Concordat and Restructuring
For a company in financial difficulty, a concordat (konkordato) is the route to restructuring its debts and continuing to trade before bankruptcy; for a creditor company, it is a period in which the process must be followed closely to protect its claim. We advise and represent both debtor and creditor companies in concordat and restructuring processes.
What is a concordat?
A concordat allows a debtor who cannot pay its debts when due, or is at risk of being unable to do so, to pay them according to a plan through an agreement with its creditors approved by the court. It is regulated in the Enforcement and Bankruptcy Law.
The process starts with the debtor applying to the court with a preliminary concordat proposal. The court first grants a temporary moratorium, then a definitive moratorium, and appoints a concordat commissioner. Enforcement proceedings against the debtor are stayed during the moratorium. If the proposal is accepted by the majority of creditors required by law and approved by the court, it binds all creditors.
Scope
- Legal advice to debtor companies on preparing the concordat application and proposal
- Registering claims and following the process for creditor companies
- Representation at the creditors’ meeting and the approval stage
- Preparing out-of-court restructuring agreements
How We Work
- Assessing the company’s financial position and options: negotiation, restructuring or concordat
- On the debtor side, coordinating the application and proposal with the financial adviser and independent auditor
- On the creditor side, registering the claim, protecting security and objecting to the proposal
- Following the commissioner’s and court’s processes during the moratorium
- Monitoring implementation of the payment plan after approval
Team
Frequently Asked Questions
How long does the concordat moratorium last?
The temporary moratorium is, as a rule, three months and can be extended by two months if necessary. The definitive moratorium is one year and can be extended by up to six months in complex files.
What happens to secured claims in a concordat?
Enforcement by realisation of the pledge can be brought for claims secured by a pledge, but the pledged asset cannot be sold or taken into custody during the moratorium. Pledgee creditors are not affected by the concordat unless the proposal provides otherwise.
Should we keep selling to a customer that has applied for a concordat?
Claims arising from transactions made during the moratorium with the commissioner's permission or in the ordinary course of business are not subject to the concordat proposal and are paid with priority. Even so, we recommend making new sales with payment security and taking the commissioner's view into account.
What happens if the concordat proposal is rejected?
If the proposal is not accepted by the required majority or the court does not approve it, the concordat application is rejected and, if the conditions are met, the debtor may be declared bankrupt. A realistic proposal acceptable to creditors is therefore what determines the success of the process.
Would you like to discuss this service? Schedule a meeting with us — the first meeting is free of charge.
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