The moratorium under the WHOA

The Act on the court approval of private restructuring plans (Wet Homologatie Onderhands Akkoord, abbreviated as WHOA) makes it easier for a company in financial distress to sit down with its creditors and shareholders and make arrangements to restructure its debts. The annual report over 2023 of the group of specialised judges and staff tasked with implementing the WHOA (the WHOA Pool) shows, among other things, that in 2023, the moratorium (afkoelingsperiode) was the most frequently requested measure of all the restructuring tools offered by the WHOA. You can read more about the figures and trends related to the WHOA in 2023 here.

A moratorium gives the debtor time to prepare a restructuring plan and, with that, restructure its debts without interference from actions for recourse taken by individual creditors. During the moratorium, a stay on enforcement applies to third parties, meaning they cannot seize the debtor’s assets, and existing attachments can be lifted by the court. Furthermore, if a bankruptcy petition has been filed against the debtor, the hearing is suspended, giving the debtor an opportunity to avert imminent bankruptcy.

A debtor may request a moratorium from the court if he has filed a start-of-procedure declaration (startverklaring) with the court registry and has either submitted a restructuring plan to its creditors or assured to do so within a period of two months. A moratorium will only be granted if it is deemed necessary for the continuation of the business during the preparation and negotiation of a restructuring plan. In addition, the moratorium must serve the interests of the joint creditors and must not substantially prejudice the interests of third parties, i.e. creditors who have attached the debtor’s assets or who have filed for bankruptcy of the debtor.

If a request for a moratorium is submitted, according to the WHOA Pool’s annual report over 2023 the court typically renders a decision one to two weeks after the hearing took place,. During that interim period, no stay on enforcement applies and the petition for bankruptcy is not suspended. During this time, the debtor’s restructuring efforts might need protection from legal actions by individual creditors as well. For such urgent situations, there is the provisional moratorium measure, which entails a temporary moratorium by way of preliminary relief, effective until the court’s final decision on the request for the regular moratorium.

If you would like to learn more about options for restructuring your debts, or if you are curious about your rights as a creditor of a debtor who has initiated a WHOA procedure, please contact Christina Oudakker.