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David Kurtz, global head of Lazard’s restructuring practice, reflects on US market trends and why the US remains the choice destination for forum shoppers

Grant Spencer, deputy governor of the Reserve Bank of New Zealand, explains why the Open Bank Resolution might be a model for other jurisdictions considering resolution plans

Certain corporate restructuring procedures such as voluntary arrangements (CVAs) under the Insolvency Act 1986 (IA) or schemes of arrangement under the Companies Act 2006 (a process involving a compromise or other arrangement with creditors or members) do not require a company to be insolvent, although in most restructuring cases the company will be tinkering on the brink of insolvency.

There is no statutory regime for restructuring a company's debts outside formal insolvency proceedings, and no Chapter 11-equivalent protection. The directors of a company may only (and must) file for insolvency if the company meets the statutory test, but face administrative or potentially criminal liability for a fraudulent filing.

As a general rule, a company may be declared insolvent (concurso mercantil) when it has defaulted in its payment obligations to two or more creditors, and on the date of filing of the insolvency petition: (i) its due obligations that have been delinquent for more than 30 days represent 35% or more of its total outstanding obligations; and/or (ii) it does not have sufficient liquid assets (cash and cash equivalents, such as bank deposits and other receivables with a maturity of no more than 90 days, or securities that may be sold within 30 days, in each case from the date of filing of the insolvency request) to pay for at least 80% of its obligations that are due and payable on such date.

Relief from creditors can be sought by filing for bankruptcy (concurso de acreedores).

There are three main forms of bankruptcy proceedings in Norway, all regulated by the Norwegian Bankruptcy Act: judicial debt negotiation proceedings; either voluntary or compulsory composition proceedings; and winding-up proceedings. The debtor may also suggest a compulsory composition while under winding-up proceedings.

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.

A company under financial distress may seek relief from creditors by filing a court-supervised reorganisation proceeding. The company does not have to provide evidence of being insolvent for the purposes of filing for reorganisation. The company may also file a voluntary bankruptcy liquidation proceeding or a pre-packaged restructuring.