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The Private Agreement Homologation Act (WHOA) has been in effect since January 1, 2021, and makes it possible for a company in financial difficulties to reach an agreement with (a part of) its creditors. The court can approve (homologate) that agreement, after which dissenting creditors are also bound by it — provided the agreement is more favorable to them than bankruptcy and meets strict conditions.
The Bankruptcy Act has been amended by the WHOA. A company facing payment difficulties can submit a private agreement, which the court can homologate—not only upon full agreement, but also if not all creditors consent. Dissenting creditors can then still be bound by the agreement.
When can the judge impose a settlement?
Because an imposed settlement affects the rights of creditors, the judge does not do this lightly. Strict conditions apply:
- Fundamentally viable — the enterprise must in principle be (able to be) profitable; a temporary setback is no obstacle, but saving a hopeless company is.
- Better than bankruptcy — the agreement must turn out more favorably for creditors than bankruptcy.
- Feasible and fair — the plan must be realistic and treat creditors fairly and equally; the burden must not be placed unilaterally on a few creditors.
- Protection of personnel — the terms and conditions of employment of employees are not affected by the WHOA through the agreement.
- At least one consenting class — at least one (group of) creditor(s) must agree to the plan, otherwise there is no agreement to homologate.
Within those frameworks, the content of the agreement is largely flexible. In practice, negotiations are intense, and the plan must be concrete: consider agreements regarding later repayment, partial forgiveness, or even the conversion of debt into shares. Shareholders are also closely involved in the process.
Consequences for dissenting creditors
If (some of) the creditors agree and the court homologates the settlement, the remaining creditors must also implement and respect it. For example, a landlord may be required to accept that the lease agreement is amended, that rent arrears are partially waived, or that the lease is terminated. However, such measures must be reasonable and more favorable to the landlord than bankruptcy — for example, by including a notice period and a plan to pay the remaining rent. After homologation, the landlord can no longer object; the same applies to other dissenting creditors.
Frequently Asked Questions
What is homologation?
The approval of the private agreement by the court. After homologation, the agreement is binding, even for creditors who have not consented.
Can one creditor block the rescue?
Not automatically. If at least one class agrees and the conditions are met, the court can homologate the agreement, and dissenting voters are also bound.
Are employees affected by a WHOA agreement?
No. Employees' terms of employment fall outside the agreement and are not adjusted through it.
Legal assistance with a WHOA process
Drafting a private agreement is complex and has both legal and tax implications. The legal experts at MKB Juristen guide you through a WHOA process, whether you are a debtor or a creditor. View our expertise in restructuring and insolvency or schedule an intake meeting .
