Answer ... (a) Debtor
If an informal financial restructuring as outlined in question 3.1 is negotiated, the debtor and its professional advisers will usually play a leading role in the negotiations.
In formal restructuring proceedings as outlined in question 3.2, the debtor may continue its business activities under the supervision of the court-appointed administrators. The court may, however, order that certain acts can be validly performed only with the administrator’s approval or authorise the administrator to take over the management of the business from the debtor.
Without the authorisation of the court or the creditors’ committee, some of the debtor’s fixed assets may no longer be sold or encumbered in a legally valid manner during the moratorium. Distraints may be appointed, guarantees may be entered into or gratuitous dispositions may be made.
The rights of third parties acting in good faith remain reserved.
If the debtor acts contrary to this provision or to the administrator’s instructions, the court may, on notification by the administrator, withdraw the debtor’s right to dispose of its assets or issue a declaration of bankruptcy.
(b) Directors of the debtor
See previous paragraph regarding the debtors position in restructuring proceedings.
(c) Shareholders of the debtor
While the interests of major shareholders are usually represented by the debtor and its directors, shareholders do not play a formal role in court-managed restructuring proceedings.
(d) Secured creditors
Secured creditors play a role as further described in question 2.
(e) Unsecured creditors
The position of unsecured creditors is outlined in question 2.
(f) Employees
Employees enjoy a privileged position as Category 1 creditors, as discussed in question 2.
(g) Pension creditors
Pension creditors are generally unsecured creditors, unless specific pension creditors are registered and admitted as Category 2 creditors as outlined in question 2.
(h) Insolvency officeholder
Immediately after his or her appointment, the administrator will draw up an inventory of all the debtor’s assets and estimate the value thereof.
The administrator will decide on the pledge estimates and make these available to creditors for inspection. The administrator must notify pledge creditors and the debtor in writing before the creditors’ meeting.
Any party may request a new pledge estimate from the court within 10 days against advance payment of costs. If a creditor requests a new estimate, it may seek reimbursement of the costs from the debtor only if the previous estimate is substantially altered.
By public notice, the administrator will invite the creditors to register their claims within one month; a creditor that fails to do so will be unable to vote on the composition and settlement agreement. The administrator will also send a copy of the notice to each creditor whose name and place of residence are known by means of an unregistered letter. Subsequently, the administrator must obtain the debtor’s acceptance or rejection of all claims so registered.
Once the draft composition and settlement agreement has been drafted, the administrator shall convene a creditors’ meeting by public notice, stating that all files may be inspected for 20 days before the meeting. The public announcement must be made at least one month before the meeting. The administrator will also send a copy of this notice by registered letter to each creditor whose name and place of residence are known.
At the creditors’ meeting, the administrator will chair the proceedings and report on the debtor’s assets and income situation.
The debtor must attend the meeting in order to provide information on request.
The draft composition and settlement agreement is then submitted to the assembled creditors for approval by signature.
(i) Court
The court will review the debtor’s initial application for the commencement of formal financial restructuring proceedings, and will approve this to the extent that there is a reasonable prospect of success. The court will also appoint the administrator and confirm his or her powers with regard to the debtor. The court must also specify the duration of the formal restructuring proceedings; this is usually six months, but can be extended several times depending on progress.