I am about to run into debt
The Wsnp and WHOA are 2 different procedures. With the WHOA you can prevent bankruptcy. The Wsnp is a legal process in which you resolve debts.
The Wsnp scheme is for natural personalities and lasts for at least 3 years. After that you are debt free. The WHOA applies to all companies. By reorganising your debts, you can continue your business without bankruptcy. The advantage of the WHOA is that it offers entrepreneurs a quick solution as it only takes a few weeks or months.
The WHOA applies to all companies, including self-employed professionals. Practice will show whether self-employed professionals will actually make use of this new law. You must take into account the costs associated with the WHOA process.
Even if you prepare the WHOA yourself, you must take costs into account. You need a lawyer for the request for confirmation (=homologation) of the agreement with the court. You also pay court fees to the court.
- lawyer: €500-€1,000
- court fees:
- for a sole proprietorship: €1,666
- for a private limited company, general partnership, partnership, or limited partnership: €4,200
If you hire an expert to carry out the entire process for you, you will incur additional costs:
- Restructuring expert / insolvency lawyer / financial specialist: €5,000
For a sole proprietorship, the total costs are approximately €7,666. For the other legal forms, it is €10,200. The amounts are an estimate. There may be additional audit fees and costs for valuation/appraisal of your assets.
With the WHOA roadmap you can move from preparation to agreement step by step. In the roadmap you can read how this works, what you can do yourself, and what you need a lawyer for. In addition, you can read approximately how many days it takes for each step.
The Tax and Customs Administration plays a role from the very beginning of the WHOA process: step 1 is a consultation with creditors. As of 1 July 2021, the Tax and Customs Administration has amended its 2008 regulation (in Dutch) and clarified when it will agree to a WHOA settlement.
The Tax and Customs Administration will approve a WHOA agreement if:
- the agreement has been offered in writing and complies with section 375 of the Bankruptcy Act (Fw)
- the statutory preference of the Tax Administration is sufficiently reflected in the WHOA agreement, and
- it is likely that the offered agreement will be approved by the court.
The Tax and Customs Administration should also be better off in the WHOA agreement offered than in the event of the debtor's bankruptcy. And the claim of the Tax and Customs Administration cannot be converted into shares. You can contact the Tax Administration or the tax information line for questions. In addition, you will find information about remission (not being able to pay) on Business.gov.nl and on the Dutch-language website of the Tax and Customs Administration.
Reimbursement of attorney fees is possible for natural personalities: entrepreneurs with a sole proprietorship, general partnership (vof), public partnership, or limited partnership. The Legal Aid Act (Article 12, in Dutch) offers this possibility.
In principle it is possible, but keep in mind that a WHOA procedure also has legal costs. Other forms of debt repayment, such as an amicable procedure, may be more appropriate. In an amicable procedure, you first investigate if you can solve your problems yourself. Without going to court, you make agreements with your creditors to pay off as much of your debts as possible within 36 months. Your municipality or a specialised debt counselling organisation can help you with this.
Another option is to find financing for your debts.
I am a creditor
As an SME creditor (50 employees or fewer) you have additional options to reject the WHOA agreement:
- the judge weighs whether the WHOA agreement is not too disadvantageous for small SMEs.
- if the value of the payment from the plan is less than 20% of your claim, this is a reason for the court to reject the plan.
There is an exception: if there is 'substantial grounds' for offering less than 20%, the party offering the agreement must demonstrate this.
The company has to pay employees and 100% of their claims (from dismissal or transition). Employment contracts fall outside the scope of the WHOA, according to the Bankruptcy Act (369 paragraph 4 Fw, in Dutch). Also pension premiums in arrears fall outside the scope of the WHOA. Therefore, an employer cannot use the WHOA for reorganisation and dismissal of staff without intervention of the UWV, a court, or payment of a transitional allowance.
If you, as a creditor, want to initiate a WHOA process, you must ask the court to appoint a restructuring expert. The restructuring expert then offers a plan on behalf of the debtor.
You will have to nominate 2 to 3 restructuring experts, each of whom must prepare a quotation. These parties must be independent.
The WHOA is available for all companies in the Netherlands. The law offers opportunities for companies that have prospect of a future, but also for companies that do not.
Companies with prospect of a future
With the WHOA you have an instrument at your disposal to prevent bankruptcy. The idea behind this is to stimulate the 'reorganising capacity' of Dutch companies. Before the law came into effect, entrepreneurs could try to reach a settlement with creditors. Often not all creditors agreed to this arrangement, which resulted in bankruptcy. With the WHOA, all creditors are bound by the agreement that the judge gives. You must then present a viable plan (private agreement) and find at least 1 group of creditors (class) that agrees with this. Within the WHOA, this is referred to as a reorganisation agreement.
Companies without future prospects
The WHOA can also be used in the financial settlement of a company that has no chance of survival. The WHOA makes it possible to end business in a controlled manner while retaining control over your company. This way you can avoid major financial damage. This contrasts with a bankruptcy where a bankruptcy trustee takes over your company and you no longer have a say. Within the WHOA this is referred to as a liquidation agreement.
There are 2 types of agreements within the WHOA: the reorganisation agreement and the liquidation agreement. The purpose of a reorganisation agreement is to reduce debt. With a liquidation agreement you end your business activities.
- you should try to get parties to agree to a plan for reorganising your debts.
- the consultancy costs must be in proportion to the amount that the creditors do not receive.
The conditions of a liquidation agreement are:
- resources, for example inventory, must be available for current obligations during the WHOA process and for consultancy costs.
- the costs of a WHOA procedure must be in proportion to the amount that creditors give up. The difference between the proceeds from a bankruptcy and the value retained in a WHOA process must justify the process.
- the transition payments for staff affect your WHOA plan. You must take these personnel costs into account because it leaves less for creditors.
- the business records must be in order.
Is a company about to go bankrupt? Then the staff can start a WHOA process through the court. A works council (OR) or employee representation (PVT) can request a restructuring expert and start a WHOA process with them. A Works Council or PVT defends the interests of employees.
An agreement may not lead to changes in the employment conditions of the staff.
Read more about the different roles (in Dutch) during a WHOA process in the event of imminent bankruptcy.
During the WHOA procedure, an important role is reserved for the restructuring expert. This does not have to be a lawyer. The court appoints a restructuring expert at the request of creditors, shareholders, or debtors.
The restructuring expert can prepare a plan and offer it to creditors and shareholders. If creditors request a restructuring expert, they pay the costs. The debtor may go through the WHOA procedure themselves, but may also request a restructuring expert. The restructuring expert must perform their task impartially and independently.
If the debtor has a personal guarantee or collateral these security rights do not expire with a WHOA agreement. An example of a personal guarantee is when the director-major shareholder (dga) co-signs privately for a loan or mortgage from the private limited company (bv). If the creditor of the loan is involved in a WHOA agreement of the bv, it is possible that the creditor recovers only part of their original claim. In this case, the creditor may still approach you privately for the entire original claim. This is stated in Article 370(2) of the Dutch Civil Code.
The law also states that a director-major shareholder cannot reclaim this paid amount from the bv after the end. The idea behind this is that the bv is not liable for the entire debt afterwards. The bv could then still run into problems and the WHOA process would have been in vain.
The legislator has included the provision that a creditor will never receive an amount greater than the amount of the claim that existed before the approval of the WHOA agreement.
If you have made a failed attempt in the previous 3 years to reach an agreement based on the WHOA, you cannot use the WHOA yourself. See Article 369(5) of the Bankruptcy Act (in Dutch).
But it will still be possible for creditors or shareholders to start a WHOA process. The restructuring expert then prepares an agreement and submits it to the creditors and shareholders entitled to vote. This can lead to an agreement being reached after all.
As of 1 June 2021, SMEs that use the WHOA can apply to Qredits for a corona time-out arrangement credit (TOA). You can borrow a maximum of €100,000 under favourable conditions. This way you can restart, expand, or adjust your business activities. The main conditions for the loan are:
- Your business activities are (in essence) profitable.
- Your company has made good agreements with creditors.
The government has made €200 million available for loans. This is part of the Time Out Arrangement (TOA).
You can submit a WHOA application to any court in the Netherlands. A list of these can be found at Rechtspraak.nl.