The Dutch Supreme Court judgment on the WHOA restructuring of Royal IHC

Introduction

The Dutch Supreme Court issued its judgment in connection with Royal IHC, one of the most cutting-edge restructurings under the Act on Court Confirmation of a Restructuring Plan (Wet Homologatie Onderhands Akkoord, the WHOA) in October 2024. The Royal IHC restructuring was one of the first large restructurings that was implemented through the WHOA that involved a syndicate of lenders. The 2023 decision of the District Court of Rotterdam (the District Court) confirming the WHOA restructuring plan included various novelties under the WHOA. We discussed this decision in the International Restructuring Newswire (Q3 2023) here: Restructuring of Royal IHC: new developments under the Dutch WHOA. However, the Procurator General (Procureur-Generaal) of the Dutch Supreme Court filed for a cassation in the interest of the law (cassatie in belang der wet) bringing the case before the Dutch Supreme Court in a process used to seek court review on legal questions in the interest of uniformity. The result was that the Dutch Supreme Court annulled the decision of the District Court, creating ground-breaking case law. In this article, we will discuss the Dutch Supreme Court’s judgment in Royal IHC.

Background

Royal IHC is a large international shipbuilder with its headquarters in the Netherlands. After going through two rounds of restructurings, it filed for a WHOA proceeding on 2 January 2023. Under the WHOA, Royal IHC offered its syndicate of nine lenders a WHOA restructuring plan that in essence aimed to (i) extend the maturity date of an already matured and due and payable facility under its senior facilities agreement, (ii) amend the waterfall in the intercreditor agreement to introduce a super senior ranking for a third party guarantee provider, and (iii) facilitate the divestment of one of its well-performing business units to a third party. The WHOA restructuring plan was adopted in all classes by the requisite majority in each class (i.e., a two-third majority of the value of the total claims for which votes have been cast). Six of its nine lenders voted in favor of the WHOA restructuring plan, whilst three lenders did not support the plan. From these three dissenting lenders, one abstained and two voted against the WHOA restructuring plan. One of them fiercely opposed the WHOA restructuring plan before the District Court challenging it on various grounds.¹ However, the District Court rejected the dissenting creditor’s arguments in its decision.

The District Court’s WHOA decision confronts novel issues

The District Court confirmed the WHOA restructuring plan on 9 March 2023.² For a complete discussion and description of this case, we refer to our International Restructuring Newswire (Q3 2023): Restructuring of Royal IHC: new developments under the Dutch WHOA. The confirmation of the Royal IHC WHOA restructuring plan was a novelty back in 2023, as the decision addressed various interesting and untested matters. The decision of the District Court involved the following elements:

• Non-consensual amendments to commitments under facilities agreements: In this WHOA proceeding, one of the most important questions was to what extent a WHOA restructuring plan could be used to amend commitments under a senior facilities agreement, in particular with respect to revolving credit facilities and bank guarantee facilities, and essentially force lenders to continue to provide funding to an economically different entity. The District Court ruled that this is possible;
• Non-consensual amendments to the waterfall in an intercreditor agreement and possibility for super priority for rescue financings: Another important question was whether amendments to the waterfall in an intercreditor agreement can be imposed on (dissenting) creditors under the WHOA. In a rather interesting ruling, the District Court decided that changing the waterfall of the ranking of claims of creditors is possible if it is implemented contractually through amendments imposed by the WHOA restructuring plan to an intercreditor agreement but not if it is imposed via a change to in rem security rights (i.e., changing the ranking of security rights);
• Impact on hedging liabilities: The WHOA restructuring plan also affected the ranking of hedging liabilities. Whilst the text of the statute explicitly states that financial collateral arrangements (financiëlezekerheidsovereenkomsten) and close-out netting provisions are excluded from the WHOA, the District Court ruled that these changes should be allowed under this WHOA restructuring plan as they were implemented through the WHOA restructuring plan’s amendment of the intercreditor agreement (and not the underlying ISDA documents); and
• The sale of assets and claw-back protection under the WHOA: The WHOA proceeding also implemented a distressed M&A transaction through a divestment which benefited from protection against claw-back action (in a subsequent bankruptcy), due the WHOA confirmation court order.

The Dutch Supreme Court weighs in providing guidance

The WHOA does not permit parties to appeal the decision. The legislature wanted to introduce a restructuring proceeding that is effective and efficient, giving parties finality expeditiously. However, in very rare and exceptional cases, the Procurator General of the Dutch Supreme Court may file for a cassation in the interest of the law. A procedure for cassation in the interest of the law cannot be filed by the parties but can only be invoked by the Procurator General. Furthermore, the decision of the Dutch Supreme Court in a cassation in the interest of the law does not affect (the rights of) the parties involved in the case but solely serves to give guidance for future cases and for the development of the law. What makes this WHOA restructuring special is that the Procurator General of the Dutch Supreme Court filed for cassation in the interest of the law on 26 March 2024 to present two questions to the Dutch Supreme Court:

1. Is it possible to force creditors to continue providing financing by amending their obligations under the WHOA?
2. Is it possible to non-consensually amend the ranking of claims of creditors under the WHOA?

The Procurator General invited parties to present their views before it would present the case before the Dutch Supreme Court. Norton Rose Fulbright advised the dissenting and opposing secured lender in this WHOA proceeding. On behalf of itself, Norton Rose Fulbright also filed written submissions in response to the questions raised by the Procurator General of the Dutch Supreme Court. We answered the two questions above and also pointed out in our written submissions that the ruling of the District Court on hedging liabilities and the impact of the WHOA on financial collateral arrangements and close-out netting provisions should be overturned. The Procurator General, however, limited the case filed in cassation in the interest of the law to the two questions above and concluded that the decision of the District Court should be overturned.³

On 25 October 2025, the Dutch Supreme Court handed down its long-awaited judgment, providing key guidance for future WHOA proceedings.⁴

• In relation to Question 1 - the non-consensual amendment of the facilities agreement, the Dutch Supreme Court ruled that the WHOA does not provide any authorization for imposing an obligation on financiers to provide new financing or keep available existing commitments on amended terms, nor that the legislature intended to permit such obligations to be imposed on financiers. The WHOA only permits the amendment of creditors’ rights.
• In relation to Question 2 - the non-consensual amendment to the ranking of claims, the Dutch Supreme Court ruled that the WHOA does allow for the amendment of the waterfall of claims, regardless of whether this is occurring contractually (i.e., through the intercreditor agreement) or through an amendment of in rem security rights, provided that the absolute priority rule is respected. This is an important part of the decision that is opening the door for rescue financing.
• Finally, whilst the Procurator General did not raise questions on the consequences of the WHOA on financial collateral arrangements and close-out netting provisions, the Dutch Supreme Court devoted two thoughtful sentences to this topic in the interest of the law and giving guidance and clarity: The WHOA does not affect financial collateral arrangements and close-out netting provisions, and any security rights deriving from such arrangements cannot be affected by the WHOA.

Conclusion

The Dutch Supreme Court annulled the judgment of the District Court in the Royal IHC WHOA proceeding. In its judgment, the Dutch Supreme Court made clear that the boundaries of the WHOA must be respected. It emphasized that under the WHOA (i) lenders cannot be forced to continue financing through non-consensual amendments to their commitments and, hence, their go-forward funding obligations, (ii) a lender’s in rem security rights’ ranking and contractual rankings can be amended non-consensually, and (iii) affecting a counterparty’s financial collateral arrangements and close-out netting provisions is not possible. This is a landmark judgment, which further clarifies the legal framework of the WHOA confirming certain protections for lenders while clearing a path for the ability to achieve rescue financings in a WHOA proceeding.

1 Norton Rose Fulbright acted as counsel to the dissenting and opposing secured creditor in the Royal IHC WHOA proceeding. However, the views expressed in this article are the views of the authors and not of any of the parties to the WHOA proceeding. Further, the authors have expressed their views with the aim to contribute to the development of the WHOA. Therefore, any views represented in this article should be regarded as the opinions of the authors with respect to the development of the WHOA in general.

2 Rb. Rotterdam 9 March 2023, ECLI:NL:RBROT:2023:2716; Rb. Rotterdam 9 March 2023, ECLI:NL:RBROT:2023:2800.

3 PG bij de HR 26 March 2024, ECLI:NL:PHR:2024:346.

4 HR 10 October 2024, ECLI:NL:HR:2024:1533