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Dictionary of Insolvency Terms in EU Member States DICTIONARY of INSOLVENCY TERMS in EU MEMBER STATES

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Dictionary of Insolvency Terms in EU Member States DICTIONARY of INSOLVENCY TERMS in EU MEMBER STATES Dictionary of Insolvency Terms in EU Member States DICTIONARY OF INSOLVENCY TERMS IN EU MEMBER STATES Contents Introduction......................................................................3 Lithuania.........................................................................97 Austria...............................................................................4 Luxembourg..................................................................104 Belgium..............................................................................9 Malta..............................................................................111 Bulgaria...........................................................................14 Netherlands..................................................................120 Croatia.............................................................................19 Poland............................................................................125 Cyprus..............................................................................26 Portugal.........................................................................135 Czech Republic................................................................33 Romania........................................................................141 Denmark..........................................................................38 Slovakia.........................................................................147 Estonia.............................................................................42 Slovenia.........................................................................152 Finland.............................................................................47 Spain..............................................................................156 France..............................................................................51 Sweden...........................................................................163 Germany..........................................................................57 UK...................................................................................169 Greece..............................................................................63 England and Wales .................................................170 Hungary...........................................................................70 Scotland ...................................................................177 Ireland.............................................................................74 Contacts.........................................................................183 Italy..................................................................................79 External Contributors..................................................185 Latvia...............................................................................90 2 WWW.DLAPIPER.COM Introduction Chris Parker With our global team of dedicated sector-focused restructuring lawyers, DLA Piper London Head of Restructuring has unparalleled knowledge of local markets. Our global Restructuring team is one T +44 (0)207 153 7402 [email protected] of the largest in the world, with over 200 lawyers across the Americas, Asia Pacific, Europe and the Middle East. We have used our exceptional international reach to put In particular, it will be a valuable resource for Peter Somekh together this dictionary of insolvency terms. It provides prospective purchasers of distressed debt, insolvency Global Co-Chairman, Restructuring a summary, for each EU member state, of all corporate, office holders, investors, lenders and credit controllers. T +971 (0)4 438 6327 personal and, where relevant, partnership insolvency [email protected] proceedings. It includes a brief description of each Our aim is to update the content periodically to take proceeding and explains key features, including who account of developing legislation in our market and, in controls the procedure and whether it is likely to be due course, to make it a global dictionary. accompanied by a moratorium to prevent enforcement. We pride ourselves on being trusted advisers to our Although there has been some movement towards a diverse client base and helping our clients develop unified approach to financial distress, with jurisdictions solutions through proactive and strategic planning. across Europe moving away from legislation that We manage assignments from the mid-market to the contemplates only formal liquidation towards instead largest national and international restructurings and embracing a culture of rescue and recovery, the detail insolvencies commercially and pragmatically and are of the restructuring and insolvency procedures and the experienced in managing all contentious issues arising terminology used to describe them remains diverse. from such cases. We hope that this dictionary will assist all those dealing Please do get in touch if you would like to benefit from with financially distressed entities in the EU to understand our knowledge, experience and resources on a national the available procedures in each member state. and international basis 3 DICTIONARY OF INSOLVENCY TERMS IN EU MEMBER STATES Austria 4 WWW.DLAPIPER.COM AUSTRIA Austria BELGIUM BULGARIA LOCAL NAME ENGLISH TRANSLATION KEY FEATURES CROATIA Das Abschöpfungsverfahren Proceedings for a levy • Available to all natural persons but can only be used by non-entrepreneurs after the individual has CYPRUS on income (insolvency tried to reach an out-of-court settlement with creditors via a debt settlement proposal (unless the CZECH REPUBLIC proceedings) individual has no attachable income or it is only slightly above the subsistence level). DENMARK ESTONIA • Considered to be the last resort for debtors. Any attachable income of the debtor exceeding the FINLAND subsistence level will be used to satisfy the claims of creditors for a five-year period. FRANCE • Approval of an income levy plan automatically terminates insolvency proceedings and a statutory GERMANY moratorium arises. GREECE HUNGARY • The debtor will be granted an automatic debt discharge after five years. IRELAND • Preferential claims (predominantly employee claims) will usually be paid first. ITALY LATVIA Das Ausgleichsverfahren Composition proceedings • No longer available. Composition proceedings have been replaced by reorganisation proceedings. LITHUANIA Das Konkursverfahren Bankruptcy proceedings • A court-led procedure for companies, partnerships and natural persons. LUXEMBOURG (Insolvenzverfahren) (insolvency proceedings) MALTA • Instigated by a petition filed by the debtor or any insolvency creditor (a creditor whose claim is NETHERLANDS unsecured and arose prior to the opening of insolvency proceedings) or any creditor who has POLAND contractually agreed to be subordinated where there is either impending or actual inability to pay PORTUGAL debts or over-indebtedness. ROMANIA • Bankruptcy results in the court appointing an insolvency administrator who realises the debtor’s SLOVAKIA assets and distributes the proceeds to its creditors. The debtor loses the right to dispose of its SLOVENIA assets and, in the case of a company or partnership, the insolvency administrator takes over the SPAIN management of the business from the entity’s directors/members. SWEDEN UK • A statutory moratorium arises after the application for insolvency. After this point, any claims ENGLAND AND by creditors against the debtor’s assets cannot be commenced and claims that are ongoing WALES are suspended. SCOTLAND • All claims in respect of the debtor’s assets must be filed with the insolvency court. 5 DICTIONARY OF INSOLVENCY TERMS IN EU MEMBER STATES LOCAL NAME ENGLISH TRANSLATION KEY FEATURES AUSTRIA BELGIUM Reorganisationsverfahren Reorganisation proceedings • A procedure enabling solvent companies, partnerships and individuals to reorganise their business BULGARIA nach dem Unternehmens under the Business to avoid insolvency. CROATIA reorganisationsgesetz Reorganisation Act • Reorganisation proceedings do not affect creditors’ rights. CYPRUS CZECH REPUBLIC Das Sanierungverfahren Reorganisation proceedings • Debtor initiated reorganisation proceedings that can apply to natural persons carrying on a DENMARK mit Eigenverwaltung with self-administration business, partnerships, legal persons (e.g. companies) and estates. ESTONIA (Insolvenzverfahren) (insolvency proceedings) • The directors, members or entrepreneur continue to manage the business (subject to some FINLAND restrictions, for example an express prohibition from selling real estate) and an insolvency FRANCE administrator is appointed by the court to supervise the proceedings. The insolvency administrator GERMANY must carry out any transactions that are not in the ordinary course of business. GREECE HUNGARY • The debtor makes an application to court to initiate proceedings and must deliver a reorganisation IRELAND plan that provides for the satisfaction of all secured and preferential debts and the repayment of at ITALY least 30% by value of unsecured debts within two years. LATVIA • A majority (in number present at the approval meeting and by value of all claims) of unsecured LITHUANIA creditors as well as secured creditors to the extent that they are under-secured must approve LUXEMBOURG the reorganisation plan. If the requisite majority does not approve the plan either prior to the MALTA commencement of restructuring proceedings or at the latest 90 days after the opening of NETHERLANDS proceedings,
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