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1 N IKOLAUS & C O. Panel session Comparative multi-jurisdictional discussion on out-of-court restructuring/ regimes Panel chairman: Dr Frank Nikolaus,

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Presentation on theme: "1 N IKOLAUS & C O. Panel session Comparative multi-jurisdictional discussion on out-of-court restructuring/ regimes Panel chairman: Dr Frank Nikolaus,"— Presentation transcript:

1 1 N IKOLAUS & C O. Panel session Comparative multi-jurisdictional discussion on out-of-court restructuring/ regimes Panel chairman: Dr Frank Nikolaus, Nikolaus & Co. LLP, (Germany) Panelists: Bryan Green – Gordon Brothers Europe (United Kingdom) Mario Lisanti – Norton Rose (Italy) Antonin Besse – Freshfields Bruckhaus Deringer (France) Jesper Trommer Volf – Accura Advokataktieselskab (Denmark) Chris Hart, Lloyds TSB (United Kingdom) TMA Europe Conference Berlin, June 11 th, 2010

2 2 N IKOLAUS & C O. Core elements of restructuring/insolvency proceedings I.Shift of Control a)Overindebtedness – an insolvency trigger? b)Obligation to file for insolvency/ Mgt. Liability c)Criminal Offence II.Moratorium/ Payment Suspension a)Automatic Stay b)Privileges to resume payments III.Continuity a)Debtor-in-possession b)Visibility/ Confidentiality/ Reputation vs. Stigma c)Termination rights with contractual parties IV. DIP Financing V. Cram Down/ Majorities VI. Market hygiene

3 3 N IKOLAUS & C O. Stand-Alone Restructuring proceedingsI. SHIFT OF CONTROLII. MORATORIUM/ PAYMENT SUSPENSION Over- indebted- ness Obligation to file for insolvency / Mgt. Liability Criminal Offence Automatic Stay Privileges to resume regular payments USA NO, since Chapter 11 regular Bankruptcy Proceeding. Practically, archetype of a restructuring proceeding NO NO restrictive timeline. Fraudulent Conveyance, Shift of Fiduciary Duties even before filing ("Creditors First“) NO YES, rigid. Includes financial debt and collateral securing it (Key) Supplier and (key) employees might be paid in due course (either through a specific judge's ruling or factually by payment of all trade debt days before filing, e.g. GM, w/o clawback thereafter) UK YES, CVA (Company Voluntary Arrangement) for unsecured, SoA (Scheme of Arrangement) for secured lenders NO NO ; Wrongful Trading Fraudulent Trading NO CVA und SoA in general YES, in administration proceedings NO F (Conc./ Mandat ad hoc) YES, three: Mandat ad hoc, Conciliation, Sauvegarde NO YES, within 45 days of ‘cessation of payments’. Filing of conciliation protects NO NO, but factually by naming respective creditors. Court can grant deferral up to 2 years to prevent foreclosures YES. No mandatory moratorium

4 4 N IKOLAUS & C O. Stand-Alone Restructuring proceedings I. SHIFT OF CONTROLII. MORATORIUM/ PAYMENT SUSPENSION Over- indebted- ness Obligation to file for insolvency / Mgt. Liability Criminal Offence Automatic Stay Privileges to resume regular payments F (Sauv.) YES NO YES. Proceeding only available if debtor is not yet in ‘cessation of payments’ NO YES, including secured debt and collateral In principal YES, but restrictions have to be observed D NO YES YES (21 days after illiquidity or overindebtedness occur). Most restrictive concept. Liable for any payments thereafter with burden of proof with mgt. that those payments were meaningful YES, always if 21 days period has expired. Irrespective of concrete damages n.a.

5 5 N IKOLAUS & C O. Stand-Alone Restructuring proceedingsI. SHIFT OF CONTROLII. MORATORIUM/ PAYMENT SUSPENSION Over- indebted- ness Obligation to file for insolvency / Mgt. Liability Criminal Offence Automatic Stay Privileges to resume regular payments E YES. Convenio (voluntary insolvency proceeding) YES YES, 2 months - may be postponed for 3 months YES YES. Enforcement of securities is delayed up to one year Convenio: YES; in other proceedings: NO I YES. Concordato Preventivo (Preventive creditor's settlement agreement); Accordi di Ristrutturazione (Restructuring Agreement); Piani Attestati (Certified Plan) YES NO express time limit for filing but failure to do so results in director's personal liability YES Concordato Preventivo/Accordi di Ristrutturazione: YES, for certain periods; other plans: NO Concordato Preventivo and Accordi di Ristrutturazione: YES DK Pending: New legislation of restructuring or similar scheme, moratorium or sale of the business YES NO, but filing in due time will relieve directors from liability NO YES re unsecured creditors; NO re secured creditors by court order NO, but those which fall due after filing

6 6 N IKOLAUS & C O. III. CONTINUITY IV. DIP FINANCINGV. CRAM DOWN/ MAJORITIES Debtor-in- Possession? Visibility/ Confidentiality/ Reputation Termination rights for contractors, customers USA YES Very visible, albeit no reputational downside NO, but company may "pick cherrys" (e.g. leases) YES, superpriority on court order YES. 66 % plus Head Count UK YES. Company appoints IP to supervise CVA. SoA: YES. Administration: NO – but court appoints debtor chosen administrator Not visible but not confidential though, CVA and SoA: NO NOPractically NO YES. 75% in CVA and SoA. No Head Count F (Conc./ Mandat ad hoc) YES. No different court ruling possible. Company appoints a "Conciliateur" NO. Strictly confidential. Breach is criminal act (Unique) NO YES. If conciliation agreement is approved by a court in a public judgement then new money lenders will be super senior and no suspect period clawback will affect security in future NO, factually due to court’s supervision

7 7 N IKOLAUS & C O. III. CONTINUITY IV. DIP FINANCING V. CRAM DOWN/ MAJORITIES Debtor-in- Possession? Visibility/ Confidentiality/ Reputation Termination rights for contractors, customers F (Sauv.) YES. No specific application necessary. YES, public procedure. Highly regarded though. NO YES. Loans made to finance the continuation of the business after sauvegarde benefit from automatic seniority. YES. 66% of each creditor committee voting separately (trade creditors, bank creditors and bondholders). No Head Count. No D-E-S. D NO, but in regular proceedings theoretically Visible and "Pleite" stigmatised. Any sensitive business contracts: YES. Property leases: NO. Loss of subsidiaries due to company bylaws: YES. N.a., „“Insolvenzgeld“ covers 3 months‘ wages N.a., but in Insolvency Plan 50% plus Head Count in each creditor's group. No D-E-S.

8 8 N IKOLAUS & C O. III. CONTINUITY IV. DIP FINANCING V. CRAM DOWN/ MAJORITIES Debtor-in- Possession? Visibility/ Confidentiality/ Reputation Termination rights for contractors, customers E NO Control and intervention receivers in compulsory proceeding, mgt. is replaced YES, Public proceedings, reputational downside Convenio: YES ; otherwise: NO YES, Head Count but 50% plus can overrule with court approval I YES, subject to specific exceptions re extra- ordinaries in Concordato Preventivo. Concordato Preventivo: published in register; Accordi di Ristrutturazione: filing published in register; Piani Attestati: none; debtor's registry has been ceased to avoid loss of reputation NO Concordato Preventivo and Accordi di Ristrutturazione: YES, subject to certain conditions; Piani Attestati: NO. Concordato Preventivo: 51% to vote; Accordi di Ristrutturazione: 60%, CHECK Head Count. DK YES, but within a cautious financial framework with supervisor/restructurer Future regime: Filing for restructuring registered YES if agreed. In administration: NO – receiver shall respond on continuation request within 2 weeks. NO formal provision but practically workable Existing regime: 60% of heads + up to 75% of claims New regime: assumed to be accepted, ordered by court unless voted down by majority of creditors present for deciding it.

9 9 N IKOLAUS & C O. N IKOLAUS & C O. LLP Zollhof 11-15Cavendish Square Düsseldorf London W1G 0PW +49 (0) (0) (0) (fax) +44 (0) (fax) Thank you for your attention.


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