13 September 2023

US and Dutch courts allow combined US-Netherlands restructuring for Diebold Nixdorf

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On 11 August 2023, Diebold Nixdorf, the cash machine manufacturer operating worldwide, successfully completed an extensive debt restructuring by combining and carrying out Chapter 11 proceedings in the US, and WHOA proceedings in the Netherlands. De Brauw partner Ferdinand Hengst took a key role as court-appointed observer in the WHOA portion, which was recognised under Chapter 15 in the US for the first time ever.

Effect of restructuring on Diebold's creditors

The restructuring had many consequences: (i) it affected all of Diebold's creditors at the group level; (ii) reduced Diebold Nixdorf's debt by EUR 2.1 billion; and (iii) cancelled all existing shares that were listed on the NYSE. Non-financial creditors, such as trade creditors and the Dutch Tax Authorities, were not affected by either the Chapter 11 proceedings in the US (US plan) or the WHOA proceedings in the Netherlands (WHOA plan).

The most important elements of the restructuring were as follows:

  • the super senior credit facilities were repaid with the proceeds of the EUR 1.25 billion debtor-in-possession facility, and the remainder was converted into an exit facility to provide sufficient funding for Diebold Nixdorf to continue as a going concern;
  • the first and second lien term loans and notes were swapped for equity in the US top holding company Diebold Inc., with the current outstanding shares being cancelled;
  • the holders of unsecured stub notes received a limited payment in cash; and
  • the entire restructuring was announced and completed within two and a half months.

Interplay between US plan and WHOA plan

Diebold Nixdorf's global operations and complex international financing structure required multiple, parallel restructuring proceedings in the US and in the Netherlands. As such, on 1 June 2023, Diebold Holding Company, LLC and nine affiliated US and Canadian debtors (US debtors) each filed a voluntary petition for relief under Chapter 11 in the US. On that same date, Diebold Nixdorf Dutch Holding B.V. filed a start declaration under the WHOA for itself and 12 affiliated UK and European debtors (WHOA debtors) at the Amsterdam District Court.

The creditors under the US plan and the WHOA plan were the same. But as a result of the multiple security packages and intercreditor arrangements, the position of those creditors towards the US debtors differed from their position towards the WHOA debtors. This meant that creditors' claims relating to the US debtors were part of the US plan, and claims relating to the WHOA debtors were part of the WHOA plan. As such, the classes in both plans were slightly different, and creditors had to vote on both plans.

At the same time, the US plan and WHOA plan were highly interconnected and formed an integral part of the other, primarily:

  • the creditors under the WHOA plan did not receive a payment under that , but they did under the US plan (including shares in the US top holding company, Diebold Inc);
  • creditors could only vote either in favour of both plans or against both plans; and
  • the success of both plans, as well as the Chapter 15 recognition, was a condition precedent for the entire restructuring.

Appointment of Ferdinand Hengst as observer

At Diebold Nixdorf's request, the Amsterdam District Court appointed De Brauw partner Ferdinand Hengst as observer, tasked with monitoring the WHOA process and advising on whether the interests of the joint creditors in the combined Chapter 11, WHOA and Chapter 15 proceedings were adequately safeguarded. In this situation, the observer's role was to supervise the drafting and negotiating of the restructuring plan for the benefit of the joint creditors. Ferdinand provided an extensive opinion on the WHOA plan and its implications, including about the manner in which unprecedented elements in the WHOA plan should be viewed - an opinion that the Amsterdam District Court followed

First-ever recognition of WHOA plan in the US

For the first time ever, the US recognised the WHOA plan as a foreign main proceeding under Chapter 15. This recognition also allows the WHOA plan to be enforced against creditors in the US, making it an even more attractive option for cross-border restructurings.