Reorganization

What we do

As an employer, various financial setbacks may necessitate a reorganization. Furthermore, a reorganization may be required for an organizational change. To implement a reorganization as an employer, various regulations must be complied with. An employer can only submit a (collective) dismissal application to the Employee Insurance Agency (UWV). A collective dismissal application is filed when an employer dismisses more than 20 employees within three months during a reorganization. In the case of a collective dismissal, the employer must adhere not only to the normal dismissal rules but also to the conditions arising from the Collective Dismissal Notification Act (Wmco). The employee organization or trade union often agrees on a Social Plan in the event of such a reorganization. A Social Plan is an arrangement that includes the key agreements regarding the reorganization.

Questions regarding reorganization? Please contact us.

Reorganization within insolvency law

A reorganization is more than just a personnel intervention. When a company is under financial pressure, the reorganization directly touches upon insolvency law: debts, collateral, ongoing contracts, and the position of creditors must all be reassessed. The goal is to preserve the fundamentally viable company and prevent bankruptcy, while maintaining employment and value. Our mixed teams of lawyers and in-house counsel guide both international corporations and the local baker through this assessment, always considering the broader context of insolvency law.

In the event of a reorganization facing severe financial difficulties, we first assess viability: is the problem structural or temporary? Depending on the outcome, we choose between an informal restructuring, a formal agreement under the WHOA, a suspension of payments, or—if there is absolutely no other option—a controlled restart.

Reorganizing via the WHOA

Since January 1, 2021, the Private Agreement Homologation Act (WHOA) offers a powerful reorganization instrument. The WHOA is incorporated into the Bankruptcy Act (Articles 369 to 387) and enables a company to offer a compulsory agreement to creditors and shareholders. If a majority within the relevant class agrees, the court can homologate the agreement and declare it binding on all parties involved — including creditors who voted against it.

The core of a WHOA reorganization consists of classifying creditors and shareholders into classes according to their rank, drafting an agreement (for example, debt forgiveness, deferral, or conversion of claims into shares), and applying for homologation. Important protection mechanisms include the cooling-off period of up to four months (with a one-time extension to eight months) during which creditors may not seize assets, and the option to appoint a restructuring expert to prepare the agreement impartially. For SMEs, the WHOA offers a lighter regime, ensuring that even a smaller enterprise can realistically utilize this route.

Reorganization of the workforce alongside the WHOA

A common misconception is that the WHOA can affect employment contracts. This is not possible: a WHOA agreement cannot alter the rights of employees arising from their employment contract. The personnel reorganization therefore follows the ordinary labor law procedure and must be structured alongside the WHOA process.

In concrete terms, this means that the familiar rules apply: advice from the Works Council for 50 or more employees, notification to trade unions and the UWV in the event of collective dismissal (20 or more employees within three months in a single work area, in accordance with the Collective Dismissal Notification Act), application of the mirroring principle and the obligation to redeploy, followed by the application for dismissal with the UWV or termination by mutual consent via a settlement agreement. We align the financial restructuring track and the employment law track so that they reinforce each other rather than delay each other.

Other reorganization routes: suspension of payments, settlement, and restart

The WHOA is not the only route. In the event of temporary payment difficulties involving healthy underlying activities, a suspension of payments act as a pause button, creating room for reorganization. Outside of formal proceedings, a private creditors' agreement offer a solution. If bankruptcy is unavoidable, a restart save viable business units, employment, and customer relationships. We advise on which route—or combination—suits your situation, from a group of companies to a sole proprietorship.

Directors' liability in reorganization

Directors' liability looms particularly in the run-up to a reorganization. A director who remains inactive for too long while the situation deteriorates faces a personal risk. In the event of bankruptcy, the trustee can hold directors liable for manifestly improper management (Article 2:248 of the Dutch Civil Code), while entering into obligations which the director knew or ought to have known the company would be unable to fulfill can lead to personal liability under the Beklamel standard (Article 6:162 of the Dutch Civil Code). Acting promptly, fully mapping out the debt position, safeguarding equal treatment of creditors, and carefully documenting decisions are essential to manage this risk. We actively assist directors in this regard; please also read our page on directors' liability.

Frequently asked questions about reorganization

Does a reorganization always prevent bankruptcy?
No. A reorganization increases the chance that a viable company will survive, but success depends on timely intervention and a realistic plan. The sooner you seek advice, the more options remain open.

Can I lay off staff via the WHOA?
The WHOA itself does not affect employment contracts. A personnel reorganization proceeds via regular employment law (UWV, Wmco, mirroring) and must be structured alongside the WHOA process.

Is reorganizing also something for small businesses?
Yes. From an international group to the baker on the corner: the WHOA offers a lighter regime for SMEs, and informal restructuring or a private agreement are often particularly suitable for smaller enterprises.