European Update

The proposal 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 cramdown if just one in-the-money class has voted in favor...

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Bibliographic Details
Published in:American Bankruptcy Institute journal 2019-12, Vol.38 (12), p.26-76
Main Authors: Gallagher, Adam, Broeders, Michael, Ausema, Charlotte, Crinson, Katharina
Format: Article
Language:English
Subjects:
Bankruptcy laws
Debt restructuring
Employment contracts
Insolvency
Jurisdiction
Labor unions
Parliaments
Proposals
Shareholder voting
State court decisions
Stockholders
Online Access:Get full text
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Summary:The proposal 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 cramdown if just one in-the-money class has voted in favor of the proposed plan. The public version, which will be publicly announced in the insolvency and trade registers, will automatically be recognized in other European Union member states under the EIR if the debtor's COMI is located in one of the member states. With the court's permission, a debtor can terminate any executory contract, including lease contracts (but not employment contracts), if the counterparty does not agree with any modification proposed by the debtor. After a debtor has filed a statement indicating that it has started preparing a plan or that a restructuring expert has been appointed, funding required during the restructuring efforts (including related granting of security) is protected from clawback if the court approves such financing.
ISSN:1931-7522