FAQ about the WHOA
- Annelies den Breejen
- 22 Jun 2023
- Edited 19 Aug 2022
- 1 min
- In trouble
- Rules and laws
Under the Court Approval of a Private Composition (Prevention of Insolvency) Act, often referred to as the WHOA, entrepreneurs can reach an agreement on a debt settlement without the consent of all creditors. Do you want to apply for this? Or are you dealing with the WHOA through someone who has a debt with you? Find frequently asked questions and answers about the WHOA on this page.
I have debts
The and the WHOA are two different procedures. With the WHOA you can prevent bankruptcy. The WSNP (Natural Persons Debt Restructuring Act) is a legal procedure which helps you pay off debts.
The WSNP-scheme is for natural persons and takes at least three years. After that you have no debt. The WHOA is for all business. By re-organizing your debt you can continue your business or end your business without bankruptcy. The advantage of the WHOA is that it offers a fast solution, because it only takes a few weeks or months.
The WHOA is for all businesses, also for self- employed professionals without staff. You have to keep in mind the costs that are part of the WHOA procedure.
Even if you do the preparations for the WHOA yourself, you must keep in mind the costs. For the request of approval (=homologation) of the agreement in court, you need a lawyer. Also, you pay court (in Dutch) to the court.
- 500-1.000 euros
- Court fees
- For a sole proprietorship: 1.666 euros
- For a private limited company (bv), general partnership, professional partnership or limited partnership: 4.200 euros
Whe you hire a intermediary who does the enitre procedure for you, you get extra costs:
- restructuring expert/ insolvency lawyer / financial specialist: 5.000 euros.
For a sole proprietorship the total costs are about 7.666 euros. For the other legal structures the total costs are about 10.200 euros. These amounts are estimates. There are possible extra costs, for example accountant- related costs and costs for valuation of your possessions.
With the WHOA-roadmap (in Dutch) you have a step-by-step plan from the preparation to agreement. In the roadmap you read how this works, what you can do yourself and for which steps you need a lawyer. You also read how long each step takes.
The Dutch Tax and Customs Administration is quickly included in the WHOA procedure: step 1 is discussion with the creditors. The tax authorities has adjusted the Leidraad Invordering 2008 as of 1 July 2021 (in Dutch) and makes it more clear when they agree to a WHOA-proposal. The tax authorities agree to a WHOA proposal if:
- the proposal is in writing and complies with article 375 of the bankruptcy law (Faillissementswet, Fw, in Dutch)
- the legal preference of the tax authorities are included in the WHOA proposal; and
- it is probable that the proposal will be approved by court.
Also, the tax authorities should be better off with the WHOA proposal than with a bankruptcy of the debtor. And it is impossible to turn the claim of the tax authorities into shares. You can go to the office of the tax authorities or call the tax information for questions.
Additionally, you can find more information about postponement or (in Dutch) on the website of the tax autorities.
Natural persons can get a refund for the lawyer fees. This is for entrepreneurs with a sole proprietorship, general partnership, professional partnership and limited partnership. The legislation legal (article 12, in Dutch) ensures this.
It is possible, but remember that a WHOA procedure brings process costs. Then maybe other types of debt arrangements, such as an amicable settlement, are better. With an amicable settlement you first try to solve your problems yourself. After that you make arrangements with your creditors to pay off your debts as much as possible without going to court within 36 months. Your municipality or a specialized organization will help you with this.
Another possibility is to search finance for your (in Dutch).
I am a creditor
For small SME creditors (50 employees or less) there are extra possibilities to reject the WHOA proposal:
- The judge determines if the WHOA proposal is not too disadvantagous for small SME's.
- If the value of the allowance in the proposal is less than 20% of your claim, then it is a reason for the judge to reject the proposal. There is an exception: when there is a valid reason (‘zwaarwegende grond’) to offer less than 20%, then the party offering the proposal has to prove this.
The business has to pay the employees their allowance (from dismissal or transition) 100%. Employment contracts are not included in the WHOA according to the bankruptcy legislation (Faillissementswet, Fw, 369 lid 4 Fw, in Dutch). Also, overdue pension contributions are not included in the WHOA. An employer cannot use the WHOA for re-organization and dismissal without interference of the UWV, the judge or paying transition allowance.
If you as creditor want to start a WHOA you have to request a restructuring expert to the court. The restructuring expert offers a proposal in name of the debtor.
You have to appoint two or three restructuring experts and each of them has to make a quotation. These parties should be impartial.
WHOA in general
Companies with severe debts can avoid bankruptcy with the Court Approval of a Private Composition (Prevention of Insolvency) (Wet Homologatie Onderhands Akkoord, WHOA). The WHOA allows a business to reach an agreement on a debt settlement without the consent of all creditors. If successful, a company can continue to do business. Companies with insufficient chances of survival also benefit from the WHOA, as it allows them to stop without a bankruptcy procedure.
The WHOA is for all businesses in the Netherlands. The scheme offers possibilities for business that have a perspective for the future and for businesses do not have that.
Businesses with perspective for the future
With the WHOA you have a tool to prevent bankruptcy. The idea is to encourage reorganizing of assets of businesses. Before this scheme entrepreneurs could try to make a settlement with the creditors. Often, not all creditors agreed to the settlement, which was followed by bankruptcy. With the WHOA all creditors are bound to the agreement when this is decided by the judge. You have to present a viable plan (direct agreement) and at least 1 group creditors (class) has to agree. Within the WHOA you call this a reorganization-agreement.
Businesses without perspective for the future
The WHOA can also be used during the financial settlement of a business that has no chances of survival. The WHOA allows to end your business while keeping control of the business. With this you can prevent huge financial loss. This is different from bankrupty when a curator takes over your business and you have no control anymore. Within the WHOA you call this a liquidation agreement.
There are two types of agreements in the WHOA: the reorganization-agreement and the liquidation-agreement. The goal of a reorganization-agreement is to decrease debts. With a liquidation-agreement you end your business activities.
The conditions of a reorganization-agreement are:
- You must try to get parties to agree with a plan to reorganize your debt.
- The fees for advice are in proportion to the money that is not recieved by the creditors.
The conditions of a liquidation-agreement are:
- There must be assets, for example reserves and inventory, available for the ongoing debts during the WHOA procedure and for advice fees.
- The costs of a WHOA procedure must be in proportion to the money that is not recieved by the creditors. The difference between the money raised from a bankruptcy and the value that is left during a WHOA procedure must justify the procedure.
- The transition allowances for staff influences your WHOA plan. You have to keep in mind these staff- related costs, because there will be less for the creditors.
- The administration must be in order.
Does a business almost need to file for bankruptcy? Then staff members can start a WHOA procedure via court. A works council (ondernemingsraad, OR) or staff representative (personeelsvertegenwoordiging, PVT) can ask for a een restructuring expert and start a WHOA procedure with them. A OR or PVT defends the needs of employees.
An agreement cannot cause changes in the employment conditions.
Read more about the different tasks (in Dutch) during a WHOA procedure with bankruptcy.
When the debtor has a personal guarantee, then this settlement will not be cancelled with a WHOA agreement. An example of a personal guarantee is when the director-major shareholder (directeur-grootaandeelhouder, dga) signs the loan or mortgage of the private limited company (bv). When the creditor is involved with a WHOA agreement of the bv, then it is possible that the creditor gets only a part of their original claim based on the agreement. In this case the creditor can come to you personally for the entire claim. This is stated in article 370 lid 2 Fw.
In the article it is also stated that as a dga you cannot get the paid money back from the bv. The idea behind this is that the bv afterwards is not still liable for the entire debt. The bv would afterwards still possibly get into trouble and then the WHOA procedure would have been for nothing.
The legislator has decided that a creditor can never get a larger amount of money than the amount of the claim that existed before the approval of the WHOA procedure.
If you had a failed attempt to get an agreement on the basis of a WHOA in the past three years, you cannot use the WHOA yourself. Read article 369 lid 5 legislation bankruptcy (in Dutch).
It is still possible for the creditors or the shareholders to start a WHOA procedure. The restructuring expert prepares a settlement and proposes that to the voting creditors and shareholders. This can still lead to a agreement.
From 1 June 2021 up until 31 May 2024 SME's that use the WHOA apply at Qredits for a Corona-doorstartkrediet (TOA-krediet) (in Dutch). You can borrow a maximum of 100.000 euro in good circumstances. This way you can restart, expand or adjust your business activities. The most important conditions of the loan are:
- Your business activities are profitable (at their core).
- Your business has agreements with creditors.
In total there is 200 millon euro available for loans by the government. This is part of the Time Out Arrangement (TOA).
You can apply for a WHOA at all courts in the Netherlands. You can find an overview of all courts at Rechtspraak.nl (in Dutch).