Ljubljana, 10 September (STA) - Companies that are considered as $systemic$ will be subject to special insolvency rules in accordance with draft amendments to the insolvency act released by the Justice Ministry on Tuesday.
Systemic companies are defined as big or medium-sized companies that are the parent companies of concerns or holding companies.
Such companies will be eligible for a special type of court-mandated debt restructuring, even if they are not yet insolvent but could become insolvent within a year.
The administrators will be picked by courts at their own discretion, not based on the automatically generated list that applies to other types of insolvency proceedings.
The Justice Ministry says this is required because managing such procedures requires more know-how and experience than run-of-the-mill insolvency procedures.
The new legislation gives creditors more say, allowing them to name an intermediary with the power to monitor the financial restructuring and access information important to creditors.
The legislation would allow companies to offer even senior creditors a change of the financing terms (deferral or reduction of interest rates).
There is also a major change affecting insolvency procedures in general, not just procedures involving systemic companies: the scrapping of the requirement that the proposal for debt restructuring must offer creditors at least 50% repayment of liabilities over four years.
The Justice Ministry says that many companies which become insolvent cannot offer more than 50% but stand a chance of survival if they offer less, which still gives creditor a better recovery rate than outright bankruptcy.
The tweaks to insolvency law are paired with a proposed bill on the systemic deleveraging of companies, which is designed to give distressed companies the option of out-of-court restructuring.
The Justice Ministry says both pieces of legislation would "improve the rule of law" and help over-indebted companies.