NETHERLANDS Law and Practice Contributed by: Folko de Vries, Ilse van Gasteren, Robert Smits and Stern Flik, Clifford Chance
7.8 Out-of-Court v In-Court Enforcement Private credit restructurings include both WHOA proceedings and share pledge enforcement processes, which can be implemented without co-operation from the existing equity holders. In case there is co-operation from those par - ties, the restructuring can be implemented on a consensual basis. Frequently, the preparation of a share pledge enforcement and/or WHOA pro - cess is an effective tool to come to a consensual transaction with the existing equity holders. 7.9 Dissenting Lenders and Non- Consensual Restructurings A debtor can initiate a Dutch Scheme/WHOA process to implement a restructuring, which is a cram-down procedure that can involve write- off of debt, extension of maturity dates, debt- for-equity swaps and similar arrangements. The WHOA can be sanctioned by the Dutch court if two-thirds majority in value in each class has consented to the WHOA plan – eg, cramming down dissenting lenders. If there is a non-con - senting class, then there is also the option of a cross-class cram-down. This allows at least one “in-the-money” class voting in favour. The court will only sanction the WHOA plan if the best interest of creditors test is met, and in case of a cross-class cram-down, also the amend - ed absolute priority rule. These requirements include protections for dissenting creditors and are based on valuations. A WHOA can apply to both creditors and shareholders.
7.10 Expedited Restructurings A pre-pack insolvency – ie, a pre-arranged sale of a business which is implemented upon the opening of insolvency proceedings, is currently not available in the Netherlands. Balance sheet restructurings are not implemented through insolvency, but by either (i) a share pledge enforcement process whereby subordinated debts can be released through intercreditor arrangements or (ii) a WHOA proceeding. In WHOA proceedings, it is possible to provide support rescue financing and obtain security which is pre-sanctioned by the court so that it cannot be challenged by a subsequent bank - ruptcy trustee should the restructuring fail. 8. Case Studies and Practical Insights 8.1 Notable Case Studies There are not many notable private credit trans - actions or ensuing proceedings which are in the public domain. The authors decline to comment on transactions or proceedings, some details of which are publicly known, on the basis of con - fidentiality restrictions or any involvement they may have had. 8.2 Lessons Learned
See 8.1 Notable Case Studies . 8.3 Application of Insights See 8.1 Notable Case Studies .
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