Wovof II als pleister naast de zere plek Het fundamentele onderscheid tussen pre- packs met zittende aandeelhouders en met externe partijen

On May 27, 2024, a slightly revised version of the 2019 draft bill "Act on Transfer of Undertaking in Bankruptcy" ("Wovof") was submitted for consultation. The Wovof aims to create a workable balance between labour law and bankruptcy law. This article explains that the Wovof will not achieve this goal. In our opinion, the sore spot is the pre-pack or restart involving a party related to the insolvent entity, specifically the old shareholder. The Wovof applies a band-aid beside the sore spot because the proposed abolition of the bankruptcy exception in the event of a transfer of undertaking does not differentiate between a pre-pack with the old shareholder and one with an external party. Instead of limiting the advantage of existing shareholders, the Wovof actually facilitates their position. Additionally, the costs for non-selected employees are partly borne by the UWV (the public) and partly by the employees themselves.

Not only does this approach fail to contribute to a workable balance between labour law and bankruptcy law, but it is also not in line with the Transfer of Undertaking Directive. The Wovof adopts a system in which only employees who receive an offer transition to the restarting acquirer. Selecting employees from the insolvent employer on the basis of economic reasons is not in line with the Directive. The Directive stipulates that if something other than the bankruptcy exception in Article 5(1) of the Directive is implemented, all employees must automatically transfer. An offer from the acquirer is therefore not necessary, and the transfer of the employment contract cannot depend on such an offer.

Our advocated approach is that if the old shareholder acts as the acquirer, all employees should automatically transfer. If there is no restart with a party related to the insolvent entity, the bankruptcy exception in the transfer of undertaking applies, and employees do not automatically transfer. This approach may lead to lower returns for the joint creditors in some cases. However, this will only occur if the old shareholder emerges as the buyer from the pre-pack. This is usually not a coincidence, and in our opinion, it justifies that the old shareholder cannot also take advantage of the bankruptcy exception in the transfer of undertaking. Thus, our proposed approach does not necessarily disadvantage creditors, as it makes it relatively more difficult for the old shareholder to carry the company through bankruptcy while writing off creditors. This also provides broader protection for creditors against the opportunistic use of pre-packs.