We advise companies in financial distress, finding value-enhancing solutions for owners, banks, charge holders, employees, suppliers and corporate managements.
Insolvency and Restructuring
We advise on all issues relating to companies in financial distress. Our lawyers work closely together in interdisciplinary teams, e.g. in connection with distressed properties, litigation, debt collection and business transfers. In that way, we are able to identify value-enhancing solutions.
Bankruptcy proceedings and representation on creditors' committees
Bankruptcy proceedings may be very extensive and complex, thus requiring in-depth knowledge of the Bankruptcy Act.
It is therefore a valuable investment to join forces with a legal expert in this field. At DLA Piper, we have great expertise in the field of bankruptcy, and our lawyers are often appointed as trustees in bankruptcy.
We advise our clients on all aspects of bankruptcy law such as:
- Compulsory dissolution and resumption of activities
- Debt rescheduling
- Restructuring
- International insolvency law
- Bankruptcy litigation
- Assistance to creditors and charge holders
Compulsory dissolution and solvent liquidation
It is up to the Danish Business Authority to order the compulsory dissolution of a company. The reason may be that the company has failed to submit financial statements or does not have the management required by law. Compulsory dissolutions are initiated by the bankruptcy court.
The compulsory dissolution of a company may be carried out within a relatively short period of time, and it may therefore be necessary to make a large number of decisions relatively quickly. As a result, it is a good idea to join forces with a competent advisor who may act as a sparring partner throughout the process.
At DLA Piper, we have a large number of lawyers who are specialised in bankruptcy law and restructurings. Many of them form part of the corps of lawyers acting as assistants to the bankruptcy court on a regular basis. They have the experience required to quickly familiarise themselves with a case.
Solvent liquidation
We also have vast experience of the liquidation of solvent companies. A company contemplating a solvent liquidation should consider a number of questions, including the following:
- Is the company actually solvent? An insolvent company cannot be subjected to solvent liquidation, but must file for bankruptcy instead.
- Is the company involved in any legal disputes or does it expect to be so in the future? The time perspective involved in litigation may have a great impact on the solvent liquidation process.
- How should the company's assets be sold? Such assets include inventories and properties.
- Who will prepare the liquidation accounts? A company in solvent liquidation must – in addition to the regular financial statements – prepare special liquidation accounts showing the consequences of the liquidation, such as revaluations and write-downs.
Debt rescheduling
Debt rescheduling is a method which allows a person – with a large debt and no prospects of repaying it – to reduce the debt to an amount which can actually be repaid. The bankruptcy court reduces the debt to a percentage of the original debt. In general, debt rescheduling includes all creditors. At DLA Piper, we have many years of experience of advising on debt rescheduling in situations where a person is insolvent and hopelessly indebted. A number of DLA Piper's lawyers form part of the corps of lawyers acting as assistants to the bankruptcy court on a regular basis.
Application for debt rescheduling
In order to be granted debt rescheduling, the debtor must submit an application to the bankruptcy court using a special application form, which is available at domstol.dk. In general, the proceedings of the bankruptcy court are free of charge since the expenses will be covered by the state treasury.
On the basis of the application, the bankruptcy court decides whether the applicant fulfils the conditions for debt rescheduling. For more information about the conditions, please see below. If the conditions are fulfilled, a lawyer will be appointed who will prepare a statement on which a proposal will be based. The rules vary depending on whether the debt is personal or the result of a bankruptcy (business debt).
In general, the following conditions must be fulfilled if a debtor is to be granted debt rescheduling:
- The debt must be hopeless, considering the applicant's financial situation.
- The debt rescheduling must lead to a lasting improvement of the applicant's situation.
- The applicant's financial situation must have been clarified (income and home).
- The nature of the debt must be considered (e.g. in general the debt must not be recently incurred for consumption purposes).
- The applicant must not have acted irresponsibly (e.g. debt to public authorities run up systematically, criminal offences or the like) or have made arrangements with a view to obtaining debt rescheduling.
Debt rescheduling in practice
The debt rescheduling process varies depending on whether the debt is personal or the result of a bankruptcy (business debt).
Personal debt
In general, debt rescheduling means that the debtor is granted a five-year repayment period. On the basis of a household budget, the ability to pay is established, i.e. the monthly amount payable to the creditors. No minimum or maximum amount exists. The amount payable by the debtor varies from case to case, and in some situations the debt is removed entirely. However, in general the budget must not be negative.
Business debt
If the debt is the result of a bankruptcy, the repayment period will typically be three years. It is a condition that the application is submitted on conclusion of the administration of the bankruptcy estate. However, the bankruptcy court may to a limited extent grant an exemption to this time-limit. The basic conditions for qualifying for debt rescheduling in connection with bankruptcy are the same as for private individuals, except for the absence of an ultimate condition that the applicant's financial situation must have been clarified.
