TMA Europe Conference
Berlin, June 11th, 2010
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)
NIKOLAUS & CO.
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Core elements of restructuring/insolvency proceedings
I. Shift of Control
a)
b)
c)
Overindebtedness – an insolvency trigger?
Obligation to file for insolvency/ Mgt. Liability
Criminal Offence
II. Moratorium/ Payment Suspension
a)
b)
Automatic Stay
Privileges to resume payments
III.Continuity
a)
b)
c)
Debtor-in-possession
Visibility/ Confidentiality/ Reputation vs. Stigma
Termination rights with contractual parties
IV. DIP Financing
V.
Cram Down/ Majorities
VI. Market hygiene
NIKOLAUS & CO.
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Stand-Alone
Restructuring
proceedings
I. SHIFT OF CONTROL
OverObligation to file for
indebtedinsolvency / Mgt.
ness
Liability
NO, since Chapter
USA
11 regular Bankruptcy
Proceeding. Practically,
archetype of a
restructuring
proceeding
II. MORATORIUM/ PAYMENT SUSPENSION
Criminal
Offence
NO
NO restrictive timeline.
Fraudulent Conveyance, Shift
of Fiduciary Duties even before
filing ("Creditors First“)
NO
NO
NO; Wrongful Trading
NO
NO
YES, within 45 days of
Automatic Stay
Privileges to resume
regular payments
(Key) Supplier and (key)
employees might be paid in due
course (either through a specific
YES, rigid. Includes financial debt judge's ruling or factually by
and collateral securing it
payment of all trade debt days
before filing, e.g. GM, w/o
clawback thereafter)
YES, CVA (Company
UK
Voluntary
Arrangement) for
unsecured, SoA
(Scheme of
Arrangement) for
secured lenders
F
(Conc./ YES, three: Mandat
ad hoc, Conciliation,
Mandat
Sauvegarde
ad hoc)
NIKOLAUS & CO.
Fraudulent Trading
‘cessation of payments’. Filing
of conciliation protects
NO
NO
CVA und SoA in general YES, in
administration proceedings
NO
NO, but factually by naming
respective creditors. Court can grant
YES. No mandatory moratorium
deferral up to 2 years to prevent
foreclosures
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Stand-Alone
Restructuring
proceedings
I. SHIFT OF CONTROL
OverObligation to file for
indebtedinsolvency / Mgt.
ness
Liability
F
(Sauv.)
D
YES
NO
NIKOLAUS & CO.
II. MORATORIUM/ PAYMENT
SUSPENSION
Criminal
Offence
NO
YES. Proceeding only
available if debtor is not
yet in ‘cessation of
payments’
YES
YES (21 days after
illiquidity or
YES, always if
overindebtedness occur).
21 days period
Most restrictive concept.
has expired.
Liable for any payments
Irrespective of
thereafter with burden of
concrete
proof with mgt. that
damages
those payments were
meaningful
NO
Automatic Stay
Privileges to
resume regular
payments
YES, including In principal YES, but
secured debt and restrictions have to
collateral
be observed
n.a.
n.a.
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Stand-Alone
Restructuring
proceedings
I. SHIFT OF CONTROL
Over- Obligation to file for
indebted- insolvency / Mgt.
ness
Liability
YES. Convenio
E
(voluntary insolvency
proceeding)
YES
YES, 2 months - may
be postponed for 3
months
YES
NO express time limit
for filing but failure to
do so results in
director's personal
liability
YES
NO, but filing in due
time will relieve
directors from liability
II. MORATORIUM/ PAYMENT
SUSPENSION
Criminal
Offence
Automatic Stay
Privileges to
resume regular
payments
YES
YES. Enforcement of
Convenio: YES; in
securities is delayed up to other proceedings:
one year
NO
YES
Concordato
Preventivo/Accordi di
Ristrutturazione: YES,
for certain periods; other
plans: NO
Concordato
Preventivo and
Accordi di
Ristrutturazione:
YES
NO
YES re unsecured
creditors; NO re
secured creditors by
court order
NO, but those
which fall due after
filing
YES. Concordato
Preventivo
(Preventive creditor's
settlement
agreement); Accordi
di Ristrutturazione
(Restructuring
Agreement); Piani
Attestati (Certified
Plan)
I
DK
Pending: New
legislation of
restructuring or
similar scheme,
moratorium or sale of
the business
NIKOLAUS & CO.
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III. CONTINUITY
Debtor-inPossession?
USA
UK
YES
Termination
rights for
contractors,
customers
NO, but
Very visible, albeit no company may
reputational downside "pick cherrys"
(e.g. leases)
V. CRAM DOWN/
MAJORITIES
YES, superpriority on
court order
YES. 66 % plus
Head Count
Practically NO
YES. 75% in CVA
and SoA. No Head
Count
Visibility/
Confidentiality/
Reputation
YES. Company appoints
IP to supervise CVA.
SoA: YES.
Not visible but not
Administration: NO – confidential though, CVA
but court appoints
and SoA: NO
debtor chosen
administrator
F
YES. No different court NO. Strictly confidential.
(Conc./
ruling possible. Company Breach is criminal act
Mandat
appoints a "Conciliateur"
(Unique)
ad hoc)
NIKOLAUS & CO.
IV. DIP FINANCING
NO
NO
YES. If conciliation
agreement is approved
by a court in a public
judgement then new
NO, factually due to
money lenders will be
court’s supervision
super senior and no
suspect period clawback
will affect security in
future
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III. CONTINUITY
Debtor-inPossession?
F (Sauv.)
D
YES. No specific
application
necessary.
NO, but in regular
proceedings
theoretically
NIKOLAUS & CO.
IV. DIP FINANCING
V. CRAM DOWN/
MAJORITIES
Visibility/
Termination rights
Confidentiality/
for contractors,
Reputation
customers
YES, public
procedure. Highly
regarded though.
NO
Any sensitive
business contracts:
YES. Property
Visible and "Pleite"
leases: NO. Loss of
stigmatised.
subsidiaries due to
company bylaws:
YES.
YES. 66% of each
YES. Loans made to
creditor committee
finance the continuation of
voting separately
the business after
(trade creditors, bank
sauvegarde benefit from
creditors and
automatic seniority.
bondholders). No Head
Count. No D-E-S.
N.a., but in Insolvency
Plan 50% plus Head
N.a., „“Insolvenzgeld“
Count in each
covers 3 months‘ wages
creditor's group. No
D-E-S.
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III. CONTINUITY
Debtor-inPossession?
NO Control and
E
I
DK
cautious financial
framework with
supervisor/restructurer
V. CRAM DOWN/
MAJORITIES
Visibility/
Termination rights
Confidentiality/
for contractors,
Reputation
customers
YES, Public
intervention receivers in
proceedings, reputational
compulsory proceeding,
downside
mgt. is replaced
Concordato Preventivo:
published in register;
Accordi di
YES, subject to specific Ristrutturazione: filing
exceptions re extrapublished in register;
ordinaries in
Piani Attestati: none;
Concordato Preventivo. debtor's registry has
been ceased to avoid
loss of reputation
YES, but within a
IV. DIP FINANCING
NO
YES if agreed. In
administration: NO –
Future regime: Filing
receiver shall respond on
for restructuring
continuation request
registered
within 2 weeks.
NIKOLAUS & CO.
YES, Head Count but 50%
plus can overrule with court
approval
Convenio: YES;
otherwise: 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.
Existing regime: 60% of
heads + up to 75% of
claims
NO formal provision but
practically workable
New regime: assumed to
be accepted, ordered by
court unless voted down by
majority of creditors
present for deciding it.
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Thank you for your attention.
NIKOLAUS & CO. LLP
Zollhof 11-15
40221 Düsseldorf
Cavendish Square
London W1G 0PW
+49 (0)211-44 77 0-0
+49 (0)211-44 77 0-770 (fax)
+44 (0)20-7182 4766
+44 (0)20-7182 4767 (fax)
NIKOLAUS & CO.
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