OUTCOMES OF NATIONAL INSOLVENCY PROCEEDINGS WITHIN THE SCOPE OF THE EIR RECAST

Last update: 11^th September 2018
 
!!! Please note that the proceedings listed below are only those applicable to both companies and entrepreneurs (not for consumers)
 
 
BULGARIA
 

Proceedings

Outcomes

„Производство по несъстоятелност“ (insolvency proceedings)

After the opening, insolvency proceedings can continue with the following outcomes: - Rescue/restructuring process, commencing upon proposal for a rescue/restructuring plan; - Declaration of insolvency and liquidation of debtor’s assets (if no restructuring plan is proposed); - Declaration of insolvency and termination of insolvency proceedings, where there are no assets to cover the initial costs of insolvency

 
By Angel Ganev 
Partner at Djingov, Gouginski, Kyutchukov & Velichkov 
Sofia, Bulgaria
&
Simeon Simeonov
Senior Associate at Djingov, Gouginski, Kyutchukov & Velichkov
Sofia, Bulgaria
 
 
CYPRUS
 

Compulsory winding up subject to court supervision:	Options:   Where a company has passed a resolution for the commencement of a voluntary winding up, the court may make an order, upon any creditor’s request, that the voluntary winding up shall continue, but subject its supervision.
Members’ Voluntary winding up   (Section 266 of the Companies Law of 2015)	Realisation and distributing of the assets of the company to its creditors.
Receivership   (Section 97 of the Companies Law 2015)	The realization of the debtor’s assets, subject to a charge, so as to discharge the debt owed to a creditor/ charge holder
Creditors’ voluntary winding up   (Section 276 (1) Of the Companies Law of 2015)	Winding up the affairs and distributing the assets of the company

 
By Alexandra KASTRINOU
Nottingham Law School,
Nottingham Trent University, England
 
 
CZECH REPUBLIC
 

Proceedings	Outcomes
Konkurs	The sale of the estate by the insolvency professional and the distribution of proceeds to creditors pursuant to rules on ranking and priorities prescribed by the Act. 2 options: -Sale as a going concern; or - Piece-meal liquidation
Reorganizace	The submission, approval, court confirmation and performance of a reorganization plan, usually by the debtor, but not exclusively – creditor-proposed plans are also possible. The plan may contain any number of reorganization measures, ranging from: repayment schedules; to sales of the estate and distribution of the proceeds.

 
By Tomáš Richter
Of Counsel, Clifford Chance Prague LLP, Prague
External Lecturer, The Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague
 
Note: Insolvency proceedings under the Czech Insolvency Act 182/2006, as amended (the "Act") are in principle unitary proceedings. It is therefore not strictly speaking correct to mention several types of proceedings below. However, as regards the outcomes of the proceedings, the outcome may in principle be either liquidation of the estate (with respect to both business debtors and non-business debtors, i.e. consumers), referred to in Czech as konkurs, or non-liquidation relief referred to as reorganization (reorganizace) with respect to business debtors and debt discharge (oddlužení) with respect to non-business debtors (consumers). Accordingly, what is referred to below under these terms are the various types of relief (or methods of resolution of insolvency) available within the unitary proceedings, not different types of proceedings.
 
 
DENMARK
 
Due to Denmark's opt-out clause, Denmark is not party to the European Insolvency Regulation.
 
 by Piya Mukherjee
Partner at Horten Advokatpartnerselskab, Copenhagen


ENGLAND & WALES
 

Proceedings	Outcomes
Winding-up by or subject to the supervision of the court	2 main options: Liquidation and distribution of the assets according to the rules of priority to creditors. In exceptional circumstances, the sale of the business:  as a going concern or; of significant assets enabling business to continue in the hands of a third party.
Creditors' voluntary winding-up (with confirmation by the court)	2 main options: Liquidation and distribution of the assets according to the rules of priority to creditors. Any surplus may be returned to the shareholders. In exceptional circumstances, the sale of the business:  as a going concern or; of significant assets enabling business to continue in the hands of a third party.
Administration, including appointments made by filing prescribed documents with the court	3 options: Rescue of the company as a going concern: either in the hands of its current ownership or, by means of a sale as a going concern, in the hands of a third party); (2) Administration of the company to achieve a better result for the company’s creditors as a whole than would be likely if the company were wound up (without first being in administration) (which effectively means an “enhanced liquidation” in which the business may continue for such time as the administrator deems necessary) (3)  Realisation of property in order to make a distribution to one or more secured or preferential creditors (which effectively means a “receivership” like process in which secured and preferential creditors will obtain satisfaction of their debts in priority).
Voluntary arrangements under insolvency legislation	2 outcomes: to enable the restructuring of debts and/or of capital obligations so as to allow the company to continue trading at the end of the process. In a few instances, the object may be to permit an operational restructuring alongside a financial restructuring where the former is a pre-condition to the success of the latter. In the case of an individual procedure (IVA), the object is to provide for a plan to be approved by creditors which will contain: rescheduling; and/or -waivers of debt owed.

 
By Paul Omar
Senior Lecturer, De Montfort University
Technical Research Coordinator, INSOL Europe
 
Note: Please note that the United Kingdom is composed of three legal jurisdictions: (i) England and Wales, a jurisdiction belonging to the common law family; (ii) Scotland, a “mixed” jurisdiction whose laws owe their inheritance to a mixture of Roman Law and local customary and statutory law; and (iii) Northern Ireland, whose legal system also forms part of the common law family. Each jurisdiction has its own court hierarchy and legal professional practice organisations.
 
The table concentrates on the law and practice in England and Wales.
 
It should also be noted that, because of the complexities of the constitutional settlement in the United Kingdom, company law and the law of corporate insolvency are reserved, or Westminster, matters. The law of personal insolvency is, nevertheless, a devolved matter,[1] although, until the devolution settlement occurred, both corporate and personal insolvency laws were contained in the Insolvency Act 1986, the primary source of legislation for insolvency matters in the United Kingdom. Thus, it should be noted that, for the discussion below, corporate insolvency measures are applicable to all of the internal jurisdictions within the United Kingdom.[2]
 
 
ESTONIA
 

Proceedings	Outcomes
Reorganisation proceedings	Court governed proceedings applying a set of measures in order for an enterprise to overcome economic difficulties, to restore its liquidity, improve its profitability and ensure its sustainable management. Only for legal persons in private law (companies and sole traders) in pre-insolvency.
Insolvency proceedings	For insolvent debtors of all sorts. 3 options: - a compromise (an agreement between a debtor and the creditors concerning payment of debts and involves reduction of the debts or extension of their terms of payment); - A debtor who is a natural person may be released from his or her obligations which were not performed during the bankruptcy proceedings. - liquidation (sale of the business as a whole / part of the business or piecemeal liquidation) for payment of debts.
Debt restructuring and debt protection	Restructuring of the debts of a natural person having solvency problems (debtor), in order to overcome the solvency problems and avoid bankruptcy proceedings. In debt restructuring proceedings the restructuring of the financial obligations of a debtor is made possible: by way of extension of the term of performance of an obligation, by way of performing the obligation in instalments or by way of reducing the obligation.

 
By Peeter Viirsalu
Associate Partner at TGS BALTIC
Tartu, Estonia
 
 
FINLAND
 

Proceedings	Outcomes
Yrityssaneeraus	Restructuring proceeding which applies to enterprises and entrepreneurs / debtor in possession.   2 options: Repayment plan confirmed by the court; A possible sale of a part of the business.
Yksityishenkilön velkajärjestely	Debt adjustment proceeding which applies to private persons / debtor in possession   2 options: Repayment plan confirmed by the court (duration 3 or 5 years); Sale of property exceeding basic livelihood, in some cases, possibility to retain dwelling.
Konkurssimenettely	Liquidation proceeding which applies to enterprises, entrepreneurs, and private persons (no discharge of debts, cf. debt adjustment proceedings)   2 options: Piecemeal liquidation; or Sale of the whole business as a going concern.

 
By Tuula Linna
Professor at the Faculty of Law, University of Helsinki
 
 
FRANCE
 

Proceedings	Outcomes
'sauvegarde accélérée'	Confirmation by the court of an advanced negotiated restructuring plan (where there are dissenting minority creditors)
'sauvegarde financière accélérée'	Confirmation by the court of an advanced negotiated restructuring plan between FINANCIAL creditors only (where there are dissenting creditors)
'sauvegarde'	2 options: - repayment plan - sale of a part of the business activity (only – no global sale)
'redressement judiciaire'	4 options: - closure for payments of debts - repayment plan (max 10 years) - sale of a part of the business activity or the whole business as a going concern - conversion to liquidation
'liquidation judiciaire'	4 options: - closure for payments of debts - sale of a part of the business activity or the whole business as a going concern - Piecemeal liquidation - discharge of unpaid debts for individuals entrepreneurs (‘liquidation judiciaire simplifiée’)

 
by Jean-Luc Vallens
Arbitrator approved by the European Court of Arbitration and the Paris Mediation and Arbitration Center (CCI Paris IDF)
 
 
GREECE
 

Proceedings	Outcomes
‘Διαδικασία Εξυγίανση’   (recovery proceedings)	Judicial ratification of a negotiated recovery agreement concluded either by the debtor and its creditors or solely by the debtor’s creditors that represent 60% of the total claims against the debtor, 40 per cent of which shall be secured claims (it has an cram down effect i.e. it binds the dissenting and non-participating creditors).  The agreement may consist of a: Sale of all or part of the business Disposition of assets. Debt-equity swap. Repayment plan (i.e. write-down of the debt, extension of the repayment date, alteration of the interest rate)
‘Σχέδιο αναδιοργάνωσης’   (reorganisation plan)	Judicial ratification of a reorganisation plan submitted by: the debtor either along with its bankruptcy petition or within three months of  being  declared  bankrupt (the plan must be approved by the majority of creditors mentioned below) the creditors representing 60% of the total claims against the debtor, 40% of which shall be secured claims, along with the bankruptcy petition against the debtor. (it has a cram down effect i.e. it binds the dissenting and non-participating creditors).
‘Πτώχευση’   (bankruptcy proceedings)	3 options: Sale of the whole business as a going concern Sale of separate business sectors or Piecemeal liquidation Distribution of the liquidation proceeds to creditors according to the privileges set by law.
‘Απλοποιημένη διαδικασία επί πτωχεύσεων μικρού αντικειμένου’   (simplified bankruptcy proceedings)	The simplified bankruptcy procedure applies in case that at least two out of three following criteria are met: a) the total value of the debtor’s assets are up to the amount of 150.000 Euros, b) the debtor’s net financial turnover is up to 200.000 Euros and c) the debtor’s average number of employees is up to 5 persons. The liquidation of the debtor’s estate takes the form of a piecemeal liquidation, the proceeds of which are distributed to creditors according to the privileges set by law.
‘Ειδική εκκαθάριση εν λειτουργία’   (special liquidation procedure)	Abolished by Law 4446/2016

 
By Stathis POTAMITIS
Managing Partner at PotamitisVekris
Athens, Greece
 
 
HUNGARY
 

Proceedings	Outcomes
'csődeljárás'	2 options - conclusion of a composition agreement by the majority of the creditor's classes and approval by the court; - opening insolvent liquidation proceedings ('felszámolási eljárás') if no composition agreement has been concluded or approved by the court.
'felszámolási eljárás’	2 options - deregistration of the debtor and distribution of the assets to the creditors; - composition agreement in liquidation (exceptional).

 
By Zoltan Fabok
Counsel at DLA PIPER, Budapest
 
Note: Please note that the Hungarian insolvency proceedings listed above basically apply to both companies and some other types of organisations (including "individual enterprise" - a special firm type designed for sole traders who want to be listed in the company registry) but not to sole traders not registered into that registry.
 
 
IRELAND
 

Proceedings	Outcomes
Compulsory winding-up by the court	Dissolution of the company after the liquidator has taken the necessary steps (including realisation and distribution of assets)
Bankruptcy	The ultimate objective is the discharge/rehabilitation of the bankrupt’s debts, after his assets are realised and distributed to the creditors.
Administration in bankruptcy of the estate of persons dying insolvent	Following bankruptcy, the property and estate of the deceased will vest in an Official Assignee who will help the court in the winding-up process.
Winding-up in bankruptcy of partnerships	Dissolution of the partnership. The firm’s debts and liabilities are ascertained, discharged and sold as necessary.
Creditors’ voluntary winding-up (with confirmation of a court)	Dissolution of the company after the liquidator has taken the necessary steps (including realisation and distribution of assets)
Arrangements under the control of the court which involve the vesting of all or part of the property of the debtor in the Official Assignee for realisation and distribution	Realisation of the bankrupt’s assets and distribution to creditors.
Examinership	Confirmation by the court of an advanced negotiated restructuring plan (scheme of arrangement). The objective is the rescue of the company as a going concern.
Debt Relief Notice	Confirmation by the court of a notice that the bankrupt be discharged of his debts.
Debt Settlement Arrangement	(Only unsecured debts) Settlement of the bankrupt’s debts, over a period of up to 5 years.
Personal Insolvency Arrangement	2 options: Restructuring settlement Bankrupt can be released from his secured debts

 
by Dr Emilie Ghio
Lecturer in Law & Erasmus/Study Abroad Programme Coordinator 
Birmingham City University, UK

 
LATVIA
 

Proceedings	Outcomes
‘Tiesiskās aizsardzības process’	In-court corporate restructuring proceedings. Confirmation by the court of an advanced negotiated restructuring plan (where there are dissenting minority creditors) Includes a sub-category - ‘Ārpustiesas tiesiskās aizsardzības process’, which are out-of-court restructuring proceedings
‘Juridiskās personas maksātnespējas process’	2 options: - Sale of a part of the business activity or the whole business as a going concern - Piecemeal liquidation Possibility to convert to ‘Tiesiskās aizsardzības process’.

 
by Edvīns Draba
Associate at SORAINEN, Riga
 
 
LITHUANIA
 

Proceedings	Outcomes
Įmonės restruktūrizavimo byla   (Enterprise Restructuring)	Confirmation by the court of the creditor approved restructuring plan, implementation of which is supervised by a court-appointed insolvency practitioner
Įmonės bankroto byla (Enterprise Bankruptcy)	Bankruptcy (liquidation) procedure administered by a court-appointed insolvency practitioner; it is highly uncommon to have a partial or full transfer of business; it is rather common to have a piecemeal liquidation of assets
Įmonės bankroto procesas ne teismo tvarka   (Out-of-court enterprise bankruptcy procedure)	Bankruptcy (liquidation) procedure administered by an insolvency practitioner appointed and supervised by the creditors.
Fizinio asmens bankroto procesas (Bankruptcy of a natural person)	Moratorium for debt payments and recovery procedures, including taxes, interests and delinquency charges debtor is prohibited from independently managing his/her property, insolvency practitioner is appointed for bankruptcy process supervision Confirmation by the court of creditor approved plan (duration of maximum 3 years) During plan period, all income exceeding minimum threshold is allocated to the creditors All property of the debtor is liquidated for the benefit of the creditors (exceptions regarding the debtor‘s domicile may be applied)

 
By Frank Heemann
Rechtsanwalt
Partner at bnt attorneys in CEE
 
 
LUXEMBOURG
 

Proceedings	Outcomes
'faillite'	Sale of assets and distribution of the proceeds among creditors taking into consideration their rank (liquidation proceeding)
'gestion contrôlée'	2 options: Reorganisation or; Sale of assets
'concordat préventif de faillite (par abandon d’actif)'	Sale of the business activity (liquidation proceeding)
'régime spécial de liquidation du notariat'	2 options (Only for public notaries) Reorganisation or; Sale of assets

 
By Christel Dumont
Senior Counsel
Dentons Luxembourg
 
 
POLAND
 

Preventive Proceedings (risk of insolvency or debtor insolvent)	Outcomes
“Postępowanie o zatwierdzenie układu”   Arrangement Approval Proceedings   Hybrid proceedings with a private initial stage (i.e. non-public) and a court-approved arrangement plan	Court confirmation of an arrangement plan previously voted upon by creditors. Two options available for the arrangement plan: 1 – affecting all creditors, or 2 – affecting certain groups of creditors (e.g. financial, highest value), but not others
„Przyspieszone postępowanie układowe”  Accelerated Arrangement Proceedings   Accelerated & simplified version of the Postępowanie układowe	Simplified court proceedings for accepting an arrangement plan. Two options available for the arrangement plan: 1 – affecting all creditors, or 2 – affecting certain groups of creditors (e.g. financial, highest value), but not others
“Postępowanie układowe”  Arrangement Proceedings   Court approved arrangement plan with full features	Court proceedings involving all pre-opening creditors accepting an arrangement; pre-opening security measures available.
“Postępowanie sanacyjne”  Remedial Proceedings   Court approved arrangement plan for most complex rescue proceedings involving restructuring at an early phase.	Most complex preventive court proceedings with the possibility of restructuring the debtor’s business before accepting an arrangement plan.  by default debtor no longer in possession. creditor may file for opening of proceedings, if the debtor is insolvent.
Bankruptcy proceedings (debtor insolvent)	Outcomes
“Upadłość” Bankruptcy   Typical liquidation insolvency of debtor’s assets	Liquidation of the insolvent debtor’s estate (sale of business/enterprise as a whole, or piecemeal) by a court-nominated receiver, involving distribution of proceeds following a statutory ranking of claims, (secured creditors satisfied separately from security). Results in (usually partial or no) satisfaction of creditors’ pre-opening claims, and the termination of the debtor’s legal existence (if a legal entity) Bankruptcy proceedings possible also with the option of a pre-packaged sale of the business/substantial parts of the business, under terms of sale agreed before opening bankruptcy proceedings, with acceptance of the terms by the court and the sale made (transfer of title) by the receiver after the opening of the bankruptcy.

 
By Michał Barłowski
Radca prawny at Wardyński i Wspólnicy sp.k.
Warsaw
 
 
PORTUGAL
 

Proceedings	Outcomes
Special revitalisation proceedings	Confirmation by the court of a negotiated restructuring plan (where there are dissenting minority creditors) – only for traders (companies and sole traders) in pre-insolvency.
Insolvency proceedings	For insolvent debtors of all sorts. 3 options: - rescue plan (may imply the sale of the business as a whole / part of the business but not necessarily). - repayment plan – only for debtors who are natural persons and non-traders or small traders. - liquidation (sale of the business as a whole / part of the business or piecemeal liquidation) for payment of debts.

 
By Catarina Serra
Professor at the University of Minho
Justice of the Portuguese Supreme Court
 
 
ROMANIA
 

Proceedings	Outcomes
`Concordat preventiv` (the arrangement) – is a Preventive Procedure	Approval by the court of a recovery plan previously negotiated and approved by at least 75% of the creditors (by the amount of the claim)
`Mandat ad-hoc` (ad hoc mandate) - is a preventive procedure	Appointment by the court of an insolvency practitioner who, within 90 days of appointment, will have to sign deals with one or more creditors, in order to save de company, the jobs and to pay the debts according to the new agreements (the insolvency practitioner appointed can propose total/partial debt remissions, debt rescheduling, staff reduction, contract negotiation, etc.)
Judicial reorganization (`Reorganizare judiciara`) – a General Insolvency Procedure followed by the approval of a reorganization plan and confirmation of the syndic judge.	Approval by the creditors and confirmation by the syndic judge a reorganization plan which should provide a repayment plan (max 4 years), after an observation period. The plan can provide: - sale of a part of the business activity or the whole business as a going concern - debt to equity swaps - management changes - mergers - debt reschedules - give ins to pay - shareholder changes - modification of the articles of incorporation etc.
`Faliment`(liquidation/bankruptcy) – a General Insolvency Procedure opened after the observation period if no reorganization plan is submitted or voted or if the approved reorganization plan fails.   `Faliment simplificat` (simplified bankruptcy/liquidation) – a Simplified Insolvency Procedure	3 options - closure for payments of debts - sale of a part of the business activity or the whole business as a going concern - Piecemeal liquidation   * The difference between the two procedures is the moment of the opening

 
By Radu Lotrean
CITR Group, Bucharest
 
 
SLOVAKIA
 

Proceedings	Outcomes
Bankruptcy (“konkurz”)	Bankruptcy proceedings are aimed at debtor’s liquidation and satisfaction of the creditors from the sale of debtor's assets.   The sale proceeds are distributed among the creditors.
Restructuring (“reštrukturalizácia”)	Restructuring proceedings are aimed at debtor’s recovery enabling the debtor to continue its business.   The debtor's liabilities are restructured based on a restructuring plan, which has to be approved by the creditors as well as the court.
Personal bankruptcy – debt relief („oddlženie“)	Personal bankruptcy proceedings are intended for insolvent natural persons and can result either in total liquidation of debtor’s assets followed by a quick debt relief, or restructuring of debtor’s liabilities according to a repayment schedule.

 
By Mgr. Slavomír M. Čauder
advokát • partner at GIESE, Bratislava
 
 
SLOVENIA
 

Proceedings	Outcomes
Preventive restructuring proceedings	– confirmation of the financial restructuring agreement (repayment plan) – confirmation by the court – applicable only for small, medium-sized or large companies with share capital which are not yet insolvent – shall most likely become insolvent within a one-year period – compulsory affects only financial unsecured and/or financial secured claims – compulsory cannot affect business claims
Simplified Compulsory Settlement Proceedings	– confirmation of the financial restructuring agreement (repayment plan) – confirmation by the court – applicable for insolvent debtors: only for micro companies and sole proprietors, who meet the criteria for small and micro companies – compulsory affects only unsecured claims
Compulsory Settlement Proceedings	– confirmation of the financial restructuring agreement (repayment plan) – confirmation by the court – applicable for insolvent debtors: all companies and sole proprietors – compulsory affects unsecured claims – voluntary affects secured claims
Compulsory Settlement Proceedings –  with special rules on compulsory settlement proceedings instituted against small, medium-sized or large companies with share capital	– confirmation of the financial restructuring agreement (repayment plan) – confirmation by the court – applicable for insolvent debtors: only for small, medium-sized or large companies with share capital – compulsory affects unsecured or only financial unsecured or/and secured claims (different combinations are possible)
Corporate bankruptcy proceedings	– liquidation – sale of the business as a whole / part of the business or piecemeal liquidation – for payment of debts – applicable for insolvent companies and other legal persons
Personal bankruptcy proceedings	– liquidation: (a) sale of the business as a whole / part of the business or piecemeal liquidation of sole proprietors and entrepreneurs  for payment of debts (b) sale of the assets of the bankrupt consumer for payment of debts   – remission of obligations applicable for sole proprietor, entrepreneur and consumer they may propose remission of obligations in the framework of liquidated bankruptcy proceedings if the debtor does not violate its obligations during the trial period (from min 6 months to max 5 years), the court, after the expiry of the trial period, orders a remission of the remainder of the debtor's obligations
Legacy bankruptcy proceedings	- liquidation – sale of the legacy of any deceased natural person for payment of her/his debts

 
By Romana Bernik
Republic of Slovenia, Ministry of Justice
 
 
SPAIN
 

Proceedings	Outcomes
'concurso'	3 options: Creditors’ arrangement Total or partial liquidation of the company’s assets or transmission of business units. Conclusion of the insolvency proceedings due to the insufficiency of the debtor’s estate.
'procedimiento de homologación de acuerdos de refinanciación'	Homologation by the court of a negotiated refinancing agreement, which entails a protective shield against claw-back actions possibility to extend the effects of the agreement to the dissenting creditors
'procedimiento de acuerdos extrajudiciales de pago'	- Creditors’ arrangement:  Stay (max 10 years) -Write-off - Transfer of assets and rights to creditors in payment or for payment of all or part of their loans. - Debts’ conversion into equity, participating loans (PPL’s), convertible bonds, subordinated loans, etc. - Opening of the concurso
'procedimiento de negociación pública para la consecución de acuerdos de refinanciación colectivos, acuerdos de refinanciación homologados y propuestas anticipadas de convenio'	4 months protection (moratorium) from enforcement proceedings and creditors insolvency petitions. Possible outcomes: -  creditors arrangement - obligation to petition for ‘concurso de acreedores’ after the 4 months period, unless the debtor is no longer in an insolvency situation

 
By Adrián Thery
GARRIGUES, Madrid