Financial Restructuring via WHOA: A Practical Case Study
M. Jansen
Senior Advisor
The WHOA procedure (Act on the Confirmation of Private Composition) offers entrepreneurs a powerful instrument to reach an agreement with creditors out of court. In this practical case study, we discuss how a medium-sized family business in the manufacturing industry managed to secure its continuity.
The company was struggling with persistent liquidity problems, partly due to delayed payments from large customers and an accumulated debt position with the Tax Authorities. A classic bankruptcy filing was looming, with all the consequences for the 45 employees.
The Approach: A Phased Recovery Plan
Our advisory firm developed a phased plan, starting with a thorough analysis of the debt burden and cash flow. Subsequently, we entered into discussions with the key creditors, including the Tax Authorities, to present a realistic repayment proposal.
- Comprehensive financial due diligence
- Preparation of a feasible recovery plan
- Negotiations with creditors and the Tax Authorities
- Legal settlement and homologation
By utilizing the WHOA procedure, the company was able to reach an agreement where 70% of the debts were repaid over a period of five years, under favorable conditions. This prevented a technical bankruptcy and preserved all jobs.
"The WHOA procedure gave us the space and confidence to restructure the company without jeopardizing operational continuity. An essential tool for SMEs."
Key Takeaways
Timeliness is crucial. The sooner an entrepreneur takes action in the face of financial headwinds, the more options are available. Open communication with creditors, supported by a solid plan, forms the basis for a successful restructuring.