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Ralf Zeitlberger: Stand still rules and corporation among lenders and financial institutions in Restructuring

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• Vienna stand still rules
• Pre-requisition for out of court restructuring
• Successful stand still and out of court restructuring advantageous for all stake holders
• Examples for successful and non-successful out of court restructuring

Published in: Economy & Finance
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Ralf Zeitlberger: Stand still rules and corporation among lenders and financial institutions in Restructuring

  1. 1. Stand still rules and cooperation among lenders and financial institutions in restructuring Ralf Zeitlberger Head of Group Corporate Workout Erste Group Bank AG 05.12.2014
  2. 2. 05.12.2014 Introduction 2 In 2013 all relevant Austrian banks agreed on „Vienna rules“, standstill rules (similar to „London rules“) after several discussions and meetings. - legally not binding („gentlemen‘s agreement“) - rules stipulate first phase of a restructuring to avoid destroying values, when liquidating a company (court procedure) - any contribution is the sole decision of the involved bank (extension, haircut, interest, …)
  3. 3. 05.12.2014 1. Guideline 3 Where a debtor is found to be in financial difficulties, all relevant creditors should cooperate to give sufficient time („Standstill Period“) to the debtor for information and evaluation and for proposals.
  4. 4. 05.12.2014 2. Guideline 4 Standstill Period: During Standstill all creditors should not enforce their claims to reduce their exposure but are entitled to expect, that their position (…reactive to others …) will not be prejudiced.
  5. 5. 05.12.2014 3. Guideline 5 During the standstill period, the debtor should not take any action that might adversely affect the prospective return to the relevant creditors as compared with the position at the beginning of the standstill period.
  6. 6. 05.12.2014 4. Guideline 6 • coordination committees useful • appointment of advisors The interests of relevant creditors are best served by coordinating their response to a debtor.
  7. 7. 05.12.2014 5. Guideline 7 Debtor should provide and allow relevant creditors (and their advisors) timely access to all relevant information: - enable proper evaluation of financial situation and proposals
  8. 8. 05.12.2014 6. Guideline 8 Restructuring agreement: Proposals should reflect applicable law and the relative position of creditors at the beginning of the standstill period.
  9. 9. 05.12.2014 7. Guideline 9 Information: • Information obtained concerning assets, liabilities and business of the debtor and any proposals should be made available to all relevant creditors. • Information should be treated confidential.
  10. 10. 05.12.2014 8. Guideline 10 Bridge Loan: Always „super senior“ as compared to other indebtedness or claims of other relevant creditors.
  11. 11. 05.12.2014 11 Specific guidelines for Credit insurers Leasing companies Annex
  12. 12. 05.12.2014 12 Positive and negative examples in the region - Mercator (Slovenia) - Baumax (Austria, CEE) - Alpine Bau (for various reasons) - Farmakom (Serbia) Annex
  13. 13. 05.12.2014 VIENNA INITIATIVE 13 • For CEE: - EBRD - Major commercial banks (Unicredit Bank Austria AG, Raiffeisen Bank International AG, Erste Group Bank AG, Intesa Sanpaolo, OTP Bank, Eurobank, Piraeus Bank, Societe Generale, KBC, …) • Focus on NPL reduction to lock up banks balance sheets. • Out of court restructuring and standstill rules one of key measures.
  14. 14. THANK YOU FOR YOUR ATTENTION !

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