GETTING THROUGH THE DEAL Restructuring & Insolvency Restructuring & Insolvency Restructuring Contributing editor Bruce Leonard 2017 2017 © Law Business Research 2016 Restructuring & Insolvency 2017 Contributing editor Bruce Leonard The International Insolvency Institute Publisher Law The information provided in this publication is Gideon Roberton general and may not apply in a specific situation. [email protected] Business Legal advice should always be sought before taking Research any legal action based on the information provided. Subscriptions This information is not intended to create, nor does Sophie Pallier Published by receipt of it constitute, a lawyer–client relationship. [email protected] Law Business Research Ltd The publishers and authors accept no responsibility 87 Lancaster Road for any acts or omissions contained herein. 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Printed and distributed by First published 2008 Encompass Print Solutions Dan White Tenth edition Tel: 0844 2480 112 [email protected] ISSN 2040-7408 © Law Business Research 2016 CONTENTS Global overview 7 Cyprus 129 Richard Tett Lia Iordanou Theodoulou, Angeliki Epaminonda and Freshfields Bruckhaus Deringer Stylianos Trillides Alan W Kornberg Patrikios Pavlou & Associates LLC Paul, Weiss, Rifkind, Wharton & Garrison LLP Dominican Republic 138 Australia 9 Mary Fernández, Jaime Senior and Melba Alcántara Dominic Emmett and Sabrina Ng Headrick Gilbert + Tobin England & Wales 149 Austria 22 Catherine Balmond and Katharina Crinson Friedrich Jergitsch and Carmen Redmann Freshfields Bruckhaus Deringer Freshfields Bruckhaus Deringer European Union 166 Bahamas 33 Rachel Seeley and Katharina Crinson Leif G Farquharson and Michelle M Pindling-Sands Freshfields Bruckhaus Deringer Graham Thompson France 180 Bahrain 42 Fabrice Grillo and Alexandra Szekely Harnek S Shoker Freshfields Bruckhaus Deringer Freshfields Bruckhaus Deringer Germany 193 Belgium 50 Franz Aleth and Nils Derksen Geert Verhoeven and Satya Staes Polet Freshfields Bruckhaus Deringer Freshfields Bruckhaus Deringer Greece 209 Bermuda 62 Stathis Potamitis and Eleana Nounou Andrew A Martin PotamitisVekris MJM Limited Hong Kong 221 Botswana 68 Georgia Dawson and Look Chan Ho Kwadwo Osei-Ofei Freshfields Bruckhaus Deringer Osei-Ofei Swabi & Co Hungary 232 Brazil 73 Zoltán Varga and Balázs Baranyai Luciana Faria Nogueira and Gabriela Martines Gonçalves Nagy és Trócsányi Law Firm TozziniFreire Advogados India 240 Bulgaria 82 Nihar Mody and Ankit Majmudar Ina Bankovska and Tsvetelina Stoilova Platinum Partners Kinkin & Partners Indonesia 249 Canada 91 Herry N Kurniawan, Theodoor Bakker and Bruce Leonard Ridzky Firmansyah Amin Chair, The International Insolvency Institute Ali Budiardjo, Nugroho, Reksodiputro Craig Mills Miller Thomson LLP Isle of Man 257 Stephen Dougherty and Tara Cubbon Cayman Islands 101 DQ Advocates Andrew Bolton and Andrew Jackson Appleby Italy 264 Raffaele Lener and Giovanna Rosato China 110 Freshfields Bruckhaus Deringer Frank Li, Allan Chen and Rebecca Lu Fangda Partners Japan 282 Kazuki Okada, Shinsuke Kobayashi and Daisuke Fukushi Croatia 120 Freshfields Bruckhaus Deringer Pavo Novokmet and Andrej Skljarov Žurić i Partneri 2 Getting the Deal Through – Restructuring & Insolvency 2017 © Law Business Research 2016 CONTENTS Luxembourg 297 Spain 395 Christel Dumont Silvia Angós Dentons Luxembourg Freshfields Bruckhaus Deringer Malaysia 305 Sweden 406 Lee Shih and Nathalie Ker Mathias Winge and Henrik Davidsson Skrine Setterwalls Advokatbyrå Mexico 312 Switzerland 415 Darío U Oscós Coria and Darío A Oscós Rueda Christoph Stäubli* Oscós Abogados Walder Wyss Ltd Netherlands 325 Thailand 429 Michael Broeders and Rodolfo van Vlooten Suntus Kirdsinsap, Natthida Pranutnorapal, Freshfields Bruckhaus Deringer Piyapa Siriveerapoj and Patinya Sriwatcharodom Weerawong, Chinnavat & Peangpanor Ltd Nigeria 341 Emmanuel Ekpenyong and Cinderella Agunanna Turkey 438 Fred-young & Evans LP Çağlar Kaçar Kaçar, Attorneys at Law Norway 348 Stine D Snertingdalen and Ingrid E S Tronshaug United Arab Emirates 448 Kvale Advokatfirma DA Pervez Akhtar and William Coleman Freshfields Bruckhaus Deringer Peru 356 Rafael Corzo de la Colina, Renzo Agurto Isla and United States 458 Lisbeth Benavides Kolind-Hansen Alan W Kornberg and Claudia R Tobler Miranda & Amado Abogados Paul, Weiss, Rifkind, Wharton & Garrison LLP Romania 365 Vietnam 470 Bogdan Bibicu Thanh Tien Bui Kinstellar Freshfields Bruckhaus Deringer Russia 372 Quick reference tables 480 Dmitry Surikov, Maria Zaitseva and Svetlana Tolstoukhova Freshfields Bruckhaus Deringer Singapore 386 Sean Yu Chou, Manoj Pillay Sandrasegara and Mark Choy WongPartnership LLP www.gettingthedealthrough.com 3 © Law Business Research 2016 Freshfields Bruckhaus Deringer ENGLAND & WALES England & Wales Catherine Balmond and Katharina Crinson Freshfields Bruckhaus Deringer Legislation dramatically. Where relevant, we have referenced the consultation in the questions where the topic may be impacted. 1 What legislation is applicable to insolvencies and reorganisations? What criteria are applied in your country to Determining whether a debtor is insolvent determine if a debtor is insolvent? ‘Insolvency’ itself is not defined by the Insolvency Act. Instead the Act General insolvency legislation contains the concept of a company being ‘unable to pay its debts’. A The legislation principally applicable to the insolvency of companies company is deemed to be unable to pay its debts if: incorporated in England and Wales is the Insolvency Act 1986 (the • it has not paid a claim for a sum due to a creditor exceeding £750 Insolvency Act) as amended from time to time. The Insolvency Act is within three weeks of service of with a written demand in the pre- supplemented by subordinate legislation, the most important of which scribed form (known as a statutory demand); are the Insolvency Rules 1986 (the Insolvency Rules). The Company • an execution or judgment against the company is unsatisfied; Directors Disqualification Act 1986 (the CDDA 1986) deals with the • it is proved to the satisfaction of the court that it is unable to pay position of directors of insolvent companies. its debts as they fall due, also having regard to contingent and pro- In relation to reorganisations, the Companies Act 2006 is also rele- spective liabilities, (generally known as ‘cash flow insolvency’); or vant as this sets out the provisions concerning schemes of arrangement • if it is proved to the satisfaction of the court that the value of the (discussed further in question 11 below). company’s assets are less than the amount of its liabilities, taking As at the time of writing, the UK remains part of the European into account contingent and prospective liabilities, (commonly Union, and, hence, the EC Regulation on Insolvency Proceedings known as the ‘balance sheet test’). The highest court in England, 2000 applies (see also ‘Update and trends’). This affects cross-border the Supreme Court, held in BNY Corporate Trustee Services Ltd v insolvencies and is discussed in more detail in questions 29 and 47 Eurosail UK 2007-3BL plc [2013] UKSC 28 that the court is required and the chapter on the European Union. The Cross-Border Insolvency to make an assessment of the company’s assets and liabilities and Regulations 2006 (which incorporated into English law the UNCITRAL to decide whether, on the balance of probabilities (making proper Model Law on Cross-Border Insolvency) are also relevant and are dis- allowance for contingent and prospective liabilities), the company cussed in question 47. cannot reasonably be expected to meet those liabilities. On 25 May 2016, the UK government issued a consultation paper ‘A review of the corporate insolvency framework – options for reform’. Courts The consultation focuses on four areas: • the creation of a new moratorium: This will provide companies 2 What courts are involved in the insolvency process? Are there with a moratorium on creditor action, initially of three months, restrictions on the matters that the courts may deal with? subject to eligibility and qualifying conditions, with some supervi- There are no courts that deal solely with insolvency procedures. The sion by an insolvency practitioner; High Court can wind up any company incorporated in England and • helping businesses to continue to trade through a restructuring Wales (and in some cases, foreign companies – see question 3). Any process: Providers of supplies essential to the particular business criminal matters must be dealt with by the relevant criminal court. may be compelled to continue to supply, on the same terms as pre- viously, and notwithstanding any contractual termination rights, Excluded entities and excluded assets through any moratorium and subsequent administration or com- 3 What entities are excluded from customary insolvency pany voluntary arrangement; proceedings and what legislation applies to them? What • developing a flexible restructuring plan: Proposals to allow assets are excluded from insolvency proceedings or are stakeholders (including secured and unsecured creditors) to be exempt from claims of creditors?