Dutch Scheme (WHOA) can be used to force lenders to continue credit lines

Summary

• A Dutch shipbuilding company is unable to repay one of the outstanding loans (the Amazon loan) under a senior facilities agreement (SFA), resulting in the entire outstanding amount becoming due and payable.
• The borrower offers a scheme that effectively overrides the voting requirements of the finance documents. All lenders’ consent decisions were imposed on dissenting lenders by the scheme which was accepted by the required two-thirds majority. The decisions related to (i) the sale of a subsidiary, (ii) amendments to the waterfall in the intercreditor agreement and (iii) the extension of the Amazon loan.
• The scheme remedies certain defaults under the finance documents and, consequently, available commitments are no longer subject to cancellation on that basis. As a result, lenders are forced to fund working capital under the existing facilities – including Lenders who voted against the scheme.

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