On 26 January 2011 the European Commission declared the so-called Restructuring Clause (Sanierungsklausel) (Sec. 8c (1a) of the German Corporate Income Tax Act (CTA)) as inconsistent with EU funding guidelines. The decision of the European Commission is criticized by national experts and stresses the German economy with a hardly tolerable uncertainty as regards tax issues in restructurings.
Restructuring companies in respect of which there exists a significant credit default swaps (CDS) market adds an additional level of complexity which the debtor and all stakeholders should consider and assess early on in the process, as it could determine the success or failure of a restructuring plan.
Eurosail’s journey has come to an end: the Supreme Court rejects the “point of no return” test, returns to balance sheet basics.
John Houghton, European Head of Restructuring and Co-Global Chair of Bankruptcy and Restructuring remarks:
The German Insolvency Code requires the management of German limited liability companies (GmbH), stock corporations (AG) and other entities without personal liability to file for the commencement of insolvency proceedings no later than three weeks after the entity has become illiquid (zahlungsunfähig) or overindebted (überschuldet).
The Chancellor announced in his budget that the Crown is to be re-instated as a preferential creditor in insolvency, reversing the changes brought in by The Enterprise Act 2002.
Proposed amendments to the Recovery and Restructuring of Credit Institutions and Investment Intermediaries Act, effective as of 14 August 2015 (“Recovery and Restructurings Act”) provide that stress tests should be carried out for insurers and reinsurers. If approved by the Parliament, the changes will necessitate the organising and performing of stress tests for insurers and reinsurers within a tight timeframe, by the end of 2016.
The guidelines laid down by the English courts for applying the balance sheet test for insolvency affects not only whether a company is technically insolvent, but also the enforceability of clauses in transactional banking documents and the ability of a liquidator to challenge certain antecedent transactions. The Supreme Court’s decision will therefore be welcomed by advisors, bankers and insolvency practitioners as it has overturned the high threshold laid down by the Court of Appeal.
Executive Order n° 2014-326 of 12 March 2014 reforming French insolvency proceedings was published in the Official Journal of the French Republic (Journal officiel de la République Française) on 14 March 2014.
Considered a priority by the Government, the objectives of this reform include, notably, favoring preventative measures and increasing the powers of creditors.1 Below are the principal provisions which will enter into force on 1 July 2014:
Amicable proceedings: mandat ad hoc, conciliation proceeding
On the bill of the Federal German Government for an Act Serving the Further Facilitation of the Reorganization of Enterprises (ESUG)
Court Acceptance of Petition for Corporate Reorganization