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Controversy surrounding the surge in covenant lite across the US and Europe has overshadowed some less cyclical trends that are shifting lending practices

Bankruptcy proceedings are governed by the Bankruptcy Act, while reorganisation proceedings are governed by the Pre-bankruptcy Settlement Agreement Act. In both cases, bankruptcy and reorganisation, a company must be insolvent to seek relief from creditors. In principle, Croatian legislation is familiar with three insolvency tests: (i) illiquidity; (ii) incapacity to pay; and (iii) over-indebtedness.

A haircut without the explicit consent of a creditor is only possible during insolvency proceedings.

Welcome to IFLR's Insolvency & Corporate Reorganisation Survey, completed in partnership with Latham & Watkins

KPMG partner and INSOL board member Richard Heis considers Europe and UK insolvency developments and looks closely at global bank resolution

The Austrian Insolvency Code provides for bankruptcy proceedings, which lead to the winding-up and liquidation of a debtor company and restructuring proceedings, which seek to rescue a debtor company. Restructuring proceedings may be initiated with self-administration or without self-administration. Only restructuring proceedings under the Insolvency Code may lead to the relief from creditors.

The European Central Bank and member state regulators have clarified the composition and role of the joint supervisory teams that will supervise the biggest eurozone banks under the incoming single supervisory mechanism

The Cyprus Companies Law is based on the UK Companies Act 1948. It provides four main procedures for dealing with financially troubled companies. In increasing order of formality and finality they are:

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.