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A debtor in financial distress – either insolvent or with negative equity – can request a moratorium and initiate composition proceedings by submitting a provisional restructuring plan to the competent composition court. The latter will, upon a summary examination of its merits, grant a provisional moratorium if it comes to the conclusion that a composition plan may be achievable. It will reject the moratorium, if it finds that there are obvious indications that the plan will most likely fail. The moratorium is first granted on a provisional basis with a maximum duration of four months and is not published if the debtor so requests and the interests of the creditors and other third parties, if any, are sufficiently protected. The court can grant a final moratorium of four to six months (which needs to be published), provided it considers the chances of achieving a composition agreement are sufficiently realistic. If the restructuring during the (provisional) moratorium is successful and no composition agreement is necessary, the debtor can file for a suspension of the moratorium and thus no composition proceedings follow.

The European Market Infrastructure Regulation is causing confusion around the question of which instruments and agreements the new framework is designed to capture