While the UK is on the brink of Brexit, European lawmakers are entering the final stage of the codification of a European Directive on Preventive Restructuring Frameworks. In the following text, Partners Krijn Hoogenboezem (Amsterdam) and Daniel F. Fritz (Frankfurt am Main) will report about the status of the European Directive and the way the Dutch and German governments are preparing the introduction of their own "Scheme of Arrangement".
"On the European Level, now the Commission, the EP and the Council have defined their respective views and are ready to enter the final stage of the 'Trilogue', thus it is expected that we will see the adoption of the Restructuring Directive in spring of 2019 in the European Parliament," Daniel F. Fritz explains. He adds: "Reading the position of the EP and the Council, it is no longer hard to predict how this new restructuring tool may be constructed. The appointment of a restructuring professional may not be compulsory, yet be the case on a regular basis, the stay will be rather robust and comprehensive, including the prohibition of enforcement actions, the suspension of insolvency filing requirements and the prohibition of ipso-factum clauses aimed at jeopardizing the circumventing the stay. On the other hand the rules on the restructuring plan may be even more diverse than initially planned by the commission, probably including a one class only voting for SME, and class formation, cross-class cram down rules quite similar to the German insolvency plan rules for bigger companies. Krijn Hoogenboezem observes: "The positions of the EP and the Council are showing us that the member states may have a couple of options at hand to find their own bespoke solution for their Restructuring Frameworks , and maybe even initiating a new wave of forum shopping a cross the EU."
"In the Netherlands", Krijn explains, "the legislation introducing the much anticipated 'Dutch scheme of arrangements' has progressed to the next procedural step. It is now up to the Dutch Council of State to render its advice on an amended legislative proposal. Once that advice is received, the draft legislation can be submitted to parliament. Assuming that the new proposal is as good as, or maybe even better than, the draft proposal that was previously published in the consultation phase, this is very good news for the restructuring community in general and the Dutch one in particular."
"As far as Germany is concerned," Daniel adds, "our Ministry of Justice seems well prepared after having finished an extensive evaluation of the enhanced rules on Debtor-in-Possession Proceedings, to one step ahead and to come up with a German Restructuring Frameworks, a.k.a. the German Scheme, in the near future. This German restructuring tool will be modeled after the European Restructuring Framework and introduce the first ever partial-collective restructuring tool in Germany."
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