The act on the confirmation of out-of-court restructuring plans (WHOA) has entered into effect. The act provides companies and other stakeholders with an efficient, fast and flexible means of financial – and possibly operational – restructuring, with the support of 2/3 of the creditors and/or shareholders. By restructuring their balance sheet, viable companies may be able to make a turnaround and become financially sound again without having to open formal insolvency proceedings.
The restructuring plan is presented to creditors and/or shareholders either by the debtor itself or by a restructuring expert. An expert may be appointed by the court at the request of a creditor, shareholder or employee representative body. The role of the court is limited, but where necessary, the court can impose certain provisional measures to allow the plan to succeed, for example by granting a moratorium or by rendering a judgment that increases deal certainty.
Creditors and/or shareholders vote in classes. If at least one class votes in favour of the plan, it may be presented to the court for confirmation. The court verifies, amongst other things, whether the restructuring plan is fair and value is distributed in accordance with the ranking of the parties involved. The plan can be declared binding on dissenting creditors and/or shareholders as well as other contractual counterparties.
The act provides flexibility to draw up a restructuring plan that is tailor-made for a company or group of companies, in both domestic and cross-border cases. Our Restructuring & Insolvency team has the necessary expertise and skills to advise on all aspects of the WHOA to any of the stakeholders involved.
According to Marc Orval, “The WHOA is a game changer. Proactivity is key in order to prevent others from determining the fate of the company.”