Restructuring Proceedings in General
The purpose of restructuring proceedings is to enable viable companies in financial difficulties to avoid termination of the company’s operations and bankruptcy.
The company must apply to the district court that restructuring proceedings should be initiated. The court examines the prerequisites and possible obstacles. The company can enter into restructuring proceedings if it is considered that the operations of the company can be made viable again. Upon initiating restructuring proceedings the district court shall appoint an administrator for the company. The administrator devises a restructuring program for the company. The program includes the restructuring proceedings and a payment plan, in which the debts are restructured and bankruptcy of the company can be avoided.
The provisions of the Restructuring of Enterprises Act apply to a company’s restructuring proceedings. During the restructuring proceedings the company retains, with some restrictions, the control over its assets and operations. During the proceedings the company shall, in normal fashion, comply with the Limited Liabilities Companies Act and other legislation, for instance, in regard to the preparation of financial statements and convening of general meetings of shareholders.