WHOA creditor has only one chance

Earlier, my colleagues Koen Wanders and Floris Krijt wrote articles on the Law on Homologation of a Private Agreement (hereinafter “WHOA”). The WHOA is a procedure that allows distressed companies to avert bankruptcy. In the WHOA procedure, it is possible to enforce a creditors’ agreement with the help of the court. This can result in the continuation of the business, as well as liquidation and distribution. The possibility is being used increasingly, including by SMEs.

The WHOA is a relatively unknown regulation. The WHOA did not come into force until January 1, 2021. What many people do not know is that the court’s ruling in a WHOA case is in principle not subject to appeal. On February 13, 2024, the Amsterdam Court of Appeal issued judgment ECLI:NL:GHAMS:2024:346 on this subject. In this article I will briefly explain the ruling mainly from the perspective of the creditor.

No remedy, inadmissible

Sections 369 et seq. of the Bankruptcy Act govern WHOA proceedings. The tenth paragraph of section 369 of the Fw reads, “No appeal shall lie from the decisions of the court under this section [the WHOA], unless otherwise provided.”

If an appeal is nevertheless filed against a decision of the court in WHOA proceedings, that appeal is in principle inadmissible. The appeal is then not heard on the merits at all.

Appellant creditor’s argument

In the Feb. 13 judgment, one of the creditors sought to invoke the unless clause of Section 369(10) FW. Under the EU Insolvency Regulation, if a company operates in several countries, bankruptcies and insolvency proceedings such as the WHOA should in principle be handled by the court where the company mainly operates. This country is called the “center of main interests”.

A Spanish creditor argued that the insolvent firm McDermott International Holdings B.V. had its “center of main interest” not in the Netherlands but in the U.S. and therefore appealed the court’s decision on jurisdiction. This was based on Article 5 of the Insolvency Regulation, which provides that the (also) creditor can challenge the decision to open main insolvency proceedings in court on the basis of international jurisdiction. The creditor argued that this article gave an independent right of appeal.

No application ‘unless’ clause

Unfortunately for the creditor, the Amsterdam Court of Appeal did not go along with that reasoning. This is because the WHOA in principle already gives creditors the opportunity to present their views in the court proceedings. This also applies to arguments about jurisdiction. In other words, Article 5 of the Insolvency Regulation was already satisfied.

That the appeal was passed over and that it is in principle not possible to appeal benefits the effectiveness of the procedure. The faster and more definite the restructuring through the court is irreversible, the faster it is possible for the company and the creditors to proceed with business.

On the other hand, for this reason, it is important not to sit still in WHOA proceedings as a creditor. As a creditor, you must already put forward in court what you wish to put forward. You almost certainly will not get a retrial.

Is your debtor going through a WHOA process? Contact us

The decision of the Amsterdam Court of Appeal makes it clear that the appeal ban in WHOA proceedings cannot be easily bypassed. Therefore, if you have a claim against a company that wishes to use the WHOA, it is very important that you are sharp from the start. Is this the case for you? Then contact one of our lawyers by mail, telephone or fill in the contact form for a free initial consultation. We will be happy to think along with you.