[BANKRUPTCY, INSOLVENCY & REHABILITATION PROCEEDINGS IN THE NETHERLANDS] 58
against the debtor’s assets and seizures made prior to the opening of the suspension of payments cease to exist. Additionally, the district court (and not the supervisory judge, as in bankruptcy) can issue a written order ( afkoelingsperiode ) stipulating that, for a stay period not exceeding two months, each right of third parties, including secured and preferential creditors and creditors to the suspension of payment estate, to enforce against the debtor’s assets or to claim assets under the control of the bankruptcy can only be exercised with his authorization. In contrast to a bankruptcy proceeding, pending lawsuits are not automatically suspended. IV. WHOA The WHOA, also known as the Dutch Scheme, is a fast and informal pre-insolvency procedure meant for companies that are in core profitable but have come into dire straits due to issues of over indebtedness and/or recurring costs. Those companies are enabled by means of debt- and/or cost restructuring to enforce a private plan on their creditors and/or shareholders to prevent the loss in value that occurs in bankruptcy. The WHOA is quick, flexible, and free of form. It is a debtor-in-possession procedure and has minimum judicial involvement. A WHOA-plan can be enforced on dissenting creditors or shareholders (cram down). Consent of the debtor is required in case of a small or medium enterprise-debtor The WHOA is applicable for companies that are in a situation where it is to be expected that they cannot continue to pay their debts. The procedure can be filed by the debtor itself or by a creditor, a shareholder, the debtor’s work council or the debtor’s workplace representation. In the latter case, a restructuring expert is appointed by the District Court. Upon
filing one can choose between a public or a confident variant of the procedure. The debtor or – if appointed – the restructuring expert proposes a private restructuring plan to (all or a subset of all) providers of capital, i.e., creditors and shareholders. During the WHOA-procedure the debtor has access to different supportive measures to enable restructuring, such as a suspension of bankruptcy, a stay period, a protection of security for new funding and the possibility to end or alter contracts. Contrary to bankruptcy, but similarly to suspension of payments, the rights of employees are protected, and employment contracts cannot be effected by the plan. The district court can be asked to lift pre- and post judgement attachments and for any other necessary tailor-made measures. The District Court can also be asked at an early stage for binding decisions regarding legal issues (such as voting rights, class placements, etc.) o avoid uncertainties later on in the procedure. Creditors (or certain categories of creditors) are put in classes of similarity and vote within this on the acceptance of the plan. The plan is accepted by a class if 2/3 rd -majority of the amount of claims or issued capital of the actual voters have voted in favor of the plan. No dissenting creditor may receive less value then they would have in a bankruptcy situation (best interest of creditors test). The court can be asked for confirmation of the plan if at least one in-the-money class has voted in favour of the plan. Dissenting classes can be bound (cross class cram down) unless (i) the plan is in breach of the absolute priority rule, (ii) creditors that are small or medium enterprise are not offered an amount in cash that equals 20% of their claim and (iii) the plan lacks a cash exit-possibility for creditors (professional lender excluded).
ILN Restructuring & Insolvency Group – Bankruptcy, Insolvency & Rehabilitation Series
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