A life buoy for a business in heavy water
If as a company you temporarily run into financial difficulties, and need a temporary breathing room to, for example, collect credits, smooth out certain problems, implement restructuring, allow the consequences of adjustments to trickle down, or simply change course slightly, a judicial reorganization may be a solution for you.
Requirements
In order to be able to obtain the suspension, a petition must be filed that must meet various conditions. In addition, various documents must be filed, and the court costs amount to EUR 1,000.00 rolling rights at the outset.
This is a procedure that must be considered very carefully and for which you need the expert help of your lawyer and your accountant. We are happy to assist you in this.
Possibilities and consequences
If the petition is accepted, the court will grant a period of suspension of 3 to 6 months, during which work will be done on one of the objectives below, including reorganization of the company.
If the attachment was still attached shortly before the application, the Court must decide separately whether these attachments will also be suspended. It is recommended to avoid this and start the procedure in good time.
The ultimate goal is to pay off all or part of the debts after going through one of the procedures below within the suspension and to make a new start after a successful lead time.
The reorganization can take place by achieving:
In this, the company uses the granted suspension period to enter into negotiations and agreements with some creditors, but not with all of them.
The purpose of this is to make an arrangement with at least 2 creditors, which they must therefore necessarily agree to, in order to then create the necessary space to guarantee the continuity of the company.
This is the most common form in which a reorganization plan is drawn up and put to the vote of the assembled creditors who are allowed to vote on it.
The plan must comply with various formalities and to be approved a double majority must be obtained: at least 50% of the creditors validly represented or present at the voting session and at least 50% of the total debt capital must vote in favor of the plan.
The Court will then check whether all formal requirements have been complied with and whether the plan meets all other conditions. In the positive case, it will be homologated.
Arrangements can be made in the plan whereby interest and costs and part of the principal sum are forgiven from most debts, in addition to a spread of payment over a period of 5 years. However, in order to get the plan approved, a very precarious balance will have to be found between this spread/debt reduction and the interests of the creditors.
Transfer under judicial authority
This is provided in case you want to sell your company or part of it and repay the creditors with the proceeds. In that case, the Court will appoint a court officer who will carry out the negotiations and the sale process.
We are happy to assist you in checking the options in your specific case and explaining their impact.
Be there in time!
Far too often this procedure is used as a last resort, when it may already be too late. As a result, many procedures have virtually no chance of success from the start.
The success of this procedure largely depends on a good relationship with your creditors, who will play an important role in its success.
If the course of a judicial reorganization is checked in time and a feasible plan can be worked out, the damage for all parties can be kept to a minimum and a judicial reorganization can be welcomed more positively.
With a realistic and feasible plan with good communication, the creditors will clearly see that you are doing everything you can to save both your company and their claim and they will often actively cooperate in this.
If you start sooner, the different routes and rescue measures to be worked out can be worked out more thoroughly, which only increases the chance of success.
The lawyers at Wanted Law are happy to assist you with questions about the procedure and to determine whether it can be useful in your situation.
Where can you contact us?
Contact us for an assessment of the feasibility of a judicial reorganization
It can then be checked whether you qualify, which steps still need to be taken and which items you should still collect. With sufficient accounting information and provided a clear overview of the debts, an initial indication can be given of the possible contours of a reorganization plan and the resulting savings.