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Slovenian Insolvency Proceedings Get a Boost with New Laws
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Ljubljana, Slovenia - The Slovenian government has introduced new laws aimed at revitalizing the country’s economy by providing a more effective framework for dealing with insolvent companies. The new legislation introduces two key procedures: compulsory settlement and preventive restructuring.
Compulsory Settlement: A Lifeline for Insolvent Companies
Compulsory settlement is the primary procedure for insolvent debtors who still have a chance to restructure their business operations. This process can be initiated by either the debtor or creditors, provided that it is deemed possible to continue business operations and that creditors will receive more favorable repayment terms than in the case of bankruptcy.
Key Features
- The court plays a crucial role in verifying that the formal requirements are met and approving the financial restructuring plan proposed by the debtor.
- Creditors have a say in the process, with the right to propose their own plans or vote on the debtor’s proposal.
Preventive Restructuring: A Safety Net for Companies at Risk
Preventive restructuring is designed to help companies that are not yet insolvent but are likely to become so within the next year. This procedure can be initiated by the debtor and requires the consent of financial creditors who hold at least 30% of the company’s total debt.
Key Features
- Only the debtor’s financial obligations can be restructured.
- The process is overseen by a court-appointed administrator.
- Creditors must approve the financial restructuring plan by a majority vote, with at least 75% of financial creditors required for approval.
Court Involvement: A Key Role in Ensuring Fairness
The court plays a vital role in both compulsory settlement and preventive restructuring proceedings, ensuring that all formal requirements are met and that the interests of creditors are protected. The court’s involvement also helps to maintain transparency and fairness throughout the process.
Creditor Involvement
Creditors have an active role in both procedures, with the right to:
- Propose their own financial restructuring plans
- Vote on those proposed by debtors
- Form a creditors’ committee to review reports and make decisions on behalf of all creditors
Restructuring Plans: A Key Element in Both Procedures
Financial restructuring plans are a critical component of both compulsory settlement and preventive restructuring proceedings. These plans must be approved by the court and creditors, and they outline the terms under which debtors will repay their debts.
Dissenting Creditors: A Minority View
In cases where not all creditors agree with the financial restructuring plan, dissenting creditors may be “crammed down” if the required majority of creditors approves the plan. This means that even if a creditor does not consent to the plan, they will still be bound by its terms.
Conclusion
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The new laws aimed at revitalizing Slovenia’s economy by providing a more effective framework for dealing with insolvent companies. The compulsory settlement and preventive restructuring procedures offer debtors and creditors alike a fresh start, allowing them to restructure their business operations and emerge stronger and more resilient in the long run.