote ‘Yes, agreed’ or ‘No, not agreed’.

Step 4

Share report of vote (7 days):

• Within 7 days of the vote (382 Fw), prepare a report stating the outcome of the vote. Share this report directly with your creditors and shareholders.
• The report (382 Fw) should include who voted, the amount of money creditors are owed and the result of the vote.

If all creditors agree, approval by a court is not necessary. You pay your creditors as agreed in the agreement. This then completes the WHOA process for you.

If not all creditors have agreed, you proceed to step 5.

Step 5

Lawyer submits homologation request to court (1 day, as soon as possible):

• A lawyer submits the homologation request to the court as soon as possible. You pay a court registry fee for this.
• You also submit the report to the registry. You may do this yourself, without a lawyer.
• After filing, the court will set a hearing date. That hearing is 8 to 14 days (383 paragraph 6 Fw) after the application is filed.
• Approval by a court is possible if there is sufficient approval of the agreement in one class. For that, the consenting creditors must account for at least two-thirds of the debts in that class. If there is sufficient support in one class in this way, the agreement applies to all classes.

Step 6

Objection period (8 to 14 days):

• All creditors and shareholders entitled to vote can submit a written request to reject the homologation request (383(8) FW) to the court until the day of the hearing. In doing so, creditors can also state their reasons. Examples include: insufficient information, incorrect voting or misclassification of classes.

Step 7

The court makes a decision on the settlement as soon as possible after the hearing. This is usually within five working days after the hearing. If the judge decides in favour of approval of the agreement, this means: Creditors who did not vote or did not consent are still bound by the agreement (385 Fw).

• Everyone must abide by the homologated agreement (385 Fw).
• Do you fail to honour the agreements in the accord? Then you have to compensate the damage suffered by your creditors, unless this cannot be blamed on you. (387 Fw). Creditors can proceed to dissolve the WHOA agreement and seize it directly.
• You cannot appeal the court's decision.

The court can reject the request for approval of the agreement on the basis of a general ground for rejection (384 paragraph 2) or an additional ground for rejection (384 paragraphs 3 and 4). An appeal against this ruling is no longer possible.