The Tax Authority as a Creditor in a WHOA Procedure: A Practical Case Study
Jan de Vries
Senior Advisor Financial Restructuring
Successfully concluding a WHOA agreement requires a strategic approach to all creditors, including the Tax Authority. In this case study, we discuss how an SME in the manufacturing industry presented a feasible plan and convinced the tax authorities.
The Starting Situation
A family business with 45 employees faced an acute liquidity crisis after several large project payments failed to materialize. The debt to the Tax Authority (wage tax and VAT) amounted to over €285,000 and posed a direct threat to the company's continuity.
The Core of the Restructuring Plan
Our team drafted a detailed WHOA plan based on the following pillars:
- A realistic, cash flow-based repayment schedule of 48 months.
- A substantial personal contribution from the shareholders/management.
- Transparent financial forecasts and monthly reporting.
- A proposal for a partial waiver (haircut) on the overdue interest.
Key Insight
In a WHOA procedure, the Tax Authority often proves to be more pragmatic than expected, provided the plan is solid, feasible, and fully transparent. The importance of employment and business continuity carries significant weight.
The Result
After three rounds of negotiations, the Tax Authority agreed to the adjusted repayment proposal. The company was able to continue operations, all jobs were preserved, and the debt is being repaid according to schedule. This case underscores the importance of early and professional advice for financial restructuring under the WHOA.
