In the current economic climate, businesses can run into financial difficulties for a variety of reasons. Whether it concerns economic headwinds, changing market conditions or unexpected events, it is essential for companies to anticipate financial challenges in a timely manner. At Guldemond Advocaten, we have extensive experience in guiding companies through complex restructuring processes. With the introduction of the Wet Homologatie Onderhands Akkoord (WHOA) in 2021, we have a powerful additional tool at our disposal to restructure companies and prevent bankruptcy.

Preventive restructuring: timely anticipation of challenges

The best time to restructure is before acute problems arise. Early detection of financial difficulties offers more options and significantly increases the chance of a successful restructuring. We help companies identify risks and develop a sound restructuring plan. A successful restructuring starts with a thorough analysis of the company’s financial position, business processes and market position. We not only look at the figures, but also at operational aspects, personnel issues and future prospects. This integral approach enables us to draw up a realistic and executable restructuring plan that is tailored to the specific needs and goals of your company.

The WHOA as a strategic instrument

The Wet Homologatie Onderhands Akkoord (WHOA) offers new possibilities for companies to restructure debts outside of bankruptcy. This instrument is revolutionary because it offers the possibility to reach an agreement with creditors and shareholders, even if not all creditors agree. This can prevent bankruptcy and ensure the continuity of the company. In practice, we see that the WHOA can be very effective, but it does require careful preparation and implementation. The process has various phases in which strategic choices must be made and legal requirements must be complied with.

The WHOA process: from preparation to homologation

The WHOA process consists of various phases, each with its own focus areas.

1. Preparation phase

In this crucial phase, the foundation is laid for a successful agreement. We support you with:

• Inventory of Debts and Creditors: Mapping all debts and identifying the different types of creditors is essential for correct class classification.
• Valuation of the Company: An independent valuation of the company helps determine the distribution value for creditors and substantiate the agreement.
• Developing a Restructuring Proposal: We work with you to develop a realistic and feasible proposal that takes into account the interests of all parties involved.
• Classification of Creditors: Creditors are divided into classes based on their legal and economic position. This is important for the voting procedure.
• Classification of Creditors: Creditors are divided into classes based on their legal and economic position. This is important for the voting procedure.

2. Silent Preparation Procedure

One of the advantages of the WHOA is the possibility to prepare an agreement in silence, without it being made public. This prevents unrest among customers, suppliers and staff, and gives you the space to carefully work out the agreement.

• Appointing a Restructuring Expert: In some cases it may be useful to have a restructuring expert appointed by the court supervising the process.
• Communication with Key Stakeholders: Although the process is confidential, it is important to involve key creditors and other stakeholders in a timely manner.
• Preparing the Voting Procedure: Drafting the voting documents and organizing the voting by class of creditors.

3. The Agreement Process

At this stage, the agreement is formally presented to creditors and a vote takes place.

• Timing of Offering the Agreement: Choosing the right time to offer the agreement is strategically important.
• Creditor Negotiations: We assist you in negotiations with various classes of creditors to obtain sufficient support.
• Organizing the Voting: Facilitating a transparent and legally valid voting procedure.
• Preparation of the Homologation: Collecting all necessary documentation and preparing the request for homologation to the court.

4. Homologation by the court

The homologation is the final and crucial step in which the court approves the agreement and declares it binding on all creditors.

• Substantiation of the agreement: we provide detailed and legally sound substantiation of the agreement.
• Rebuttal of objections: if creditors have objections, we prepare defenses to rebut them.
• Representation at the hearing: our lawyers will represent you at the homologation hearing and represent your interests.
• Implementation after homologation: after court approval, we help implement the agreement and communicate with all parties involved.

Cooling off period and protection during the pathway

An important tool within the WHOA is the possibility to request a cooling-off period. This gives the company breathing space to prepare the agreement without creditors being able to take enforcement measures. We advise on:

• Strategic moment for applications cooling-off period: choosing the right moment to achieve maximum protection and effectiveness.
• Impact on ongoing proceedings: understanding how the cooling-off period affects existing legal proceedings and obligations.
• Protection of crucial contracts: preventing termination of important agreements by contracting parties.
• Communication with stakeholders: carefully informing affected parties to maintain trust.

Custom made for different situations

Every restructuring process is unique and requires a tailor-made approach.

For SMEs

For small and medium-sized enterprises, we offer practical solutions that take into account specific challenges such as limited financial resources, personal guarantees of entrepreneurs, family relationships within the company and regional aspects. We strive for solutions that are both legally and commercially viable.

For larger enterprises

Larger companies often face more complex issues concerning international aspects, multiple stakeholders, listed instruments and employee interests. Our expertise enables us to also provide effective advice and guidance in these situations.

Stakeholder management: the key to success

A successful restructuring project requires careful stakeholder management. It is essential to understand and address the interests of different parties.

Creditors

• Strategic communication: providing timely and transparent information to creditors to build support.
• Negotiation: conducting effective negotiations on appropriate payment arrangements and terms.
• Retaining relationships: maintaining crucial supplier relationships for the continuity of the business.

Employees and Works Council

• Communication: communicating openly and honestly with employees and the works council to maintain trust.
• Reorganization counseling: guiding any reorganizations and drafting social plans.
• Consultation with Trade Unions: conduct constructive consultations with trade unions on the impact on staff.

Financial restructuring

An important part of many restructurings is the financial restructuring. We advise on:

• Renegotiating financing terms: modifying existing financing arrangements to create space.
• Attracting new financing: seeking investors or loans to improve the liquidity position.
• Debt-for-Equity Swaps: converting debt into equity to strengthen the balance sheet.
• Sale-and-Leaseback constructions: freeing up working capital by selling assets and leasing them back.
• Issue of new shares: raising new capital through the issuance of shares.

Guidance by experienced specialists

At Guldemond Advocaten you will have direct access to partners with years of experience in restructuring and insolvency law. We understand that restructuring processes are often time-pressured and can be emotionally taxing. That is why we provide:

• Personalized support: an established team of lawyers who know your situation and are always there for you.
• Speed and availability: fast response times to act appropriately.
• Pragmatic solutions: a practical and solution-oriented approach that takes into account your specific needs.
• Strategic advice: providing insight into the possible scenarios and advising on the best strategy.

The unique benefits of WHOA

The WHOA offers several unique advantages that make it an attractive instrument for companies in financial difficulties:

• Flexibility: you can decide which creditors to include in the settlement and can make different proposals for each class.
• Speed: the WHOA process has a relatively short lead time, allowing clarity to be provided quickly.
• Bankruptcy protection: using WHOA can prevent bankruptcy, allowing the company to continue to exist.
• Discretion: the ability to prepare the agreement quietly avoids negative publicity and maintains the trust of customers and suppliers.

When are you eligible for WHOA?

The WHOA is specifically designed for companies that are fundamentally viable, but are hampered by an excessive debt burden. If your company can be healthy again in the long term, but is at risk of bankruptcy due to the current financial situation, the WHOA can offer a solution. It is essential that there is sufficient business-economic perspective; the law is not intended for companies that are structurally loss-making without any prospect of improvement.

Timing and communication as keys to success

The success of a WHOA process depends on the right timing and communication. It is important to start on time and not wait until the situation is critical. Careful planning and strategically informing stakeholders increase the chance of a successful outcome.

Legal and practical concerns

The WHOA has several legal requirements that must be strictly adhered to. A correct classification of creditors, a sound valuation and transparent communication are crucial. In addition, there are practical challenges, such as retaining customers and suppliers during the process, managing employee interests and ensuring sufficient working capital.

A decisive conversation

Are you considering a WHOA process or would you like to know more about the possibilities for your company? In a confidential conversation, we will discuss your situation and map out whether the WHOA can be a suitable instrument. We will provide you with practical examples, relevant case law and detailed information about the process. The sooner we start talking, the more possibilities there are to achieve a successful restructuring.

Contact

Do you have questions or want to know more about WHOA? Contact Guldemond Advocaten.