Reconstruction of insolvent companies – restructuring plan
The reconstruction proceedings of insolvent trading companies are regulated by the Articles 696 to 709 of the Commercial Code. According to Article 696 of the Commercial Code, the restructuring plan may comprise the postponement or respite of due payment obligations, the partial or persistent cancellation of due payment obligations, the reorganisation of the company as well as other legal actions and transactions. The sale of trading company may also be part of the restructuring plan.
The following subjects are entitled to offer a restructuring plan:
- The insolvency debtor;
- The insolvency administrator;
- The insolvency creditors with at least one third of the insolvency claims;
- The partners or shareholders of the insolvency debtor with capital shares of at least one third;
- Partners with unlimited liability;
- 20 % of the employees regarding the trading company.
The proposal of the restructuring plan must be provided within one month after the opening of the insolvency proceedings. The court decides whether to pass the restructuring plan for further consideration to the creditor’s meeting. The court determines a date for the creditor’s meeting within 45 days after its decision regarding the restructuring plan. The insolvency creditors vote on the restructuring plan. Only the creditors whose claims have been accepted have the right to vote (and those who got this right accorded). The creditors vote separately according to legally defined categories; the plan must be approved by each creditor category with a simple majority of votes regarding the claims of the respective category. After the approval of the restructuring plan by the creditors, it must be confirmed by the insolvency court.
The restructuring plan creates new rights and obligations. The restructuring plan is after its confirmation through the court binding on the creditors (also on those who voted against the plan) and the debtor. The restructuring plan revises the claims completely. With the confirmation through the court, the insolvency proceedings are ended. The debtor is obligated to comply with his obligations. With the ending of the insolvency proceedings, the debtor’s rights are restored as well.