WHOA-toestand
WHOA situation
The WHOA situation is the situation in which a company is in financial distress and proposes an out-of-court composition pursuant to the Act on the Homologation of Private Settlements (WHOA).
A WHOA situation arises when a debtor, typically an enterprise, avails itself of the WHOA to restructure its debts without entering bankruptcy. The Act enables the debtor to propose a composition with its creditors that may be homologated by the court, rendering the composition binding on dissenting creditors as well.
This situation is relevant in that it provides companies in financial distress with an alternative to suspension of payments or bankruptcy, while preserving the enterprise and its continuity. The court examines whether the composition is reasonable and feasible and may impose a cooling-off period.
In practice, the WHOA is frequently invoked in the event of impending insolvency, with the enterprise preparing a restructuring plan in good time and petitioning the court for homologation.
“The company is in a WHOA situation and has proposed a plan that will be assessed by the court.”
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