Reorganisation proceedings can be initiated to rehabilitate the business operations of a company that is in financial difficulties but otherwise viable, and to secure debt restructuring. The Restructuring of Enterprises Act (47/93) contains an extensive and detailed set of rules to define
- the preconditions for the initiation of the proceedings and their legal effects,
- the progress of the procedure,
- the status of creditors and their hearings,
- content of the debt restructuring,
- confirmation of the reorganisation programme and
- closure of the proceedings.
Who is eligible for business reorganisation?
Reorganisation proceedings may apply to a private entrepreneur, a general partnership, a limited partnership, a limited liability company, a cooperative, a housing company or an association engaging in business activities.
Objective of reorganisation and the company's own reports
In the reorganisation proceedings, an individual reorganisation programme, lasting several years, is created for the company, to allow for reorganisation of the company's operations and liabilities. If a company takes care of its obligations under the reorganisation programme, it is released from its remaining debts at the end of the programme. A company should find out as soon as possible whether it fulfils the criteria for corporate reorganisation, and whether bankruptcy could be avoided.