In the article “What Options Do Creditors Have When Filing Claims Against Arca Capital Slovakia, a.s.?” we informed you about the options for filing claims against a company in bankruptcy. According to the latest information, Arca Capital Slovakia, a.s. is reportedly interested in restructuring the company. What does the company’s restructuring mean for creditors, and what are their rights? You’ll find out in today’s post.
The total liabilities of Arca Capital Slovakia, a.s. are currently unknown, as the company has not yet published its financial statements; however, given the number of lawsuits piling up against this company—particularly at the Bratislava V District Court, which has jurisdiction over securities disputes—it can be assumed that the company’s debts are in the tens of millions of euros. The company makes no secret of its insolvency and publicly acknowledges this inability to pay. What concerns the company’s creditors most, however, is the fact that the company is disposing of its assets without the oversight of an appointed bankruptcy or restructuring administrator.
Creditors are unable to file for bankruptcy, as, in light of the ongoing coronavirus pandemic and the adopted “Lex Corona,” so-called temporary protection for businesses is in effect in Slovakia, during which such proceedings are suspended or cannot be initiated. This protection will remain in effect in Slovakia at least until the end of the 2020 calendar year. However, there is increasing speculation among creditors that Arca Capital Slovakia, a.s. has requested a restructuring assessment, which suggests that the company has a clear goal for the near future—restructuring.
Restructuring is one way to overcome a debtor’s adverse financial situation. If a debtor is in bankruptcy or faces the threat of bankruptcy, it has the option to appoint an administrator to prepare a restructuring report. A restructuring report provides an objective assessment of the debtor’s financial situation, with the primary purpose of such a report being to recommend entering into restructuring. The result of this process is that the debtor can continue to operate, while for creditors, this procedure generally means that their claims will be satisfied to a greater extent than would be the case in potential bankruptcy proceedings.
The preparation of a restructuring assessment is the first and essential step before a company successfully enters restructuring. Only a restructuring administrator registered in the list of administrators may be commissioned to prepare such an assessment. Such an appointment may be made either by the debtor or, upon agreement between the debtor and the creditors, by the creditors themselves.
The administrator is required to prepare the restructuring report impartially and with professional diligence, objectively assessing the debtor’s financial and business situation. Based on their findings, they shall subsequently either recommend or not recommend the debtor’s restructuring. If they recommend restructuring, they shall also propose a possible method for its implementation. If the administrator recommends restructuring even when the prerequisites for it are not met, they are liable to the debtor’s creditors for any damages caused thereby. The administrator would be relieved of liability only if they could demonstrate that they acted with professional care.
Restructuring may be recommended if the debtor is a legal entity engaged in business activities and is in bankruptcy or facing the threat of bankruptcy. Financial statements must provide a reliable and true picture of the relevant facts, and at least two years must have elapsed since the last restructuring. Another condition is a reasonable expectation that at least a substantial part of the business operations will be maintained, and the fact that, if restructuring is approved, a higher degree of creditor satisfaction can be expected than in the case of bankruptcy.
Subsequently, if such an assessment recommends that the debtor enter into restructuring, a petition for authorization of restructuring must be filed with the competent court. If the court determines that the statutory requirements are met, it shall decide within 15 days to commence restructuring proceedings. The decision to commence restructuring proceedings is subsequently published in the Commercial Gazette. Within 30 days thereafter, the court will issue a ruling authorizing or dismissing the restructuring. Authorization of the restructuring marks the start of the company’s restructuring process.
In order for creditors to successfully assert their claims, they must file their claims in the prescribed manner. A claim must be filed in a single copy with the administrator, and it must be received by the administrator within 30 days of the approval of the restructuring. In this regard, please note that claims filed after the deadline will not be considered. This means that if a creditor does not file their claim properly and on time, the right to enforce these claims against the debtor lapses upon confirmation of the restructuring plan. The restructuring plan is a document governing the creation, modification, and termination of the rights and obligations of the parties listed therein, as well as the scope and manner of satisfying its participants.
The claim must be filed on the prescribed form and must include, in particular, the identification details of the creditor and the debtor, the legal basis for the claim, the priority of the claim in the general estate, the total amount, and a signature. If the claim is secured, it must be filed separately. Remember that it is necessary to attach to the claim all documents proving the facts stated therein, as well as a statement regarding the recording of the claim in the accounting records, or an explanation of why the entity does not record this claim. If a claim is filed incorrectly, it may be supplemented or corrected only by filing a new claim, but again only until the original deadline for filing claims has expired.
However, even if a claim is successfully filed, creditors’ claims may not be fully satisfied during the company’s restructuring process, and this is generally not the case. The restructuring plan typically sets a period during which debts will be repaid through installments, with the creditor expected to be satisfied for at least 50% of their claim. Compared to bankruptcy, however, creditors’ claims are generally satisfied to a greater extent.
Filing claims is a process that carries significant responsibility and necessarily requires legal knowledge, as incorrect or unprofessional handling may result in your claim not being filed properly and on time, which will effectively result in the loss of the right to enforce the claim itself. In this regard, we therefore recommend that you consult an attorney and entrust the entire claim filing process to them. The law firm Hronček & Partners, s. r. o. offers you the opportunity to handle all procedures related to the successful filing of your claim. Our team of experienced experts in the field of bankruptcy and restructuring guarantees the provision of first-class, reliable, professional, and effective legal services. If you need advice or assistance beyond simply filing a claim, please do not hesitate to contact us. The law firm Hronček & Partners, s. r. o. is fully at your disposal.
