Findings show that financial creditors often get better repayment of their claims if they attempt to solve the distressed company through informal workout instead of initiating formal proceedings in court. In the case of out-of-court financial restructuring a contractual agreement between creditors and distressed company takes place which is not regulated by statutory provisions. Therefore the cooperation between creditors and the distressed company is autonomous, and the framework is given only by non-binding legal sources. This may result in contractual provisions that are not necessarily the most optimal for one or more parties.
This master’s thesis first briefly discusses alternatives to out-of-court financial restructuring, i.e. formal insolvency proceedings regulated by Slovenian legislation. Further on, it deals with terms and elements of out-of-court financial restructuring as regulated by non-binding legal sources and attempts to highlight them via case of Company X. A segment of the master’s thesis also touches on the actions of banks as the most common creditors and thus the main participants in out-of-court restructuring. The important role of banks has been recognized by the Bank of Slovenia therefore it has issued recommendations for more efficient cooperation of creditor banks. In the final part the master’s thesis discusses some of the specifics that arose due to the circumstances of the Company X, the difficulties that emerged during the process and the final outcome of the out-of-court restructuring of the Company X.
|
