Pre-Bankruptcy and Insolvency Procedures

Pre-Bankruptcy and Insolvency Procedures

A special role has been assigned to authorised business appraisers with the adoption of the Financial Operations, Insolvency Proceedings and Compulsory Dissolution Act. The law requires that prior to the commencement of a compulsory settlement, an authorised appraiser’s report is submitted to the court, and for that reason P&S Group developed a special methodology and procedure in order to meet all the statutory requirements. The appraiser’s report includes an opinion regarding the following issues:

  • possibility of debtor insolvency
  • likelihood of a more than 50% chance that the financial restructuring plan will lead to short- and long-term solvency of the debtor
  • likelihood of a more than 50% chance that the compulsory settlement will ensure creditors with more favourable terms for the repayment of debt claims compared to bankruptcy proceedings

For the preparation of an authorised appraiser’s report, assumptions underlying the financial restructuring plan are thoroughly assessed as well as their realisation probability. To that end, a detailed financial and business analysis of the debtor is conducted, along with a business environment and industry analysis, a SWOT analysis, as well as a comparison of creditor repayments in compulsory settlements and bankruptcy proceedings.

In addition to the appraiser’s report and based on extensive experience in business valuation and corporate restructuring, the debtor’s management is advised in drawing up a financial restructuring plan. When offering consultancy services in the course of both voluntary and compulsory settlement procedures, the objective is to attain a feasible restructuring plan. In voluntary settlements, the debtor’s interests are protected through creditor negotiations.

Following the financial crisis and the ever increasing number of compulsory settlements, many creditors are doubtful in regard to their debt claims. Based on an assessment of debtor’s business prospects, strategic and tactical advice to creditors is therefore also provided in order to ensure minimal losses in voluntary and compulsory settlement procedures.

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