Roles in WHOA procedures

WHOA stands for the Court Approval of a Private Composition (Prevention of Insolvency) Act (Wet Homologatie Onderhands Akkoord in Dutch). It is a Dutch law that lets businesses agree to debt restructuring without their creditors’ consent. The court must approve the proposal.

Find out more about the WHOA and how to prepare.

Debtor

A debtor is a person or business that can no longer pay their debts. Under the WHOA, debtors can offer an agreement to their creditors and shareholders. Not all creditors may accept this agreement, but the court may still approve it.

Creditor

A creditor is owed money by a debtor. A common reason for owing money is agreeing to purchase products or services. A creditor is not the same as an account payable. An account payable gets its invoice paid. Only when that does not happen, does the person or business behind the invoice, the account payable, become a creditor. Creditors can also start a WHOA proceeding by petitioning the court for a debt restructuring expert.

Shareholders

When a business comes close to bankruptcy, shareholders risk losing their capital. This is why can also start a WHOA procedure by petitioning the court for a debt restructuring expert. In a normal bankruptcy, shareholders are last in line. Under WHOA, they can be included in the debt settlement plan and recoup part of their investment.

Experts

During a WHOA procedure, the court may appoint experts to investigate whether a debtor is capable of paying their debts. And whether they meet the criteria of the WHOA.

Debt restructuring expert

A debtor can prepare an agreement themselves, or request a debt restructuring expert. This is someone who prepares and offers an agreement to creditors and shareholders. The court appoints the restructuring expert. This does not have to be a lawyer. The restructuring expert must be impartial and perform the task without influencing anyone.

Creditors or shareholders can also request a debt restructuring expert if they initiate WHOA proceedings. If creditors request a restructuring expert, they pay the costs.

Court

A judge's main task is to approve (homologate) an agreement. Before submitting the agreement to the court, you can ask the court to check the proposed agreement. You do this to assess whether the agreement is likely to be approved. The main task of the court is to approve (or ‘homologate’) the composition.

A court-approved agreement also applies to debtors and shareholders who did not agree to the proposal. In this case, they can file an objection to the court.

Works council/staff representation

A works council or a staff representation body can also request a debt restructuring expert. And start a WHOA procedure that way. Works councils and staff representation bodies are tasked with protecting employees’ interests.

An agreement may not lead to any changes to the terms and conditions of employment.

Observer

If the debtor prepares the agreement independently, the court can appoint an observer to monitor if the preparation process is going well and fairly.

If the debtor violates the rules, the observer will notify the court. The court can then appoint a debt restructuring expert. If that happens, the observer is no longer needed and their role will be revoked.

Lawyer

You need a lawyer if:

• You want to request a cooling-off period.
• You want to file a debt settlement plan for court approval.
• You want to petition the court for a debt restructuring expert.
• You want to bring in an observer.

You do not have to be assisted by a lawyer at the court hearing.