As at 25 January 2018

by Piya Mukherjee
Partner at Horten Advokatpartnerselskab, Copenhagen



Elements of the Directive already included into the national legislation

Rekonstruktion (restructuring)

Main features:
The debtor retains possession and the proceedings are supervised by an administrator appointed by the Court
2 options
- Affirmation of a reorganization plan (which shall contain a sale of the business, a compulsory arrangement with the creditors or a combination of both).
- Konkurs (bankruptcy).

Article 4
Rekonstruktion is only available to insolvent debtors. However insolvency under Danish bankruptcy law comprises actual and future insolvency. The test of insolvency is the inability – which is not temporary - to make payments as they fall due, ie a liquidity test.
Rekonstruktion is available to debtors (legal entities and individuals) as well as creditors.


Article 5
Debtor retains possession


Article 6
On filing, an automatic stay is imposed on all unsecured creditors .
The duration of the Rekonstruktion proceedings is 12 months at the most.


Article 7
The debtor has a mandatory right to continue mutually binding contracts post-filing.


Article 8
Mandatory requirements to the contents of the reorganization plan, which by large correspond to the Directive.


Article 9
Cramdown of dissenting creditors is possible.


Article 10
A reorganization plan that is adopted by the creditors does not have effect unless the plan is confirmed by the Court.
The Court may refuse to confirm a plan if the plan is not feasible in light of the financial position of the debtor.


Article 12
The equity holders cannot block a reorganization plan.


Article 13
A reorganization plan shall comprise a balance sheet showing the assets and liabilities of the debtor.  An independent auditor appointed by the Court shall endorse the balance sheet and the valuations.


Article 14
A confirmed reorganization plan is binding on all creditors.


Article 15
Any creditor and the debtor has the right to appeal a confirmed reorganization plan within 2 weeks after confirmation of the plan.


Article 16
New financing obtained post-filing of the Rekonstruktion shall have priority if the debtor subsequently is declared bankrupt and shall be discharged in full prior to unsecured claims.


Article 17
Costs incurred post-filing with the consent of the administrator shall have priority if the debtor subsequently is declared bankrupt and shall be discharged in full prior to unsecured claims.
Payments of such costs post-filing, but prior to the bankruptcy of the debtor would not fulfil the requirements of avoidance or annulment.


Article 18
Directors can be held responsible for loss incurred on creditors, if they continue the operation of the company beyond the point of no return. The directors might also be disqualified from participation in the management of a company wherein the director is not personally liable.