On 25 October 2024, the Dutch Supreme Court ruled in a ground-breaking judgment in Royal IHC that a WHOA plan may change creditors’ and shareholders’ rights but cannot impose more onerous obligations. More specifically, the lenders cannot be compelled to provide new financing or to accept new terms and still provide new funds under previously committed credit facilities (i.e., undrawn commitments).
In the most significant decision of the decade on a matter of U.S. bankruptcy law, the U.S. Supreme Court rendered its highly anticipated decision in Harrington v. Purdue Pharma L.P., 603 U.S. ____ (2024) on June 27, 2024, striking down the non-consensual third party releases that were the cornerstone of Purdue Pharma's Chapter 11 Plan of Reorganization by a vote of 5-4. In doing so, the Court said:
Since the Dutch Act on Court Confirmation of a Private Restructuring Plan (“WHOA” or “Dutch Scheme”) entered into force on 1 January 2021, Dutch Courts have rendered over 200 judgments.
On 9 March 2023, (one of) the largest Dutch Schemes so far was successfully completed: the restructuring of Royal IHC and its subsidiaries (as announced in IHC’s press release). In this case, the Rotterdam Court made several important decisions enhancing the effectiveness and legal certainty surrounding the WHOA, including regarding:
On October 17, 2022, Justice Andrea Masley of the NY Supreme Court issued a decision and order denying all but one of the motion to dismiss claims filed by Boardriders, Oaktree Capital (an equity holder, term lender, and “Sponsor” under the credit agreement), and an ad hoc group of lenders (the “Participating Lenders”) that participated in an “uptiering” transaction that included new money investments and roll-ups of existing term loan debt into new priming debt that would sit at the top of the company’s capital structure.
On October 14, 2022, the Fifth Circuit issued its decision in Ultra Petroleum, granting favorable outcomes to “unimpaired” creditors that challenged the company’s plan of reorganization and argued for payment (i) of a ~$200 million make-whole and (ii) post-petition interest at the contractual rate, not the Federal Judgment Rate. At issue on appeal was the Chapter 11 plan proposed by the “massively solvent” debtors—Ultra Petroleum Corp. (HoldCo) and its affiliates, including subsidiary Ultra Resources, Inc.
On July 6, Delaware Bankruptcy Court Judge Craig T. Goldblatt issued a memorandum opinion in the bankruptcy cases of TPC Group, Inc., growing the corpus of recent court decisions tackling “uptiering” and other similar transactions that have been dubbed by some practitioners and investors as “creditor-on-creditor violence.” This topic has been a hot button issue for a few years, playing out in a number of high profile scenarios, from J.Crew and Travelport to Serta Simmons and TriMark, among others.
The Act providing for court confirmation of a private restructuring plan (Wet homologatie onderhands akkoord (WHOA)) entered into force on 1 January 2021. It introduces a fast and efficient pre-insolvency procedure to restructure a company’s business through a scheme between the company and its creditors and/or shareholders, with the possibility of a court-approved cross-class cram down.
On Tuesday 6 October 2020 the Dutch Senate adopted the long-awaited legislative proposal for the Act providing for court confirmation of a private restructuring plan (Wet homologatie onderhands akkoord (“WHOA”)). The act introducing the 'Dutch scheme' will enter into force in the beginning of next year at the latest.
On August 26, 2020, the Court of Appeals for the Third Circuit held that the Bankruptcy Code does not require subordination agreements to be strictly enforced in order for a court to confirm a cramdown plan, so long as the plan does not discriminate unfairly.
On 26 May 2020, the Dutch Lower House adopted the long-awaited legislative proposal regarding the Dutch scheme (Wet Homologatie Onderhandsakkoord (WHOA)).
This is an important step towards the entry into force of the proposal. The Senate still needs to approve, but this can usually be done much quicker and less debate is expected.
The Senate will discuss the procedure of the treatment on 2 June 2020. Once the Senate has voted and it becomes clear when the WHOA comes into force, we will post a new update.