Busy restructuring experts due to collection of corona debts
Trustees and debt relief experts expect top pressure in the coming period as the Tax Administration actively starts collecting corona debts. Business owners already struggling to pay the charges will now face yet another payment obligation. If you are experiencing payment problems, it is important to take action quickly. The sooner help is sought, the more likely it is to be successful and the less likely it is to lump you into bankruptcy. The most approachable is to make payment arrangements with creditors. But if the problems are too great and one hole is plugged with another, other measures are needed. The first step then is refinancing or restructuring, but it is not always possible to find lenders with the current debt burden. This article discusses two solutions where an entrepreneur heading for bankruptcy can eventually continue in business with a sustainable debt load.
Remediation of debts
A relatively new tool is debt restructuring through the so-called Homologation Private Arrangement Act (WHOA). This is a forced composition, in which creditors are offered a percentage of their claim. If enough creditors agree to the offer, then the rest of the creditors can also be forced to “participate” in the debt restructuring. WHOA can also be used to terminate a business in a controlled manner. In that case, it is called a liquidation agreement.
The WHOA has led to successes with shipbuilder IHC and soccer club ADO Den Haag, among others. These companies were able to continue with a ‘sustainable debt burden’.
A WHOA trajectory offers particular solace to companies with a considerable burden of debt as well as considerable future earning potential.
Relaunch from bankruptcy
It is not always possible to talk to creditors. This may be due to creditors in principle, or because the debt burden is simply too great. In such a case, a restart from bankruptcy can offer a solution to “start over” with the healthy parts of a company. However, it is important that the bankruptcy can be attributed to external factors, that the insolvency has been reported on time, that the administration is in order and that the annual accounts have been filed on time. Also, you may not quickly pay off certain creditors who would miss the boat in bankruptcy.
If you want to continue with (part of) the business, you need to prepare a lot in a short time, especially if it is important for the business to be shut down for as short a time as possible. Think about an independent valuation of (essential) company assets, the IP rights and which personnel should be retained in any case. A good offer and a (short) business plan are also important to convince the receiver that it is a good idea to enter into business with you.
Get in touch
For a company in difficulty, there is no one size fits all. It is customized to find the best solution to a problem. If you are experiencing problems, contact one of our experts. Do you have questions? Then contact one of our lawyers by mail, phone or fill out the contact form for a free initial consultation. We are happy to think along with you.