The Slovenian insolvency law only regulates the voluntary conversion of claims from the perspective of creditors in the context of the resolution of companies in financial difficulties. In practice, the current legal regime has proven to be sub-optimal due to the lack of predictability or certainty for creditors who opt for conversion, as they do not know what share of the debtor's ownership structure they will ultimately acquire. As a result, in practice, a mere conversion of claims does not achieve the desired financial restructuring that would return the debtor to (long-term) capital adequacy.
Based on insights from banking law (i.e., bail-in), other national laws, the Restructuring Directive and theory, the thesis presents the theoretical concept of compulsory debt conversion in insolvency proceedings for public limited companies. Compulsion in this case refers to the possibility that a conversion decision taken by the relevant majority of creditors could be imposed on those creditors who did not vote in favour of the conversion. In my view, such a forced conversion would only be permissible if the legislator had simultaneously provided for an effective exit strategy for all new shareholders.
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