CMS Expert Guide to restructuring and insolvency law

A global overview

1. What is the primary legislation governing insolvency and restructuring proceedings in your jurisdiction?

The primary legislation governing insolvency and court-sponsored financial restructuring proceedings in Slovenia is the Financial Operations, Insolvency Proceedings, and Compulsory Dissolution Act (Zakon o finančnem poslovanju, postopkih zaradi insolventnosti in prisilnem prenehanju, hereinafter “ZFPPIPP”).

There is no special law or regulation governing out-of-court restructuring of financial obligations. There are only informal guidelines. 

After the start of the financial crisis in 2008 there was a period involving a number of financial restructurings in Slovenia. Based on that experience and know-how:

  • in 2011 the Managers’ Association of Slovenia adopted Principles on Restructuring of Corporate Debt 
  • in 2014 the Bank Association, in cooperation with the Bank of Slovenia and the Ministry of Finance, prepared Slovenian Principles of the Financial Restructuring of Corporate Debt. 

Out-of-court financial restructuring agreements are purely a result of negotiations and agreement between the parties. 

Peruvian bankruptcy proceedings are governed mainly by Peruvian Bankruptcy Law No. 27809 and supplementary by the General Corporate Law No. 26887. 

This means that in cases in which the Bankruptcy Law does not provide a specific regulation, the General Corporate Law will apply.

Note that in Peru the term “Bankruptcy” is used to make reference to either reorganisation or liquidation.
Recently, Legislative Decree No. 1511 which regulates the Accelerated Bankruptcy Refinancing Proceeding (“PARC”), has been issued. This proceeding will be open to legal entities (companies and associations) affected by the financial crisis caused by the COVID-19 pandemic. This proceeding allows debt refinancing, and will be in force, initially, only until 31 December 2020.

2. How are insolvency proceedings or restructuring proceedings initiated?

All insolvency proceedings and court-sponsored financial restructuring proceedings are initiated based on a request to the court which can be filed by: 

Compulsory settlement 

  • an insolvent debtor
  • a personally liable shareholder, or 
  • creditors in certain cases.   

Simplified compulsory settlement

  • an insolvent debtor, or 
  • a personally liable shareholder.  

Bankruptcy 

  • an insolvent debtor 
  • a personally liable shareholder
  • creditors in certain cases, or 
  • Public Guarantee, Maintenance and Disability Fund of the Republic of Slovenia, in certain cases.

Court-sponsored financial restructuring proceeding

  • a debtor.  

Out-of-court financial restructuring 

  • can be proposed by any of the involved parties. 

Peruvian bankruptcy proceedings in Peru are handled by a national administrative agency, INDECOPI, through its Bankruptcy Commission. According to Peruvian Bankruptcy Law, a debtor can be subject to one of the following proceedings: 

  • a voluntary Preventive Refinancing Proceeding, which is initiated exclusively at the debtor’s request, or
  • a voluntary or involuntary Ordinary Restructuring Proceeding, which may be initiated by the debtor or its creditors.  

In May 2020 a new temporary bankruptcy proceeding called the Accelerated Bankruptcy Refinancing Proceeding(PARC) has been created in order to provide financial relief to companies affected by COVID-19. This proceeding may only be initiated at the debtor’s request.

A bankruptcy proceeding is initiated against insolvent debtors. Under ZFPPIPP the company is considered insolvent if the following reasons exist:

  •  long-term illiquidity (trajnejša nelikvidnost), i.e. the company is not able to pay its payment obligations that are due in a longer period of time, and/or
  • the company is over-indebted (dolgoročna plačilna nesposobnost).

ZFPPIPP defines certain assumptions for a company to be considered insolvent which help to establish or prove that a company is insolvent. Certain assumptions are considered true unless proven otherwise, and certain assumptions cannot be contested.

Assumptions that can be contested

Long-term illiquidity 

  • if a company is late with payment for more than 2 months and with more than 20% of all of its payment obligations, as shown in its last published balance sheet/annual report, or
  • if the monies on a company’s bank account do not suffice for payment of its obligations under the writ of execution or debenture note (izvršnica) in an uninterrupted period of 60 days, or interrupted period of more than 60 days within a period of 90 days, and such situation exists on the day prior to filing for bankruptcy, or
  • if the company has no bank account with Slovenian providers of payment services and has not paid its payment obligations under the writ of execution in a period of 60 days from when such decision became final.

Over-indebtedness 

  • if the value of the company’s assets is lower than the total amount of its obligations
  • if the loss of the current business year with losses brought forward reached half of the registered capital and such loss cannot be paid out of the profit brought forward or the provisions.   

Assumptions that cannot be contested

ZFPPIPP defines certain assumptions for a company to be considered insolvent which are considered true and cannot be contested:

Long-term illiquidity 

  • the company is late with payment of employees’ salaries in the amount of a minimum salary for more than 2 months, or
  • the company is late with payment of taxes and contributions that need to be paid in respect to employees’ salaries, and such situation exists on the day prior to filing for bankruptcy.

Pursuant to the intervention measures of the Slovenian state amid the COVID-19 pandemic, an additional assumption for long-term illiquidity has been introduced that applies until 30 September 2020: 

  • the company is late with payment of salaries and contributions to employees for more than 1 month from the time the company received compensation from the state for salaries and contributions of employees, based on the intervention measures amid the COVID-19 pandemic.

Under Peruvian legislation, a company may be part of a bankruptcy proceeding when it is going through a financial and/or economic crisis situation (a crisis caused by the loss or reduction of assets). Even though our Bankruptcy Law does not provide exact definitions of financial and economic crisis situations, it does define the requirements needed to commence the filing of voluntary and involuntary bankruptcy petitions as follows: 

Ordinary Restructuring Proceeding

Voluntary:

Any debtor can file a voluntary petition and request either the reorganisation or liquidation of its business if: 

  • more than one third of its liabilities are due and unpaid for more than 30 calendar days, or
  • its carried-forward losses less retained earnings exceed one third of its paid-in capital.

However, a debtor is forced to request liquidation if its carried-forward losses less retained earnings exceed its paid-in capital. 

Involuntary:

An involuntary petition is commenced by the filing of a petition by one or more creditors holding claims of more than 50 Tax Units (UITs)  in the aggregate. These claims need to be due and unpaid for more than 30 days.

Voluntary Preventive Refinancing Proceeding

Any debtor who is not included in one of the two requirements of the above-mentioned Ordinary Restructuring Proceeding may request the commencement of a voluntary Preventive Refinancing Proceeding. This proceeding has been designed for non-severe crisis, in which the debtor retains a certain capital or financial solvency. In this proceeding, the debtor maintains control of its business since its highest-ranking corporate body is not replaced by the creditors’ meeting, as occurs in the Ordinary Restructuring Proceeding.

Accelerated Bankruptcy Refinancing Proceeding (PARC)

Any debtor who is not included in one of the two requirements of the above-mentioned Ordinary Restructuring Proceeding may request the commencement of an Accelerated Bankruptcy Refinancing Proceeding. In order to do so, it must prove that its financial and/or economic situation has been affected specifically by the COVID-19 pandemic. In this proceeding, it is foreseen that the benefits of the “automatic stay” can be obtained in just 10 business days, and the debtor does not lose control over the business.

4. Which different types of restructuring / insolvency proceedings exist and what are their characteristics?

For a company that is insolvent the following insolvency proceedings are available in Slovenia: 

  • compulsory settlement proceeding
  • simplified compulsory settlement proceeding
  • bankruptcy proceeding.   

Prior to insolvency there are two options of restructuring proceedings: a court-sponsored financial restructuring and an out-of-court financial restructuring.

Insolvency proceedings

Compulsory settlement (postopek prisilne poravnave)

  • a compulsory settlement proceeding is a proceeding available to already insolvent companies; it can be proposed even if the bankruptcy proceeding has already been initiated. Once bankruptcy proceeding starts, there are no longer any restructuring options 
  • the proceeding is usually proposed by a debtor, though in certain cases it may be proposed by creditors holding more than 20% of the value of all claims against the debtor
  • compulsory settlement generally affects all unsecured claims. The company, however, has the possibility to propose:
    • restructuring of secured claims as well
    • restructuring of claims of financial creditors only
  • the proceeding is led by an insolvency administrator, appointed by a court, who also oversees the business operations of the debtor during the proceeding 
  • a proposal for a compulsory settlement proceeding must be substantiated with a combination of one or more of the restructuring measures necessary for a successful restructuring; these measures may include: 
    • financial restructuring measures: principal haircut, maturity extension, and/or interest rate reduction
    • corporate restructuring measures (usually ancillary in nature): a simplified capital reduction, a capital injection with cash inflow or by way of a D/E swap, a downstream spin-off
    • operational restructuring measures: divesting non-core assets, operational turnaround, etc.
  • compulsory settlement requires a vote of 60% of all affected claims. 

Simplified compulsory settlement (poenostavljena prisilna poravnava)

  • a simplified compulsory settlement is intended for micro-sized companies and self-entrepreneurs who meet the criteria of micro- or small-sized companies. Some rules of compulsory settlement are simplified to ensure efficient restructuring of small entities. For example, in this proceeding, no administrator is appointed, creditors do not register their claims, there is no creditors’ committee and there is only limited involvement of the court
  • simplified compulsory settlement requires more than a 50% vote of all creditors. 

Bankruptcy (stečajni postopek)

  • a bankruptcy proceeding is initiated to enable a court-sponsored dissolution of an insolvent debtor with the best possible recovery terms for the creditors. After the opening of a bankruptcy proceeding, creditors’ claims can only be exercised within this proceeding. There is no possibility of the restructuring of a debtor within a bankruptcy proceeding.

Restructuring proceedings

Court-sponsored financial restructuring (postopek preventivnega prestrukturiranja)

  • a court-sponsored financial restructuring proceeding is available to debtors who are not insolvent but are likely to become insolvent within 1 year. If financial creditors holding at least 30% of the value of all financial claims support the initiation of the proceeding this condition is presumed to be fulfilled 
  • a statutory stand-still/execution holiday prevails for the entire class of financial creditors during the time period of the proceeding
  • the proceeding is led by the debtor
  • the proceeding is intended for the restructuring of financial claims (secured and unsecured) only; claims of other creditors (e.g. suppliers) are not affected unless they expressly consent to be part of the restructuring agreement
  • the restructuring agreement may contain various restructuring measures, but only the following will achieve the “cram-down” effect on dissenting creditors: 
    • principal haircut and/or maturity extension of unsecured financial claims
    • interest rate reduction and/or maturity extension of secured financial claims (to a maximum of 5 years) 
  • other restructuring measures (e.g. D/E swap, principal reduction of secured claims, maturity extension of secured claims beyond 5 years, haircut and/or maturity extension of claims held by other non-financial creditors) require explicit the consent of affected creditors
  • the restructuring agreement must be approved by financial creditors holding at least 75% of the value of all financial claims (with a separate majority of 75% of all secured financial creditors if the restructuring agreement affects secured financial claims). 

Out-of-court financial restructuring 

  • an out-of-court financial restructuring agreement is purely a result of negotiations and agreement between the parties. All parties need to consent to the terms of restructuring agreement.

As explained before, our legislation provides three different types of bankruptcy proceedings which allow negotiation between the debtor and its creditors with the purpose of maximising the value of the debtor’s assets.

Ordinary Restructuring Proceeding

This can be initiated voluntarily at the request of the debtor, or involuntarily by one or more creditors. This proceeding is applicable to debtors who are immersed in a financial and economic crisis situation, and in order to qualify, they must meet certain requirements provided in the Peruvian Bankruptcy Law. 

This proceeding begins with a publication that generates a framework, which protects the debtor’s estate and suspends the enforceability of its obligations (automatic stay). In this proceeding, recognised creditors adopt decisions at a creditors’ meeting and may choose to reorganise the debtor’s assets or, alternatively, approve its liquidation. If creditors opt for reorganisation, the company must submit a proposed Restructuring Plan that must be approved by a qualified majority of recognised creditors. In Ordinary Restructuring Proceedings, the shareholders’ meeting is replaced by a creditors’ meeting. Also, in certain cases, the debtor’s administration is replaced by an administrative entity registered with INDECOPI. This process concludes with the payment of claims contained in the restructuring plan.

Preventive Refinancing Proceeding

This is initiated exclusively at the request of the debtor and is applicable to those debtors facing a financial crisis, but that still have financial and economic solvency which requires them to refinance their obligations to have better management of their liquidity. 

In this scenario, the debtor faces a temporary impossibility of complying with the payment of obligations to its creditors. The debtor can request a suspension of the enforceability of its obligations (automatic stay) and must propose a Global Refinancing Proposal to creditors. The creditors’ meeting must decide on the viability of the Global Refinancing Proposal filed by the debtor. With the approval of the referred proposal, the proceeding ends and the company exits the insolvency proceeding.

Accelerated Bankruptcy Refinancing Proceeding (PARC)

Taking into consideration the consequences generated by the pandemic, new insolvency legislation was passed in May 2020 approving a proceeding called the Accelerated Bankruptcy Refinancing  Proceeding. This is a transitory, exceptional and electronic proceeding. This proceeding is similar to the Preventive Refinancing Proceeding explained above, as it is initiated exclusively at the request of the debtor and is applicable to those debtors who are facing a financial crisis caused exclusively by the COVID-19 crisis, but who still have financial and economic solvency which requires them to refinance their obligations to have better management of their liquidity. 

Once the commencement of an Accelerated Bankruptcy Refinancing Proceeding is published, an automatic stay is imposed. The automatic stay suspends enforcement of its obligations and protects the debtor’s estate. The purpose of this new legislation is to provide a platform that allows companies to negotiate with their creditors the approval of a Business Refinancing Plan. With the approval of the Business Refinancing Plan, the proceeding ends. In this case, the appointment of a supervisor to verify the compliance of the Business Refinancing Plan is allowed. This is a very short proceeding that shall last between 45 and 90 business days.

5. Are there several types of creditors and what is the effect of a difference?

Under ZFPPIPP the types of creditors are: 

  • preferential (secured) creditors (prednostni upniki) – hold a right to separate satisfaction (prednostna pravica do poplačila). They are paid before the ordinary creditors (unsecured) from the proceeds of the debtor’s assets on which they have their security, depending on their rank
  • creditors with exclusion rights (izločitvena pravica) – have an ownership right on a debtor’s asset and therefore have the right to exclude this asset from a bankruptcy estate
  • ordinary creditors – are paid after preferential creditors, in the same rank and in the same share, depending on the value of the general bankruptcy estate in a bankruptcy proceeding. In a compulsory settlement proceeding, simplified compulsory settlement proceeding and a court-sponsored financial restructuring proceeding these creditors may, by law, be more affected than the preferential creditors (e.g. haircut on principal can be proposed only for unsecured claims)   
  • subordinated creditors (podrejeni upniki) – are subordinated to preferential and ordinary creditors.

ZFPPIPP also differentiates between financial and non-financial creditors. For example:

  • court-sponsored financial restructuring is only meant for the restructuring of claims of financial creditors 
  • a compulsory settlement proceeding can only be initiated with the intent to restructure financial claims. 

Peruvian Bankruptcy law only provides a mandatory distinction of creditors when the company is undergoing a liquidation proceeding as it establishes a priority order that must be followed when paying allowed claims. The order is as follows: 

  • labour claims
  • maintenance credits (if the debtor is an individual who carries out economic activity)
  • secured claims (up to the amount of the collateral)
  • tax claims
  • general unsecured claims. 

It is important to mention that our law does not distinguish between types of creditors in a restructuring or refinancing proceeding, except in the case of labour (employee) claims that, as set out in the Peruvian Constitution, have precedence of payment over other creditors. In addition, creditors related to the company (shareholders, directors, affiliated companies, among others) shall vote as a separate class in certain cases if the amount of total related claims exceed 50% of the total allowed claims.

In an Accelerated Bankruptcy Refinancing Proceeding, labour creditors and those who come from a consumer relationship are exempt from filing a proof of claim for recognition as creditors, as well as from participating in the creditors’ meeting, and receive special treatment in the payment of their credits. (50% of what the debtor allocates annually for the payment of credits must be used exclusively for the payment of these creditors.) However, related creditors in this proceeding do not have a right to vote.

6. Is there any obligation to initiate restructuring / insolvency proceedings? For whom does this obligation exist and under what conditions? What are the consequences if this obligation is violated?

When a company becomes insolvent, the management of the company must, among other actions: 

  • submit a report on financial restructuring measures to the supervisory board within 1 month of the company becoming insolvent. (If there is no supervisory board, the obligation is the same with the exception of not submitting the report to the supervisory board.) Such report must clarify the company’s financial position, analyse the causes of insolvency and provide the management’s opinion as to whether a financial restructuring is more likely than not to succeed, and if so, provide a financial restructuring plan
  • file for bankruptcy within 3 business days if the management is of the view that:
    • the probability of successful financial restructuring is less than 50% (the deadline starts when the term of 1 month, outlined in the previous item, expires), or 
    • the shareholders do not approve the capital injection (the deadline starts when the shareholders’ meeting is concluded), or
    • when approved, all the shares have not been registered and paid in time (the deadline starts when the term for registration and payment of shares expires)
  • file for a compulsory settlement proceeding within 3 months of the company becoming insolvent if the probability of a successful restructuring is more than 50%.  

Pursuant to the intervention measures of the Slovenian state amid the COVID-19 pandemic, management does not need to file for insolvency proceedings until 31 August 2020 if a company has become insolvent due to the COVID-19 pandemic.

Management, however, will have a duty to file for insolvency within the regular deadline if there are no prospects for a company to resolve its insolvency. If a bankruptcy proceeding is proposed earlier by a creditor, management will have 4 months (instead of the usual 2 months) for a financial restructuring to prevent bankruptcy.

Generally, under the Slovenian Companies Act and ZFPPIPP, members of the management board and supervisory board have a duty to act in the benefit of the company with the diligence of a conscientious and fair-minded businessperson. They are jointly and severally liable to the company for any damage caused pursuant to the rules of the Companies Act and ZFPPIPP, unless they can prove they acted with due care and in line with the business and financial rules and rules of management.

A claim for damages against the management board and supervisory board members can be exercised by creditors in the case that the company cannot pay their claims, and by a bankruptcy administrator for the benefit of creditors in a bankruptcy proceeding.

Pursuant to ZFPPIPP, the management and supervisory board can also be sanctioned with a fine ranging from EUR 2,000-10,000 if they do not follow the steps required by ZFPPIPP when the company becomes insolvent.
In a pre-insolvency situation the management is, pursuant to the rules of the Slovenian Companies Act and ZFPPIPP, required to initiate a restructuring proceeding in due time and/or implement other restructuring measures to ensure the company’s solvency.

In general terms, Peruvian Bankruptcy Law does not provide an obligation to initiate a bankruptcy proceeding. It is generally only commenced voluntarily by the debtor or involuntarily (initiated by the debtor’s creditors) in cases where the legal requirements are met as explained above.

Notwithstanding the foregoing, our General Corporate Law provides that if a company loses half or more of its capital stock, or if such loss is presumed, the board must immediately summon a general shareholders’ meeting in order to convey this situation. If the assets of the company are insufficient to satisfy its liabilities, or if such insufficiency should be presumed, the board should immediately call a general shareholders’ meeting to report on the situation; and within 15 days from such date, should call for a meeting and decide whether an insolvency proceeding should be commenced.

Furthermore, our General Corporate Law provides that when a company which is under a corporate liquidation does not have enough assets to pay its creditors, it must request a judicial declaration of insolvency in accordance with Peruvian Bankruptcy Law.

7. What are the main duties of the representative bodies in connection with restructuring / insolvency proceedings?

Once a company becomes insolvent, the management has, in addition to those described under point 6 above (among others), the following duties:

  • equal treatment of creditors
  • to take on no new obligations or make payments on behalf of the company, except for those that are necessary for regular business operations.

Under Peruvian Bankruptcy Law, once the debtor files for bankruptcy, or is given notice of an involuntary filing, all actions by its representative bodies (management) (a) during the prior year (“Preference Period”), and (b) from that date on and until the date the creditors ratify or replace management (“Avoidance Period”), are put under scrutiny using two different tests. These tests may result in such actions being declared void.

Preference Period

The first test covers all actions or transactions, whether for consideration or not, performed during the Preference Period. These will be declared void if they have a negative impact on the net worth of the company and are not related to the normal activities of the debtor.

Avoidance Period

The second test covers the following actions by management if they happen during the Avoidance Period:

  • payment of non-due obligations
  • payment of mature obligations not made according to their terms
  • contracts for consideration that are not in the ordinary course of business
  • compensations among mutual obligations with creditors
  • liens over, or transfers of, property
  • liens created in security of obligations incurred prior to bankruptcy
  • foreclosure on liens and attachments
  • mergers and spin-offs if they have a negative impact on the net worth of the insolvent.

Additionally, representative bodies must comply with the provision of all documents and information requested by the administrative authority in a truthful and accurate manner. 

Furthermore, when the debtor is part of a liquidation proceeding and the company’s representative bodies are replaced by the creditors’ meeting, the company’s representative bodies must cease their operations. 

  • in a bankruptcy proceeding, representation of the company is transferred to the bankruptcy administrator
  • in a compulsory settlement proceeding, simplified compulsory settlement proceeding, court-sponsored financial restructuring or out-of-court financial restructuring, the company is still run by the existing management, supervised by its supervisory board
    • in a compulsory settlement proceeding, an administrator is appointed but has only a limited supervisory role. 

When a company is undergoing a restructuring proceeding, the creditors’ meeting may:

  • decide to maintain the debtor’s original representative bodies in charge of the company’s administration
  • appoint an administrator who is registered before INDECOPI, or
  • appoint a mixed administration regime.

When a company is part of a liquidation proceeding before INDECOPI, its representative bodies must cease their operations and be replaced by the creditors’ meeting and a liquidating entity or individual. 

9. What are the main duties of shareholders in connection with restructuring / insolvency proceedings?

Personally liable shareholders have a right to file for compulsory settlement proceedings and bankruptcy proceedings. 

After insolvency occurs, authorisations of the shareholders’ meeting are limited to recall and appointment of members of the management and supervisory board and the passing of certain decisions necessary for successful restructuring (e.g. if a restructuring plan anticipates a capital injection, etc.).

In a bankruptcy proceeding, shareholders must provide the insolvency administrator with explanations of the bankruptcy debtor’s transactions and other facts and circumstances relevant to the bankruptcy proceeding and for preparing financial statements.

In general terms, when a company is part of a bankruptcy proceeding, its representative bodies have to maintain the duties explained in point 7 above. These obligations may extend to shareholders only if they have powers of representation and act on them before third parties.

10. Are the shareholders of a company involved in restructuring / insolvency proceedings?

For certain restructuring measures, the shareholders’ involvement is needed (for example, if there are any demands of creditors to shareholders such us capital injection or converting shareholder loans to equity; or any decision of shareholders is required for implementing  restructuring measures, or when shareholder loans are also being restructured). 

In a bankruptcy proceeding, the shareholders’ involvement is limited to their duty to provide the bankruptcy administrator with certain information relevant to the proceeding.

Generally, shareholders are not directly involved in bankruptcy proceedings, meaning that shareholders’ personal assets are not part of the proceedings.

According to our General Corporate Law, shareholders’ responsibility is limited. This means that shareholders do not answer personally for corporate debts, they only respond up to the amount of stock capital that each has contributed.
The obligations of a company generally lie exclusively on directors and managers of the company, being such persons responsible before the company and third parties.

Note that in the case of an irregular company, shareholders only respond when they act as administrators, representatives or as persons who enter into any contract or legal acts on behalf of the company. This means that this responsibility covers the fulfilment of obligations and compensation for damages. Such responsibilities are generated before the company and third parties, as the case may be.

11. Is a solvent liquidation of the company an alternative to regular insolvency proceedings?

A solvent liquidation may be an alternative to an insolvency proceeding, but only if an insolvent company can become solvent (by way of capital injection, for example) first. Solvent liquidation can only be initiated if the company is solvent.

A solvent liquidation is only permitted in a corporate liquidation framework, under the terms of the General Corporate Law. This means that when:

  • the company’s assets exceed their liabilities, and
  • the company is able to pay all of its creditors in full

the company must undergo a corporate liquidation and cannot request a bankruptcy proceeding before INDECOPI.

Yes, preventive (court-sponsored) restructuring is regulated in Chapter 2.3 of ZFPPIPP.

Yes, debtors may request the commencement of a Preventive Refinancing Proceeding, which is exclusively used when the company is facing a financial crisis, but still has financial and economic solvency which requires the company to refinance its obligations to have better management of its liquidity. 

Furthermore, if such financial crisis is due to the consequences of the COVID-19 pandemic, the company may request an Accelerated Bankruptcy Refinancing Proceeding, which is similar to the Preventive Refinancing Proceeding but has less requirements and is solved within a shorter time frame.

13. What is the average success rate after completed restructuring / insolvency proceedings?

According to publicly available data, the following success rates apply:

Compulsory settlement proceeding

  • ordinary claims: approximately 30-40% with payment deferral of 4-6 years 
  • claims with rights to separate satisfaction: 100% with payment deferral of 4-6 years.

Simplified compulsory settlement proceeding 

  • ordinary claims: approximately 30-50% with payment deferral of 4-5 years
  • claims with rights to separate satisfaction: 100% with payment deferral of 4-5 years.

Bankruptcy proceeding

  • ordinary claims: below 10%
  • claims with rights to separate satisfaction: approximately 20%.  

For court-sponsored restructuring there is no publicly available data since master financial restructuring agreements are commercially confidential.

Several companies have successfully recovered after a reorganisation or a Preventive Refinancing Proceeding. Recovery rates for creditors vary depending on how the restructuring or refinancing plan has been implemented. In addition, an important factor is whether an investor or buyer has financially supported or acquired the company. We estimate that the new PARC will provide for a faster process and, therefore, less loss and more recovery for creditors.

Maja-Zgajnar-CMS-AT
Maja Zgajnar
Partner
Ljubljana
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Irena Šik Bukovnik
Attorney-at-Law for banking & finance
Ljubljana
Maja-Sipek-CMS-SVN
Maja Šipek
Associate
Ljubljana
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Michelle Barclay
Partner
Lima
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Victor Farro
Counsel
Lima
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Carolina Pinzas
Associate
Lima
Ivanna Escala
Ivanna Escala
Associate
Lima