Before submitting a reorganisation application to the court, it is advisable to cooperate with a reorganisation advisor who will help in assessing the prospects for the reorganisation of the enterprise, and will prepare a reorganisation application for the court. A well-conceived and carefully prepared reorganisation application aids in the prompt commencement of reorganisation proceedings. A further role of the reorganisation advisor is to advise the management during the course of the reorganisation proceedings and to fulfil the duties assigned to him under the Reorganisation Act, e.g. assessing the validity and legality of the transformed claim. The duties of the advisor also include evaluating the economic situation and solvency of the enterprise and the prospects of the reorganisation in light of the proposed reorganisation measures. As the result of the advisor’s work, the preliminary draft of the reorganisation plan is prepared. Then, the counsellor assists the management in negotiations with the major creditors and prepares the final reorganisation plan, which is presented to the creditors for approval. The accepted reorganisation plan is then also submitted to the court for approval. A successful reorganisation may take up to three months, until its approval in court.
The work of the reorganisation advisor can be broadly divided into the following stages:
- Examining the economic situation of the enterprise and helping to prepare the reorganisation application
- Sending a reorganisation notice to creditors after commencement of reorganisation proceedings
- Preparing the preliminary draft of the reorganisation plan
- Negotiating with the major creditors
- Preparing the final draft of the reorganisation plan
- Sending the draft of the reorganisation plan to the creditors for approval
- Submitting the reorganisation plan to the court for approval
- Supervising the implementation of the approved reorganisation plan
If the reorganisation is successful, the undertaking will overcome its solvency problems and will carry on with its business activities.
In the course of a natural person’s debt restructuring proceedings, the court may appoint an advisor at the request of the debtor. This advisor will help the debtor in restructuring the debts and in assessing the legality of the creditors’ claim, as well as the legality and expediency of the debtor’s transactions. The advisor also helps the debtor to prepare a debt restructuring plan, which is submitted to the court for approval.
If the debt restructuring proceedings are successful, the debtor will overcome the solvency problems and avoid insolvency.