Business News


Bill to Help Distressed Companies Deleverage Unveiled

Ljubljana, 10 September (STA) - The Justice Ministry presented on Tuesday a draft bill on systemic deleveraging, a long-awaited piece of legislation designed to provide distressed companies with a lifeline and help them avert bankruptcy.

The centrepiece of the bill is an out-of-court procedure of financial restructuring, which will take on the form of pre-bankruptcy procedure for companies for which a bankruptcy motion has been filed.

Once the management establishes that the company is insolvent or that it will not be able to settle its liabilities within a year, it must inform its creditors thereof and offer them a framework agreement.

The framework agreement will have to offer the creditors better terms for the recovery of their claims than bankruptcy and include a list of claims (compiled by the debtor), according to the proposal.

The agreement needs to be confirmed by creditors holding at least 50% of total claims (rising up to 75% in certain cases).

One option for the creditors will be a debt-to-equity conversion; if the debtors acquire over 50% of the share capital with the conversion, they will have the right to appoint new management bodies.

Claims by workers, including unpaid contributions and wages, cannot be subject to the agreement, while claims by the state and local communities will be placed in a special class of claims and eligible for debt-to-equity conversion only under special circumstances.

You might be also interested in:

GET IN TOUCH

We are here to help you.