European Distressed Info: Insolvency Regimes, Foreclosures and Lease Info

The Gorj Group, LLC (“TGG”)
Information on European Insolvency and RE Foreclosures
Feb. 2015
www.thegorjgroup.com

2
1. Insolvency Regimes across Europe
2. Real Estate Foreclosure Times across Europe
3. CRE Lease Structures across Europe
Feb-15

Insolvency Regimes across Europe
Characteristics of Insolvency
Regime
France Spain
Procedure and/or Operative Statue and
Associated Documents
Book VI of the French commercial code provides for certain restructuring options:
1: Safeguard, 2: Accelerated Financial Safeguard (applies only to “financial creditors” (i.e. those having
extended credit to the debtor, including bondholders, other than suppliers); 3: Judicial Reorganization; and 4:
Judicial Liquidation
Spanish Insolvency Act (Ley Concursal)
Purpose of Insolvency Regime Rehabilitation or liquidation Rehabilitation and/or liquidation.
Specialized Court for Hearing Insolvency
Proceedings
Bankruptcy court with specialized judges of the commercial court Commercial Courts
Party that Initiates Insolvency
Proceedings (Voluntary or Involuntary)
Debtor for voluntary proceedings and the bankruptcy court, creditors or public prosecutor for involuntary
proceedings.
Debtor or creditor;
Broadly, voluntary if initiated by the debtor and involuntary if initiated by a creditor.
Conditions to Initiation of Insolvency
Proceedings
Safeguard (“Sauvegarde”) proceedings: the debtor is not insolvent and faces difficulties which he cannot
overcome.
Accelerated financial Safeguard: a debtor must (i) have a minimum revenue of € 20 million, (ii) employ 150
employees minimum, (iii) have a balance sheet of € 25 million minimum or (iv) a balance sheet of €10 million
minimum if it controls a company meeting one of the criteria mentioned in (i) through (iii) above). A debtor must
also not be insolvent and have prepared a plan for the continued operation of the business as a going concern
which is likely to receive the support of at least 2/3 of its financial creditors (bank and bond debt within a
maximum of 2 months).
Judicial reorganization proceedings: the debtor must be insolvent and be seeking preservation of the
business as a going concern in order to safeguard jobs and discharge liabilities.
Judicial liquidation: the debtor must be insolvent and rehabilitation of the company must be impossible.
The debtor must be insolvent.
Conditions that Require the Initiation of
Insolvency Proceedings
Insolvency of the debtor. Management is required to file within 45 days of insolvency and is liable for
any increase in ultimately unpaid liabilities resulting from failure to comply with that deadline.
Imminent or actual insolvency.
Definition of Insolvency The debtor is unable to meet its liabilities that are due and payable from its cash (or cash equivalent)
assets.
Inability for the debtor to regularly meet its payment obligations upon their maturity
Management Preserved During
Proceedings and its Role
n Safeguard and Accelerated Financial Safeguard proceedings, management remains in place with a
judicial administrator that supervises or is co-responsible for management.
In Judicial Reorganization proceedings, management may remain in place with the addition of a judicial
administrator that is appointed that is co-responsible for management and may also replace
management.
In the case of voluntary insolvency proceedings, the debtor maintains the managing faculties
under the supervision of an appointed receiver (administrador concursal).
In the case of an involuntary insolvency proceeding, the receiver will fully manage the
debtor’s assets and activities.
Feb-15 3Source: Latham & Watkins. 2014

Regime
France Spain
Procedure and/or Operative Statue and Associated
Documents
Appointment of an Insolvency
Administrator or Other Similar Entity
In Judicial Liquidation proceedings, the judicial liquidator replaces management.
In Safeguard, Accelerated Financial Safeguard and Judicial Reorganization proceedings, management
has a role in the preparation of the plan that will be submitted to creditor approval.
Potential for Criminal Liability for
Management for Failure to Initiate
Insolvency Proceedings, Wrongful Trading
Activity or Otherwise
No criminal liability for failure to initiate insolvency proceedings. Criminal liability for continuing to trade
while insolvent provided there is evidence of intentional wrongdoing (examples of intentional
wrongdoing include misuse or misappropriation of corporate assets or an attempt to avoid/delay the
proceeding by using ruinous means to procure funds). There is also a potential for criminal liability
once the proceedings are initiated for a violation of certain essential rules including, among others,
payment violating the automatic stay or the terms of payment decreed by the plan.
There are no special criminal liabilities for debtor’s management included in the Spanish
Insolvency Act. The Spanish Criminal Code, however, provides for criminal liability for
management under certain causes, such us if insolvency is created or worsened by the
conduct of management.
Moratorium or Automatic Stay Yes. In Accelerated Financial Safeguard proceedings, however, the automatic stay only applies to financial
creditors.
Yes, but only secured creditors are barred from enforcing their rights through the judicial
proceeding and such restrictions are only in place until either (1) a restructuring plan that does
not impact the rights of the secured creditor has been approved or (2) one year has elapsed
from the initiation of the bankruptcy proceedings.
Unsecured creditors, however, may seek to enforce their rights during the proceedings if such
creditors initiated such enforcement action prior to the initiation of the bankruptcy
proceedings.
Input of Creditors in the Development of
the Restructuring Plan
All types of French insolvency proceedings (Safeguard, Accelerated Financial Safeguard and Judicial
Reorganization) with the exception of Judicial Liquidation allow for the input of creditors in the development of
the any restructuring plan. Creditor involvement may be limited, however, based on the size of the company,
whether measured by revenue or number of employees.
Any financial creditor or major supplier (a supplier holding a claim greater than or equal to 3% of all claims held
by all suppliers) may propose a restructuring plan, but the plan on which the creditors vote is ultimately
determined by the debtor and/or the judicial administrator.
Creditors holding at least one-fifth of total claims may submit a restructuring plan.
Availability of Substantive Consolidation Only with respect to entities that are not genuine (i.e. are fictitious) or the assets and liabilities of which are
commingled to the point of being undistinguishable.
N/A

Regime
France Spain
Procedure and/or Operative Statue and Associated
Documents
Creditors Entitled to Vote to Accept or
Reject Restructuring Plan and Associated
Documents and Associated Voting
Thresholds
The French regime provides for the formation of up to three “committees” of creditors for a particular
insolvency proceeding, though whether and which committees will be established depend, potentially, on the
size of the debtor’s business and on the type of proceeding.
The three committees include:
1. the committee of credit institutions, including all entities having extended credit to the debtor except
suppliers and bondholders;
2. the committee of major suppliers; and
3. the committee of bondholders, including holders of all bonds/notes irrespective of the currency, place of
issue, governing law, listing or number.
Accelerated Financial Safeguard proceedings will only have the first and third committees established, and there
will be no committee of major suppliers.
Creditors then vote to approve or reject of a proposed restructuring plan with their committees, and a
committee will approve a restructuring plan with the vote of 2/3 majority in value of debt represented by the
committee that also vote.
Creditors are generally entitled to vote during a meeting of the creditors, although creditors
holding subordinated claims may not be entitled to vote.
The vote of 50% of all creditors, with the exception of subordinated creditors, is required to
approve the restructuring plan.
Equity Holders Entitled to Vote to Accept
or Reject Restructuring Plan and
Associated Documents and Associated
Voting Thresholds
No, with the exception of restructuring plans that contemplate a debt for equity swap. In that case, the voting
threshold will depend on the debtor’s organizational documents, but the approval of 2/3 of equity attending or
represented at the general shareholders meeting is generally required.
No
Division or Composition of Classes of
Creditors and Equity Holders Entitled to
Vote
See above Creditors are classified as follows:
• Special privileged creditors (such as holders of claims based on “debts of the insolvency
estate” (as further discussed below), holders of secured debt claims, lessors, or holders of
claims based on status as a co-party to an instalment sale agreement);
• General privileged creditors (such as holders of wage claims, tax claims or claims for social
security);
• Ordinary creditors;
• Subordinated creditors (such as holders of contractually subordinated claims (other than
secured debt) and other types of claims); and
• Deeply subordinated creditors (such as holders of claw-back claims).
Subordinated creditors and deeply subordinated creditors are not entitled to vote.

Regime
France Spain
Absolute Consensus Required No, see above No
Cram Down Yes, in the sense that creditors who vote to reject a proposed plan will be forced to accept if 2/3 majority of their
respective committee vote to accept the plan.
The approval of a restructuring plan by one committee cannot cram down the proposed restructuring plan on
either (1) another committee that votes to reject it or (2) equity in the context of a plan that contemplates a
debt for equity swap.`
Yes, because a restructuring plan may be approved with consent of 50% of all creditors
entitled to vote.
A post-petition refinancing arrangement may also be “crammed down” on disapproving
creditors, if 75% of the current creditors holding claims based on prepetition financing
approve of the refinancing arrangement.
Creditors with Statutory Priority with
Potential to Impair Secured Creditors
(taxes, employees, fees, etc.)
In a case where the debtor will exit and be reorganized as a going-concern, there is no statutory priority
structure as creditors recover as set forth in the restructuring plan. In a liquidation case, however, bankruptcy
administrative expenses and certain amounts owed to employees will impair secured creditors.
Yes, claims based on “debts of the insolvency estate” will take statutory priority over other
claims asserted in the bankruptcy proceeding.
Debts of the insolvency estate generally include, among others, claims originating due to or
during the pendency of the insolvency proceedings (e.g., judicial expenses, loan agreements
that are reinstated by the court, debts arising from the continuation of the debtor’s business)
and wage claims for the 30 days immediately preceding the insolvency filing.
Minimum Protections for Creditors that
Vote to Reject the Proposed
Restructuring Plan Other Factors that
May Impact Creditor Recoveries
The court must only satisfy itself that “the interests of all creditors are sufficiently protected” provided there a
2/3 majority approves the plan. If the business is sold in a Judicial Liquidation or in a Judicial Reorganization, a
portion of the sale price is set aside to satisfy the claims of secured creditors whose security interest does not
include a right to withhold legal title to the assets until the creditor’s claim is satisfied in full. In practice that
portion may be far less than the secured creditors’ claim.
Special privileged creditors are not bound by the terms of a restructuring plan if they vote to
reject the plan.
Ability of Debtor to Obtain New Debt
During Insolvency Proceedings and
Priming Liens
Yes, but the ranking of this post-petition financing is junior to the claims of employees, administrative expenses
and to prior secured creditors in the event of subsequent Judicial Liquidation proceedings.
Yes, provided certain requirements are met:
• the refinancing must be approved by creditors representing at least 3/5 of the claims
asserted in the cases;
• the refinancing agreement has to be memorialized in a public document; and
• there must be issued a third-party independent expert report in support of the refinancing.
Fifty percent of the post-petition financing will qualify for superiority status and will not be
subject to the restructuring plan.

Regime
France Spain
Limitations on the Transfer of Claims
During Insolvency Proceedings
No, but a claims transfer must be formally submitted and noticed to the judicial administrator in order for the
creditor to be entitled to vote in Safeguard, Accelerated Financial Safeguard and Judicial Reorganization
proceedings.
The claims transferred during the insolvency process lose their voting rights.
Private Proceedings No No (judicial proceeding either for the restructuring or the liquidation processes).
Fixed Deadline to Approve a
Restructuring Plan or Other Deal, and
Implications of Missing this Deadline
In Safeguard and Judicial Reorganization, a restructuring plan must be approved with 6 months of the
commencement of the proceedings. If a restructuring plan is not approved by all three types of committees by
that time, the debtor will be required to separately negotiate treatment of claims with each creditor. With
respect to those creditors with whom a negotiated settlement cannot be reached, the bankruptcy court will
have the authority to impose the same period of a maximum of 10 years by which the debtor must satisfy the
claims asserted against it with such claims being repaid in full (including principal and interest, where
applicable).
In Accelerated Financial Safeguard proceedings, the plan must be approved within 2 months of commencement
of the proceedings. If the debtor fails to have a restructuring plan approved during that period, the bankruptcy
court will terminate the proceedings.
Generally, 2-3 months depending on the specific procedure, but such estimate is subject to
wide variations.
Timing Safeguard and Judicial Reorganization proceeding: 8 months maximum.
Accelerated Financial Safeguard Proceedings 2 months maximum.
No max time limit for Judicial Liquidation proceedings.
6-12 months subject to circumstances that can extend such process up to one or several years.

Characteristics
of Insolvency
Regime
Germany
Procedure and/or
Operative Statue and
“Ordinary” Insolvency Proceedings Insolvency Plan Proceedings, Sec. 217 InsO Self-Administration, Sec. 270a InsO. “Ordinary”
Self-Administration
Protective Shield Proceedings, Sec. 270b InsO.
Preparation for Reorganisation (Chapter 11 like
“Schutzschirmverfahren”), Sec. 270b InsO
Purpose of Insolvency
Regime
Collective satisfaction of the claims of the creditors by
liquidation or rehabilitation.
Collective satisfaction of the claims of the creditors
by means of an insolvency plan. This process
provides more leeway and often aims at
restructuring the business.
Collective satisfaction of the claims of the creditors
by means of self-administration of the restructuring
process.
Gives a debtor the chance to prepare an insolvency
plan, with the assistance of creditors and a
preliminary custodian (referred to as vorläufiger
Sachwalter) prior to occurrence of illiquidity (akin to
a pre-pack).
Specialized Court for
Hearing Insolvency
Proceedings
Bankruptcy Court
Party that Initiates
Insolvency
Proceedings
(Voluntary or
Involuntary)
Debtor or creditor(s) Debtor or creditor(s) initiate insolvency proceedings,
insolvency administrator or the debtor applies an
insolvency plan.
Debtor or creditor(s) initiate insolvency proceedings
and the debtor applies for self-administration.
A debtor applies for protective shield proceedings
prior to occurrence of illiquidity.
Conditions to
Initiation of Insolvency
Proceedings
Illiquidity, Sec. 17 InsO, and/or
Imminent illiquidity, Sec. 18 InsO, and/or
Over-indebtedness, Sec. 19 InsO.
Over-indebtedness, Sec. 19 InsO, and
Application for insolvency plan.
Application for self-administration.
Application for self-administration, and
Certification according to Sec. 270b InsO.

Characteristics
of Insolvency
Regime
Germany
Procedure and/or
“Ordinary” Insolvency Proceedings Insolvency Plan Proceedings, Sec. 217 InsO Self-Administration, Sec. 270a InsO. “Ordinary” Self-
Administration
Conditions that
Require the Initiation
of Insolvency
Proceedings
Illiquidity, Sec. 17 InsO.
Over-indebtedness, Sec. 19 InsO.
In case of illiquidity or over-indebtedness, management must file within three weeks (and during that period, management must take steps to overcome the financial crisis).
Management is entitled, but not required, to file in the context of imminent illiquidity.
Definition of
Insolvency
Illiquidity: debtor is not able to honor its payment obligations as they come due (three weeks cash forecast: debtor is unable to pay at least 90% of the debt which is due or which will become due within the next three weeks with current
funds).
Imminent illiquidity: predominantly likely that debtor cannot honor its payment obligations as they come due (1 to 2 year forecast).
Over-indebtedness: Existence of financial over-indebtedness (not identical to balance sheet over-indebtedness) and lack of a going concern-prognosis.
Management
Preserved During
Proceedings and its
Role;
Appointment of an
Insolvency
Administrator or
Other Similar Entity
No, an insolvency administrator is appointed who takes over
management responsibility.
In the case of an ordinary insolvency proceeding, an
administrator is appointed. In the case of self-
administration, management is preserved and,
instead of an administrator, a custodian (Sachwalter)
is appointed to supervise management.
Yes, but management remains under supervision of
the custodian (Sachwalter).
Yes, but management remains under supervision of
the preliminary custodian (vorläufiger Sachwalter).
Potential for Criminal
Liability for
Management for
Failure to Initiate
Insolvency
Proceedings, Wrongful
Trading Activity or
Otherwise
Potential criminal liability for management if management violates obligation to file the case within a maximum of three weeks of illiquidity or over-indebtedness, Sec. 15a InsO
Potential criminal liability for management and employees for certain conduct when the debtor is or is near a state of insolvency, such as violation of book-keeping duties, extending unlawful benefits to creditors or debtors or unlawful
disposition of assets, Sec. 283 et seqq. StGB.

Characteristics
of Insolvency
Regime
Germany
Procedure and/or
Self-Administration
Moratorium or
Automatic Stay
Upon filing for insolvency, the bankruptcy court will order a
stay. There is no statutory limitation on the length of the stay.
The automatic stay covers (a) all enforcement action by
unsecured creditors and (b) enforcement action by secured
creditors with respect to assignment of receivables and the
transfer of security interests in equipment and inventory. The
stay does not cover a secured creditor’s enforcement action
with respect to share pledges or real estate mortgage
enforcement action. The automatic stay can be extended to
cover such enforcement action by secured creditors, however,
provided the debtor can persuade the court that such
enforcement action by secured creditors will impact the
ongoing business of the insolvent entity.
Upon filing for protective shield proceedings, the
bankruptcy court will most probably order a stay,
and is obliged to order one – in each case for up to 3
months – if the Debtor applies for it.
The automatic stay covers (a) all enforcement action
by unsecured creditors and (b) enforcement action
by secured creditors with respect to assignment of
receivables and the transfer of security interests in
equipment and inventory. The stay does not cover a
secured creditor’s enforcement action with respect
to share pledges or real estate mortgage
enforcement action. The automatic stay can be
extended to cover such enforcement action by
secured creditors, however, provided the debtor can
persuade the court that such enforcement action by
secured creditors will impact the ongoing business of
the insolvent entity.
N/A N/A
Input of Creditors in
the Development of
Limited influence.
Informal influence of significant creditors through discussions
with insolvency administrator and most administrators will
consider input by creditors.
Formal influence through (Preliminary and Regular) the
formation of a creditors’ committee and meeting.
Preliminarily, a creditors’ committee may suggest the
appointment of an administrator and supervise an appointed
administrator.
Creditors may decide, at a meeting, whether to pursue
liquidation or continuation of business and, if applicable, the
nature and substance of the insolvency plan.
Major informal and formal influence.
Informal and early input by creditors is necessary for
successful adoption of the insolvency plan.
Approval of the insolvency plan requires consent the
creditor classes.
Self-administration rarely successful without close
co-operation between the debtor, any custodian and
the creditors.
The creditors’ committee must formally consent to
an insolvency plan, to the sale of the businesses or
any other fundamental transactions in the
proceedings. The creditors’ committee can request
the revocation of self-administration proceedings by
a majority vote.
Self-administration rarely successful without close
co-operation between the debtor, any custodian and
the creditors.
The creditors’ committee must formally consent to
an insolvency plan, to the sale of the businesses or
any other fundamental transactions in the
proceedings. The creditors’ committee can request
the revocation of self-administration proceedings by
a majority vote.

Characteristics
of Insolvency
Regime
Germany
Procedure and/or
Self-Administration
Availability of
Substantive
Consolidation
No N/A N/A N/A
Creditors Entitled to
Vote to Accept or
Reject Restructuring
Plan and Associated
Documents and
Associated Voting
Thresholds
A simple majority of the sum of the creditors’ claims is required
to approve the plan to restructure or to liquidate.
Creditors vote on a proposal prepared by Debtor or
insolvency administrator, divided into classes.
Adoption of plan requires at least a majority in
number and amounts of the creditors in at least a
majority of the classes.
Not applicable.
If insolvency plan is proposed during self-
administration, see corresponding column.
N/A
Equity Holders
Entitled to Vote to
Accept or Reject
Restructuring Plan and
and Associated Voting
Thresholds
No Only as one of several classes entitled to vote. The
voting threshold is a combined headcount majority
as well as ownership-percentage majority of the
equity holders attending the meeting.
Self-administration proceedings may be opened
either in form of regular proceedings or insolvency
plan proceedings – see respective column for
corresponding information.
N/A

Characteristics
of Insolvency
Regime
Germany
Procedure and/or
Self-Administration
Division or
Composition of Classes
of Creditors and Equity
Holders Entitled to
Vote
N/A Classes of creditors are formed based on shared
legal position and similar economic interests.
Standard classes:
- Secured Creditors
- Unsecured Creditors
- Subordinated Creditors
- Shareholders (in case of debt-equity-swap).
Additional classes can include:
- Suppliers
- Employment Agency
- Pension Fund
- Splitting of Secured Creditors if different economic
interests.
N/A N/A
Absolute Consensus
Required
N/A No, adoption of a restructuring plan requires at least
a majority in number and amounts of the creditors in
at least a majority of the classes of creditors.
N/A N/A

Characteristics
of Insolvency
Regime
Germany
Procedure and/or
Self-Administration
Cram Down No Classes of creditors and classes of equity holders can
be crammed down under certain conditions, Sec.
245 InsO.
Dissenting creditors and equity holders will be
deemed to have consented if the provision for their
recovery under the insolvency plan is (i) not worse
than their recovery without the insolvency plan
(liquidation or ordinary insolvency proceedings) and
(ii) fair and adequate compared to the recovery of
other creditors.
Only if self-administration proceedings are opened
as insolvency plan proceedings – see corresponding
column.
N/A
Creditors with
Statutory Priority with
Potential to Impair
Secured Creditors
(taxes, employees,
fees, etc.)
Preferential status granted for (i) court fees, remuneration and
expenses of preliminary and regular insolvency administrator
and members of creditors’ committee and
(ii) all debts created by activities of the insolvency
administrator or by the way of administering the insolvency
estate.
See corresponding column for regular insolvency
proceedings.
See corresponding column for regular insolvency
proceedings, substituting custodian for insolvency
administrator.
See corresponding column for self-administration
proceedings.
Minimum Protections
for Creditors that Vote
to Reject the Proposed
Restructuring Plan
N/A In addition to the conditions for cram down,
dissenting creditors may request that the insolvency
plan not be approved and be heard by the
bankruptcy court prior to the approval of the
insolvency plan. The bankruptcy court will analyze if
conditions of a cram down are met or otherwise.
N/A N/A

Characteristics
of Insolvency
Regime
Germany
Procedure and/or
Self-Administration
Ability of Debtor to
Obtain New Debt
During Insolvency
Proceeding and
Priming Liens
Yes, but practical reasons limit availability. Special loan
agreements (Massekredit), similar to DIP financing, may be
entered into by the insolvency administrator, debtor or
custodian (often with consent of the creditors’ committee), but
some investors or banks may not be willing to provide this kind
of financing, especially considering the postpetition lender will
not be granted a superpriority lien over existing security
interests.
N/A N/A N/A
Limitation on the
Transfer of Claims
During Insolvency
Proceedings
No
Private Proceeding No. Under supervision by Bankruptcy Court

Characteristics
of Insolvency
Regime
Germany
Procedure and/or
Self-Administration
Fixed Deadline to
Approve a
Restructuring Plan or
Other Deal, and
Implications of
Missing this Deadline
No Statutory Deadline N/A N/A N/A
Timing Several Years At least ~3-6 months, with variation depending on
complexity and if pre-pack has been agreed.
At least ~3-6 months, with variation depending on
complexity of cases.
Up to 3 months only, then opening of “regular” self-
administration proceedings.

Characteristics of
Insolvency Regime
Italy United Kingdom
Procedure and/or Operative Statue
and Associated Documents
Article 67 and
Restructuring Plan
Article 182-bis and
Restructuring
Agreement
Article 160 and
Pre-bankruptcy
Agreement
Administration under
Insolvency Act 1986
and Insolvency Rule
1986
Liquidation under Insolvency Act
1986 and Insolvency Rules 1986
Company Voluntary
Arrangement under
Insolvency Act 1986
and Insolvency Rules
1986
Scheme of
Arrangement under
Companies Act
2006
Receivership/
Administrative
Receivership under
Insolvency Act 1986
and Insolvency Rules
1986 and under
specific agreement
which permits the
appointment of a
receiver.
Purpose of Insolvency Regime Rehabilitation Rehabilitation and/or
liquidation
Rehabilitation
and/or liquidation
3 cascading purposes:
(1) save company as a
going concern; (2)
achieve a better
result than if
company were wound
up; and (3) realize
property to make
distribution to one or
more creditors.
Company dissolution procedure.
Assets are realized and
distributed to creditors.
Company compromises
or enters other
arrangement with
creditors under the
supervision of an
insolvency
practitioner. Only
binds unsecured
creditors not secured
or preferential
creditors unless they
agree to be bound.
Court sanctions a
compromise or
arrangement which
has been agreed by
the relevant class of
creditors or
members. This is
not an insolvency
procedure but is
commonly used by
companies in
financial distress.
Purpose of receivership
is to enforce
security/realize assets
over which receiver is
appointed to discharge
the debt owed to the
appointer.
Specialized Court for Hearing
Not Applicable Bankruptcy Court. Bankruptcy Court. No No No No No
Party that Initiates Insolvency
Proceedings
Debtor Debtor Debtor Debtor or Creditor(s) Company is unable to pay its
debts or the court considers it
just and equitable to wind up
company. Solvent company may
also enter liquidation.
No particular trigger,
although used when
company is nearing
insolvency to
restructure.
No particular
trigger, although
used when
company is nearing
insolvency to
restructure.
Trigger event in
agreement permitting
appointment of
receiver should have
occurred.

Regime
Article 67 and
Restructuring Plan
Article 182-bis and
Restructuring
Agreement
Article 160 and Pre-
bankruptcy Agreement
Insolvency Act 1986 and
Insolvency Rule 1986
Liquidation under
Insolvency Act 1986
and Insolvency
Rules 1986
Company Voluntary
Arrangement under
Insolvency Act 1986
and Insolvency
Rules 1986
Scheme of
Arrangement under
Companies Act
2006
Receivership/
Administrative
Receivership under
Insolvency Act 1986
and Insolvency
Rules 1986 and
under specific
agreement which
permits the
appointment of a
receiver.
Conditions that Require the Initiation of
N/A N/A N/A Debtor or Creditor(s) Company is unable
to pay its debts or
the court considers
it just and equitable
to wind up
company. Solvent
company may also
enter liquidation.
No particular
trigger, although
used when
company is nearing
insolvency to
restructure.
No particular
trigger, although
used when
company is nearing
insolvency to
restructure.
Trigger event in
agreement
permitting
appointment of
receiver should
have occurred.
Definition of Insolvency Recoverable crisis
(squilibrio).
Debtor in distress (stato
di crisi) or insolvent.
Insolvency as incapacity
of the debtor to
regularly pay out his
debt when due.
Debtor in distress (stato
di crisi) or insolvent.
Insolvency as incapacity
of the debtor to
regularly pay out his
debt when due.
Inability to pay debts is
ascertained by two
different tests:
Cash Flow test: can
company pay its debt as
they fall due, if not
company is insolvent
regardless of whether
assets exceed liabilities
on balance sheet.
Balance Sheet test:
Company deemed
insolvent if liabilities
(taking into account
contingent and
prospective liabilities)
exceed assets.
No insolvency
required.
No insolvency
required.
No insolvency
required.
N/A

Regime
Article 67 and
Restructuring Plan
Article 182-bis and
Restructuring
Agreement
Liquidation under
Insolvency Act 1986
and Insolvency
Rules 1986
Company Voluntary
Arrangement under
Insolvency Act 1986
and Insolvency
Rules 1986
Scheme of
Arrangement under
Companies Act
2006
Receivership/
Administrative
Receivership under
Insolvency Act 1986
and Insolvency
Rules 1986 and
under specific
agreement which
permits the
appointment of a
receiver.
Management Preserved during
Proceedings and Its Role
Appointment of an Insolvency
Administrator or Other Similar Entity
Yes Yes Yes, with the
supervision of Court
appointed officer
Extraordinary acts need
judge’s prior approval.
An administrator is
appointed to the
company. Although
directors remain in place
they cannot exercise
power that might
interfere with an
administrator and have
a duty to cooperate with
the administrator.
A liquidator is
appointed and
replaces the
directors.
A nominee is
appointed to make
the CVA proposal
and then a
supervisor is
appointed to
implement
proposal. These
may be the same
person. During
process
management
remain in place.
Management is
preserved.
An administrative
receiver has the
power to carry on
business and whilst
in office
management’s
powers are
suspended.
Potential for Criminal Liability for
Management for Failure to Initiate
Insolvency Proceedings, Wrongful Trading
Activity or Otherwise
Potential criminal
liability for management
under Article 223
(bancarotta
fraudolenta), Article 224
(bancarotta semplice)
and others.
Potential criminal
liability of the
Management under
Article 223 (bancarotta
and others.
Potential criminal
liability of the
Management under
Article 223 (bancarotta
and others.
Absent fraud generally
directors incur civil
liability for offences
such as breach of duty
and wrongful trading.
N/A N/A N/A N/A

Regime
Article 67 and
Restructuring
Plan
Article 182-bis and
Restructuring Agreement
Article 160 and Pre-bankruptcy
Agreement
Administration
under Insolvency
Act 1986 and
Insolvency Rule
1986
Liquidation under
Insolvency Act 1986
and Insolvency
Rules 1986
Company Voluntary
Arrangement under
Insolvency Act 1986
and Insolvency
Rules 1986
Scheme of
Arrangement under
Companies Act
2006
Receivership/
Administrative
Receivership under
Insolvency Act 1986
and Insolvency
Rules 1986 and
under specific
agreement which
permits the
appointment of a
receiver.
Moratorium or Automatic Stay No 60 days (negotiation
phase) + 60 days.
The stay is generally
referred to as the “Stay of
Claims.”
Yes.
Under the recently added paragraph 6
to Article 160, a debtor may now seek
the protection of the Stay of Claims by
filing a notification of the intent to
restructure. Under paragraph 6, the
Debtor will have 60 to 120 days, with
the potential for a further extension of
60 days, to submit additional required
documents, but will be able to enjoy
the breathing room of the stay at a
point earlier in the process.
Otherwise, the Stay of Claims is
generally in effect from the date of the
publication of the petition for approval
of the Pre-bankruptcy Agreement in a
debtor’s register until the agreement is
approved by the court and is no longer
subject to appeal.
Yes Yes Only for small
companies if it
satisfies two of the
following three
requirements:
revenue of not
more that £5.6
million; assets of no
more than £2.8
million; and less
than 50 employees.
No Bi

Regime
Article 67 and
Restructuring Plan
Article 182-bis and
Restructuring
Agreement
Liquidation under
Insolvency Act 1986
and Insolvency
Rules 1986
Company Voluntary
Arrangement under
Insolvency Act 1986
and Insolvency
Rules 1986
Scheme of
Arrangement under
Companies Act
2006
Receivership/
Administrative
Receivership under
Insolvency Act 1986
and Insolvency
Rules 1986 and
under specific
agreement which
permits the
appointment of a
receiver.
Input of Creditors in the Development of
Each of the separate
proceedings under
Articles 67, 182 and 160
are led by the debtor
and any restructuring
plan will likely be
negotiated with the
creditors, though the
extent of the
involvement will depend
on the Article under
which the proceedings
were initiated.
In certain circumstances,
it is also possible for
creditors to propose and
develop a restructuring
plan separate and apart
from the debtor.
N/A N/A No statutory
requirement, but in
practice a creditors
committee will be
appointed to liaise with
administrator and so
informally creditors may
have input.
Creditors holding at
least one-fifth of
total claims may
submit a
restructuring plan.
No statutory
requirement but in
practice view of
creditors may be
canvassed
informally to ensure
proposal is
acceptable and
minimum voting
thresholds will be
met.
No statutory
requirement but in
practice view of
creditors may be
canvassed
informally to ensure
proposal is
acceptable and
minimum voting
thresholds will be
met.
Primary duty of a
receiver is to his
appointer to realize
the property of the
company and repay
indebtedness owed
to the appointer.
Availability of Substantive Consolidation Yes Yes Yes No No No No No

Regime
Article 67 and
Restructuring Plan
Article 182-bis and
Restructuring
Agreement
Liquidation under
Insolvency Act 1986
and Insolvency
Rules 1986
Company Voluntary
Arrangement under
Insolvency Act 1986
and Insolvency
Rules 1986
Scheme of
Arrangement under
Companies Act
2006
Receivership/
Administrative
Receivership under
Insolvency Act 1986
and Insolvency
Rules 1986 and
under specific
agreement which
permits the
appointment of a
receiver.
Creditors Entitled to Vote to Accept or
Reject Restructuring Plan and Associated
Documents and Associated Voting
Thresholds
Not applicable –
agreement with affected
creditors (to implement
the Plan).
Restructuring
Agreement to be
approved by creditors
representing at least
60% of outstanding
indebtedness.
Creditors, including
those creditors that
waived their security
interests and under-
secured creditors, are
entitled to vote.
The Bankruptcy
Agreement must be
approved by a majority
of voting creditors from
each class of creditors
and a majority of each
class must vote to
approve the Agreement.
Creditor vote on a
proposal prepared by
the administrator.
Proposal may be
accepted with or
without modification.
50% of creditors present
and voting must pass
proposal. If proposal is
voted down then
administrator must
return to court and seek
directions.
No Yes. Proposal must
be passed by 75% in
value of creditors
present and voting
and 50% in value of
creditors that are
unconnected with
company.
Yes. 75% in value of
creditors present
and voting and a
majority in number
must pass the
scheme in each
class.
No proposal
although an
administrative
receiver is required
to update
unsecured creditor
who may also form
a committee.
Equity Holders Entitled to Vote to Accept
or Reject Restructuring Plan and
Associated Documents and Associated
Voting Thresholds
N/A N/A N/A No Only in a solvent
liquidation.
Shareholder can
approve proposal
by simple majority
in value, although if
they do not pass
the proposal but
creditor do, the CVA
will still be
implemented.
Equity would only
vote in a scheme if
their rights were
being
compromised. Not
very common in
restructuring
schemes of
arrangement.
No

Regime
Article 67 and
Restructuring Plan
Article 182-bis and
Restructuring
Agreement
Liquidation under
Insolvency Act 1986
and Insolvency
Rules 1986
Company Voluntary
Arrangement under
Insolvency Act 1986
and Insolvency
Rules 1986
Scheme of
Arrangement under
Companies Act
2006
Receivership/
Administrative
Receivership under
Insolvency Act 1986
and Insolvency
Rules 1986 and
under specific
agreement which
permits the
appointment of a
receiver.
Division or Composition of Classes of
Creditors and Equity Holders Entitled to
Vote
Chance to create classes
of creditors (based on
the nature of claims) to
differentiate treatment.
No class. N/A No class issues as
typically only
unsecured creditors
vote on CVA and
unless they are
being treated
differently they will
be deemed the
same class.
The class must be
confined to those
persons whose
rights are not so
dissimilar as to
make it impossible
for them to consult
together with a
view to their
common interest.
Class composition is
of vital important
since each class
must pass the
scheme.
Creditors/Lenders
should not
unnecessarily be
segregated into
separate classes as
this would
effectively give
them a veto.
N/A

Regime
Article 67 and
Restructuring Plan
Article 182-bis and
Restructuring
Agreement
Liquidation under
Insolvency Act 1986
and Insolvency
Rules 1986
Company Voluntary
Arrangement under
Insolvency Act 1986
and Insolvency
Rules 1986
Scheme of
Arrangement under
Companies Act
2006
Receivership/
Administrative
Receivership under
Insolvency Act 1986
and Insolvency
Rules 1986 and
under specific
agreement which
permits the
appointment of a
receiver.
Absolute Consensus Required Yes (any affected
creditor has to consent)
Yes (Restructuring
Agreement to be
approved by creditors
representing at least
60% of outstanding
indebtedness.
Non consenting or non-
participating creditors to
be satisfied in full).
No No N/A No No N/A
Cram Down No No Yes, a Bankruptcy
Agreement can be
approved over the
dissent of a class if the
reviewing court finds
that the dissenting
creditors have an
opportunity under the
Bankruptcy Agreement
to have their associated
claims satisfied or that
there are no better
chances for satisfaction
outside of the
Bankruptcy Agreement.
Yes N/A Yes Yes N/A

Regime
Article 67 and
Restructuring Plan
Article 182-bis and
Restructuring
Agreement
Liquidation under
Insolvency Act 1986
and Insolvency
Rules 1986
Company Voluntary
Arrangement under
Insolvency Act 1986
and Insolvency
Rules 1986
Scheme of
Arrangement under
Companies Act
2006
Receivership/
Administrative
Receivership under
Insolvency Act 1986
and Insolvency
Rules 1986 and
under specific
agreement which
permits the
appointment of a
receiver.
Creditors with Statutory Priority with
Potential to Impair Secured Creditors
(taxes, employees, fees, etc.)
Yes, certain claims, such
as claims for procedural
expenses, certain taxes,
and employee wages
and benefits, may be
given priority status.
and employee wages
and employee wages
Very limited preferential
creditors (unpaid wages
to £800 and certain
liabilities related to
occupational pension
schemes) are paid after
fixed charge holders but
prior to floating charge
holders. Also note that
an amount is set aside
from funds owed to
floating charge holders
for payment to
unsecured creditors
known as the prescribed
part being the 50% of
the first £10,000 net
realization from floating
charge property and the
20% thereafter to a
maximum of £600,000.
Crown preference for
taxes has been
abolished.
Secured creditors
and preferential
creditors cannot be
bound by a CVA
unless they agree to
it. No cram down
available in this
respect.
N/A Not applicable to
fixed charge
receiver.
Administrative
receiver must pay
preferential
creditors and set
aside funds for the
prescribed part
from floating
charge realizations.
N/A

Regime
Article 67 and
Restructuring Plan
Article 182-bis and
Restructuring
Agreement
Liquidation under
Insolvency Act 1986
and Insolvency
Rules 1986
Company Voluntary
Arrangement under
Insolvency Act 1986
and Insolvency
Rules 1986
Scheme of
Arrangement under
Companies Act
2006
Receivership/
Administrative
Receivership under
Insolvency Act 1986
and Insolvency
Rules 1986 and
under specific
agreement which
permits the
appointment of a
receiver.
Minimum Protections for Creditors that
Vote to Reject the Proposed
Restructuring Plan
Yes, including that
classes of creditors may
not be crammed down.
Yes, including that
classes of creditors may
not be crammed down.
Creditors that vote to
reject a restructuring
plan that are a part of a
dissenting class may be
granted certain
protections.
N/A N/A N/A N/A N/A
Ability of Debtor to Obtain New Debt
During Insolvency Proceeding and
Priming Liens
Yes, and a DIP lender
may be given a super
priority lien provided
the lien does not
prejudice the holders of
prepetition claims.
the lien does not
prepetition claims.
the lien does not
prepetition claims.
Will depend on
circumstances and
whether permitted by
existing
facilities/creditors. No
“DIP” financing market.
No since it is a wind
down not a rescue
procedure.
Will depend on
circumstances and
whether permitted
by existing
facilities/creditors.
No “DIP” financing
market.
N/A N/A

Regime
Article 67 and
Restructuring Plan
Article 182-bis and
Restructuring
Agreement
Liquidation under
Insolvency Act 1986
and Insolvency
Rules 1986
Company Voluntary
Arrangement under
Insolvency Act 1986
and Insolvency
Rules 1986
Scheme of
Arrangement under
Companies Act
2006
Receivership/
Administrative
Receivership under
Insolvency Act 1986
and Insolvency
Rules 1986 and
under specific
agreement which
permits the
appointment of a
receiver.
Limitation on the Transfer of Claims
During Insolvency Proceedings
No No No No moratorium on
trading, although
insolvency officeholder
or relevant person in
charge of process may
as a matter of process
seek to fix a date for
creditors’ register or
refuse to recognize
transfers after a certain
date to enable voting or
payment of claims. The
onus would shifts to the
transferor who would
need to ensure the
transferee receives the
appropriate
information/distribution
.
N/A N/A N/A N/A

Regime
Article 67 and
Restructuring Plan
Article 182-bis and
Restructuring
Agreement
Liquidation under
Insolvency Act 1986
and Insolvency
Rules 1986
Company Voluntary
Arrangement under
Insolvency Act 1986
and Insolvency
Rules 1986
Scheme of
Arrangement under
Companies Act
2006
Receivership/
Administrative
Receivership under
Insolvency Act 1986
and Insolvency
Rules 1986 and
under specific
agreement which
permits the
appointment of a
receiver.
Private Proceeding Yes, Plan to be
acknowledged
by independent expert.
No (needs Court’s
approval (omologa)).
No (judicial proceeding). Largely private, even
where court appointed
since majority of
proceeding will be out
of court. Court
directions may be
sought.
Largely out of court
process. Although
court directions
may be sought.
Out of court
process.
Two court hearings
required, one to call
meeting of creditors
and another to
sanction scheme.
Out of court
process.

28
Feb-15

Real Estate Foreclose Times across Europe
29
Country Foreclosure Process
France
• Foreclosure, 50% more than 1 year, 33% more than 2 years
• Creditor must have court decision to seize property
Germany • 1 – 2 year recovery period
Ireland
• Period of beginning of arrears status to forced sale no longer than 18 months
• Presentation of civil bill, notice of trial/court hearing, order for repossession, execution order, repossession by
country sheriff
Italy • Lengthy court process with a period of as long as 8 years from time of default to recovery
Netherlands • Foreclosure process usually within three months
Spain
• Regulated, new laws reduces number of required auctions from 3 to 1 to speed up process
• However, foreclosure or auctions is rare, normal course of action renegotiation of rate or term of debt
• Typically three years to foreclosure
UK
• Legal repossessions process commences, with court order required and lasts 12 months, on average
• Eviction and sale in open market
• No government mandated auction system
Source: Merrill LynchFeb-15

30
Feb-15

Overview of Lease Structures across Europe
France Germany Italy Netherlands Spain UK
Rent Payable
every:
Quarter Month Quarter Quarter Month Quarter
Typical Lease
Length
3 / 6 / 9 years or fixed
term of 6, 9
5 + 5 years 6 + 6 years 5 Years 3 – 5 years 5 – 15 years
Statutory right to
renew lease
Yes No Yes No Yes Yes
Frequency of
rent reviews
None Rare
Not possible after
first 6 years. Free
negotiation at the
end of 12 years
By agreement 3 – 5 years
5 Years (upwards
only)
Frequency and
basis of
indexation of
rent
Annual by agreement
based on INSEE cost of
Construction Index
Annual. Indexation
based on CPI
Annual (75% of
Italian Consumer
Price Index)
Annual (based on
CPI)
Annual (based on
CPI)
Annual RPI linked
uplift (not applicable
to all leases)
Lease disposal –
Early terminating
rights
Via break clause only
Via break clause only
(penalty is to be paid)
Via break clause only Via break clause only Via break clause only Via break clause only
Feb-15 31Source: DTZ Research 2014

Overview of Lease Structures across Europe
France Germany Italy Spain Netherlands UK
Rents – Exclusions
Service charge,
utilities, parking
Service charge,
parking, VAT, utilities
Service charge,
utilities
Service charge,
utilities, property tax
Service charge, VAT,
fit-out
Service charge,
utilities, taxes
Letting Agent’s Fees
(as % of first year’s
rent)
15% – 30% 20% - 25% 10% – 15%
8.5% – 10% (typically
paid by landlord)
14% – 16% 10%
Local tax (as % of
annual rent)
Property tax (varies
between type of
premise). Additional
tax in the Greater
Paris region (“taxe
bureaux”)
Property tax
(variable), typically
included in service
charge
A nominal sum to be
defined in each case
Property tax (landlord
obligation but
typically passed onto
tenant)
Property tax called
OZB (varies between
locations)
Business Rates
(variable – not
standardised and
subject to discounts
for quantum)
VAT (as % of annual
rent)
20%
19% (where parties
opt to tax)
22% where applicable 21%
21% (where parties
opt to tax)
20% (where landlord
opts to tax)
Restriction on
ownership of
property by
foreigners
No No No No No No
Feb-15 32Source: DTZ Research 2014

European Distressed Info: Insolvency Regimes, Foreclosures and Lease Info

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