Definitive global law guides offering comparative analysis from top-ranked lawyers
CHAMBERS GLOBAL PRACTICE GUIDES
Insolvency 2025 Definitive global law guides offering comparative analysis from top-ranked lawyers
Contributing Editor Marcel Willems Fieldfisher
Global Practice Guides
Insolvency Contributing Editor Marcel Willems Fieldfisher
2025
Chambers Global Practice Guides For more than 20 years, Chambers Global Guides have ranked lawyers and law firms across the world. Chambers now offer clients a new series of Global Practice Guides, which contain practical guidance on doing legal business in key jurisdictions. We use our knowledge of the world’s best lawyers to select leading law firms in each jurisdiction to write the ‘Law & Practice’ sections. In addition, the ‘Trends & Developments’ sections analyse trends and developments in local legal markets. Disclaimer: The information in this guide is provided for general reference only, not as specific legal advice. Views expressed by the authors are not necessarily the views of the law firms in which they practise. For specific legal advice, a lawyer should be consulted. Content Management Director Claire Oxborrow Content Manager Jonathan Mendelowitz Senior Content Reviewers Sally McGonigal, Ethne Withers, Deborah Sinclair and Stephen Dinkeldein Content Reviewers Vivienne Button, Lawrence Garrett, Sean Marshall, Marianne Page, Heather Palomino and Adrian Ciechacki Content Coordination Manager Nancy Laidler Senior Content Coordinators Carla Cagnina and Delicia Tasinda Content Coordinator Joanna Chivers Head of Production Jasper John Production Coordinator Genevieve Sibayan
Published by Chambers and Partners 165 Fleet Street London EC4A 2AE Tel +44 20 7606 8844 Fax +44 20 7831 5662 Web www.chambers.com
Copyright © 2025 Chambers and Partners
Contents
INTRODUCTION Contributed by Marcel Willems and Rowan Hamer, Fieldfisher p.5
HUNGARY Law and Practice p.167 Contributed by Lakatos, Köves & Partners
Trends and Developments p.184 Contributed by TENK Law Office
ANDORRA Law and Practice p.9 Contributed by Cases & Lacambra
INDIA Law and Practice p.194 Contributed by Shardul Amarchand Mangaldas & Co Trends and Developments p.212 Contributed by Shardul Amarchand Mangaldas & Co
AUSTRIA Law and Practice p.21 Contributed by Fellner Wratzfeld & Partners Trends and Developments p.36 Contributed by Fellner Wratzfeld & Partners BAHRAIN Law and Practice p.43 Contributed by Hassan Radhi & Associates Trends and Developments p.59 Contributed by Hassan Radhi & Associates BELIZE Law and Practice p.65 Contributed by Stanbrook Prudhoe BRITISH VIRGIN ISLANDS Trends and Developments p.83 Contributed by Maples Group CANADA Law and Practice p.88 Contributed by Gowling WLG Trends and Developments p.110 Contributed by Miller Thomson LLP CHINA Trends and Developments p.115 Contributed by Han Kun Law Offices Contributed by DLA Piper Denmark Trends and Developments p.138 Contributed by DLA Piper Denmark FRANCE Law and Practice p.144 Contributed by White & Case Trends and Developments p.162 Contributed by White & Case DENMARK Law and Practice p.121
INDONESIA Law and Practice p.219 Contributed by ABNR Counsellors at Law Trends and Developments p.236 Contributed by KARNA ITALY Trends and Developments p.243 Contributed by LEXIA
JAPAN Law and Practice p.250 Contributed by Nishimura & Asahi (Gaikokuho Kyodo Jigyo) Trends and Developments p.272 Contributed by Nishimura & Asahi (Gaikokuho Kyodo Jigyo)
KENYA Law and Practice p.279 Contributed by Oraro & Company Advocates Trends and Developments p.297 Contributed by Oraro & Company Advocates
LUXEMBOURG Law and Practice p.302 Contributed by BSP Trends and Developments p.320 Contributed by Loyens & Loeff
MACAU SAR, CHINA Law and Practice p.327 Contributed by Lektou
MEXICO Law and Practice p.339 Contributed by Sainz Abogados
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Contents
NETHERLANDS Law and Practice p.354 Contributed by Fieldfisher
THAILAND Law and Practice p.460 Contributed by Chandler Mori Hamada Trends and Developments p.473 Contributed by Chandler Mori Hamada UAE Law and Practice p.476 Contributed by Attalah Legal Consultancy
POLAND Law and Practice p.374 Contributed by Tatara & Partners Restructuring & Insolvency Law Firm Trends and Developments p.390 Contributed by Tatara & Partners Restructuring & Insolvency Law Firm
UK Law and Practice p.492 Contributed by Kirkland & Ellis
PORTUGAL Law and Practice p.396 Contributed by Sérvulo & Associados
USA Law and Practice p.511
ROMANIA Law and Practice p.413 Contributed by Zamfirescu Racoți Vasile & Partners Attorneys At Law Trends and Developments p.431 Contributed by Zamfirescu Racoți Vasile & Partners Attorneys At Law
Contributed by Robinson & Cole LLP Trends and Developments p.529 Contributed by Levenfeld Pearlstein USA – DELAWARE Trends and Developments p.535 Contributed by Robinson & Cole LLP USA – NEW JERSEY Trends and Developments p.542 Contributed by Gibbons P.C.
SWITZERLAND Law and Practice p.436 Contributed by Schellenberg Wittmer Ltd Trends and Developments p.454 Contributed by Walder Wyss Ltd
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INTRODUCTION Contributed by: Marcel Willems and Rowan Hamer, Fieldfisher Fieldfisher is a European law firm with more than 1,800 people across 24 international offices in 12 countries. As an entrepreneurial, pragmatic and so - cially conscious firm, Fieldfisher embraces its pur - pose as a trusted, client-focused corporate citizen. Fieldfisher’s office in the Netherlands, is in Amster - dam where a team of 25 lawyers and civil-law no - taries advise national and international clients on all types of legal, regulatory and compliance issues relevant to organisations in the Netherlands and the
EU. Fieldfisher’s Amsterdam team is highly special - ised in corporate and M&A, finance, regulatory, data protection, IT, intellectual property, insolvency, dis - pute resolution, employment law and notarial law. As part of its service, Fieldfisher Amsterdam advises and assists businesses and their management, or other parties confronted with (impending) insolvencies, on matters such as (cross-border) restructurings, direc - tors’ and officers’ liability, insolvency proceedings, and disputes with insolvency trustees.
Contributing Editor
Co-Author
Marcel Willems is co-founder of Fieldfisher’s Amsterdam office, and is specialised in dispute resolution, commercial contracting, and restructuring and insolvency. He has been a trustee in bankruptcy for many
Rowan Hamer is an associate at Fieldfisher’s Amsterdam office. He focuses on commercial contracts, corporate disputes and restructuring and insolvency matters.
years and, besides being a lawyer, has served as a substitute judge at one of the four Courts of Appeal in the Netherlands for more than 25 years. His work varies from restructuring all sorts of businesses in a variety of sectors, from start-ups to multinationals, both high-tech and bricks-and-mortar companies, to acquiring assets or entire businesses out of insolvency, and assisting clients in directors’ and officers’ liability cases and litigating against insolvency trustees.
Fieldfisher Amsteldijk 220 1079 LK Amsterdam The Netherlands Tel: +31 20 225 2200 Email: Marcel.willems@fieldfisher.com; Rowan.hamer@fieldfisher.com Web: www.fieldfisher.com/en/locations/netherlands
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INTRODUCTION Contributed by: Marcel Willems and Rowan Hamer, Fieldfisher
The Insolvency Guide 2025 aims to provide legal and non-legal professionals with a concise overview of the main restructuring and insolvency law topics in various jurisdictions. The experienced authors on restructuring and insolvency law describe the rules and practices applicable in their jurisdictions, as well as the latest (upcoming) developments. To provide an outline of the main elements, this Guide discusses the different liquidation, restructuring and insolvency procedures in each jurisdiction, as well as the main statutory officers and other actors within the systems. Nowadays, many businesses are no longer operating in just one jurisdiction, so that liquidation, restructur - ing and insolvency procedures also must deal with cross-border businesses and aspects. Therefore, this Guide also considers how different jurisdictions deal with international aspects, such as recognition of for - eign judgments, or co-operation between the various actors in the event of cross-border procedures. Fur - thermore, the Guide covers the obligations of direc - tors and officers, and under which circumstances they can be held personally liable. Finally, the possibilities to set aside transactions that preceded a restructuring or insolvency procedure will be discussed. The (national) rules and practices of insolvency law have been evolving for years, decades or centuries; at the same time there are developments that have come up only recently or have come from other legal sys - tems or continents. Such developments always take place in a legal, political and socio-economic context. Some of the global developments and practices that came to the surface in 2025 will be discussed below. Globalisation Today’s economy faces constant change and uncer - tainties. Globalisation, technology and geopolitical shifts increase the interdependence of national econo - mies. Globalisation offers companies new opportuni - ties to prosper through cross-border trade, investment and collaboration. On the other hand, these develop - ments can also lead to companies failing to survive, due to a lack of adaptability to change or a lack of financial resilience. Because of the interdependence of economies, financial problems or bankruptcies in one economy can have severe financial consequenc - es for the other. For example, the ongoing insolvency
proceedings regarding the Signa Group, which was part of a network of about a thousand companies. Around 40,000 people worldwide were employed in companies owned by the Signa Group, and those jobs were suddenly at risk. The ongoing process of opening economic, political, technological and social borders is one of the most discussed phenomena of recent decades. Businesses today no longer operate only in the national market, but increasingly and more easily enter the international market with their goods or services. With customers, suppliers, employees, shareholders and other lenders spread across different continents, this presents com - panies with global growth opportunities. As the com - plexity of businesses increases, the complexity of the insolvency procedures that must be gone through if such a business is at risk of insolvency also increases. A consequence of globalisation is that companies are specialising and exports are increasing. As a result, there is the increasing influence of the logistics sec - tor. One consequence is that certain products are no longer produced domestically but must be imported from other countries. This therefore provides many opportunities for companies to operate efficiently and internationally but can also painfully expose how inter - dependent companies and economies have become. As demonstrated in March 2021, when a container ship blocked the Suez Canal and daily trade worth EUR9 billion came to a halt. On top of that, thousands of freight containers were shipped late, causing delays in manufacturing processes as factories received raw materials and assembling parts late, and for a long time the orderly spread of containers over the globe was disrupted. In addition, more recently, the worries in Europe that China may block or delay the supply of rare earth metals (a group of 17 elements that are essential for modern technologies and clean energy), thereby jeopardising innovative development in vari - ous branches, especially automotive. Another consequence of technological globalisation is the increased competition from businesses that are not even required to be physically present in the same country. Technical developments mean that compa - nies can offer their goods or services cheaper, faster and more efficiently. Companies that do not invest in
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INTRODUCTION Contributed by: Marcel Willems and Rowan Hamer, Fieldfisher
Uncertain times Other sources of uncertainty in the current juncture are geopolitical tensions and ESG. An example of the first is the ongoing war between Russia and Ukraine. Besides the human and political consequences, this war has a major impact on the global economy, in particular, for all countries that were dependent on Russia for energy. Rising energy prices and disrup - tions in the supply chain has meant that companies in energy-intensive sectors, such as industry and transport, saw their costs skyrocketing. In addition, non-Russian businesses were also affected by the sanctions imposed on Russian-(owned) businesses, for instance because of frozen assets. On the other hand, this war and the tensions that go with it have boosted especially the arms manufacturing industry globally. Beyond the war in Ukraine, escalating ten - sions in the Middle East further destabilised trade flows and energy routes and raised the risk of regional recessions. ESG puts additional strain on companies in the form of, for instance, extra administrative burdens (check - ing compliance by the entire supply chain and report - ing on measures taken) and the necessity to invest heavily in measures to safeguard the environment. Funding of such investments and, as a matter of fact, financing of operations in general, seems to be shifting strongly from the traditional banks to private institutions like hedge funds, private equity firms and business angels with entirely different approaches and requirements, adapting to which provides a challenge in itself. Furthermore, trade restrictions are also a source of uncertainty. Whether they are of a protectionist nature (import duties) or aim at limiting national security risks (prohibition of the use of foreign software), such poli - cies can have wide-reaching impacts on businesses and increase uncertainty across the board. In this context, what immediately stands out, in 2025, is the sweeping import tariffs introduced by the United States on key industrial and technological goods, triggering retaliatory measures and disrupting global supply chain developments which have increased insolvency risks for export-dependent businesses and added significant volatility to international trade. Due to unpredictable government behaviour, international
technical innovations can run into declining revenues. Rapid technological developments such as automa - tion and digital platforms are threatening traditional business models. Furthermore, artificial intelligence has become a structural force reshaping entire indus - tries. While offering efficiency gains, it has also led to widespread job displacement and the collapse of outdated business models, particularly in retail, logis - tics and customer service. This is also reflected by the increasing bankruptcy rates in the respective indus - tries. Companies that do invest in the latest innovations become increasingly dependent on technology, with its own cyber risks. How dependent companies have become on IT was illustrated by one of the largest IT outages in history, in July 2024, which disrupted businesses and governments around the world. The disruption was caused by a flawed update to a cloud- based security software of a global top cybersecurity company. The update triggered a malfunction which made some 8.5 million Microsoft Windows devices crash, led to disruptions of airlines, banks, broadcast - ers, hospitals and cash machines globally, and is said to have cost over USD10 billion. A last aspect of globalisation that should be men - tioned here is cryptocurrency. This literally borderless way of making payments causes legislatures and the judiciary many challenges while they are trying to come to grips with it. The ease with which the trust of the investing public may be abused (FTX), the grave consequences of (the possibility of) hacks (Mount Gox) and the danger of money laundering and financ - ing of terrorism with cryptocurrencies underline the need for caution, whereas at the same time cryptocur - rencies offer a unique worldwide speculation mecha - nism without involvement of any financial institution or regulated exchange. And yet, despite the risks and the warnings for it, the US has proven a big backer of stablecoins with the GENIUS Act (the Guiding and Establishing National Innovation for US Stablecoins Act), which may well lead the EU to follow this exam - ple shortly so as to not lag behind and lose ground to the dollar.
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INTRODUCTION Contributed by: Marcel Willems and Rowan Hamer, Fieldfisher
Insolvency Law Within insolvency law, there is increasing demand for out-of-court restructuring and preventive measures that can rescue companies in financial distress from bankruptcy. In such proceedings, the emphasis is no longer just on settling debts, but also on preserving jobs and economic value that otherwise would be lost. In light of the above developments, such as ever- increasing globalisation, and the growing presence of international aspects in restructuring or insolvency proceedings, additional international insolvency law rules are needed. This will allow for more predictable and efficient insolvency proceedings. To this end, a proposal was made by the European Commission in December 2022, which aims to harmonise certain aspects of insolvency law in the European Union, such as a director’s duty to request the opening of insolvency proceedings and a pre-pack procedure in which a (or part of a) business can be sold as a going concern. In 2025, the proposal progressed as the Council adopted its general approach, paving the way for negotiations with the European Parliament once it finalises its position, with the aim of agreeing on a final directive. As long as insolvency law is not harmonised, knowl - edge of other legal systems is crucial.
trade is in a constant state of shock, with old alliances being broken and new ones being formed. Sanctions, asset freezes and political instability have become common triggers for insolvency, particularly for businesses with cross-border operations or expo - sure to restricted markets. Bankruptcy Numbers Now in 2025, businesses are still facing relatively high inflation (due to, amongst others, trade protectionism and wage growth), higher interest rates and low unem - ployment. This, combined with the above-mentioned additional economic developments, has resulted in an increasing number of businesses struggling finan - cially, and there has been a clear upward trend in the number of restructurings and bankruptcies, which is generally believed to continue for quite some time, yet at a slower pace. According to Allianz-Trade’s insol - vency report, the insolvency numbers in 2024 stood out in the US with a rise of +22%, followed by the Eurozone with a rise of +19%. The forecasts, as made by Allianz-Trade, imply that the global upward trend of business insolvencies will continue through 2026, with +6% in 2025 and +3% in 2026. The key drivers behind the upward trend are the risk of delayed easing of interest rates, the pro - longed uncertain environment and the soft rebound in demand. Driving the global increase, North America and Asia will see the steepest gains: the US is fore - cast at an increase of +11% to 25,580 cases in 2025. Western Europe faces an increase of +3% in 2025, marking a fourth consecutive annual increase.
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ANDORRA Law and Practice Contributed by: Miguel Cases, Marc Ambrós and Marta Felipó Cases & Lacambra
France
Andorra
Andorra La Vella
Spain
Contents 1. Overview of Legal and Regulatory System for Insolvency/Restructuring/Liquidation p.11
1.1 Legal Framework p.11 1.2 Types of Insolvency p.12 1.3 Statutory Officers p.12 2. Creditors p.12 2.1 Types of Creditors p.12 2.2 Priority Claims in Restructuring and Insolvency Proceedings p.13
2.3 Secured Creditors p.13 2.4 Unsecured Creditors p.13 3. Out-of-Court Restructuring p.14 3.1 Out-of-Court Restructuring Process p.14 3.2 Legal Status p.14 4. Statutory Restructuring, Rehabilitation and Reorganisation Proceedings p.14 4.1 Opening of Statutory Restructuring, Rehabilitation and Reorganisation p.14 4.2 Statutory Restructuring, Rehabilitation and Reorganisation Procedure p.15 4.3 The End of the Restructuring, Rehabilitation and Reorganisation Procedure p.15 4.4 The Position of the Debtor in Restructuring, Rehabilitation and Reorganisation p.16 4.5 The Position of Office Holders in Restructuring, Rehabilitation and Reorganisation p.16 4.6 The Position of Shareholders and Creditors in Restructuring, Rehabilitation and Reorganisation p.16 5. Statutory Insolvency and Liquidation Procedures p.16 5.1 The Different Types of Liquidation Procedure p.16
5.2 Course of the Liquidation Procedure p.17 5.3 The End of the Liquidation Procedure(s) p.17 5.4 The Position of Shareholders and Creditors in Liquidation p.17 6. Cross-Border Issues in Insolvency p.18 6.1 Sources of International Insolvency Law p.18 6.2 Jurisdiction p.18 6.3 Applicable Law p.18 6.4 Recognition and Enforceability p.18 6.5 Co-Ordination in Cross-Border Cases p.19 6.6 Foreign Creditors p.19 7. Duties and Liability of Directors and Officers p.19 7.1 Duties of Directors p.19 7.2 Personal Liability of Directors p.19 7.3 Duties and Personal Liability of Officers p.19 7.4 Other Consequences for Directors and Officers p.20 8. Setting Aside or Annulling a Transaction p.20 8.1 Circumstances for Setting Aside a Transaction or Transfer p.20 8.2 Claims to Set Aside or Annul a Transaction or a Transfer p.20
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ANDORRA Law and Practice Contributed by: Miguel Cases, Marc Ambrós and Marta Felipó, Cases & Lacambra
Cases & Lacambra is a client-focused international law firm with a cornerstone financial services prac - tice. With a presence in Europe and the USA, the firm has a tested track record in complex transac - tions involving the financial sector, special situations, financial markets regulations, cross-border disputes and transactions with relevant tax aspects. Its finan -
cial services group is comprised of three partners, two counsel, one senior associate and five associ - ates. Most team members have profound knowledge of banking and finance regulations and capital mar - kets transactions. The firm’s practice also extends to capital markets, derivatives and structured finance matters.
Authors
Miguel Cases is a partner at Cases & Lacambra and the firm’s executive chairman. He leads the markets and financial services group at the firm and is qualified to practice in both Spain and the Principality of Andorra.
Marta Felipó is a managing associate at Cases & Lacambra and a member of the litigation and employment law group at the firm’s Andorran office. She has more than ten years of professional experience as a lawyer.
He has extensive experience in advising credit institutions and investment services firms, acting regularly as the key legal counsel for major national and international financial institutions, public administrations and public and private investment funds in the structuring of financial transactions, derivatives and financial sector reorganisations and M&A deals. His practice also extends to special situations and entities in turmoil. He regularly lectures on these areas.
Her practice focuses on litigation and dispute resolution, especially in civil, labour and commercial litigation before the Andorran courts. She advises companies on labour matters in both Spain and Andorra, with a special focus on international issues. She is also a lecturer in labour law at the Vatel Hotel & Tourism Business School in Andorra.
Marc Ambrós is a partner at Cases & Lacambra and focuses on corporate and M&A and markets and financial services. He has extensive experience in corporate and commercial matters. He has advised on mergers,
acquisitions, joint ventures, private equity, corporate restructuring and refinancing, representing both Andorran and foreign clients in international transactions with an Andorran angle. He also advises companies and foreign financial entities on project and corporate finance issues and foreign credit institutions and investment services firms on regulatory cross-border matters.
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ANDORRA Law and Practice Contributed by: Miguel Cases, Marc Ambrós and Marta Felipó, Cases & Lacambra
Cases & Lacambra Manuel Cerqueda i Escaler 3-5 - AD 700 Escaldes Engordany Andorra Tel: +376 728 001 Email: andorra@caseslacambra.com Web: www.caseslacambra.com
1. Overview of Legal and Regulatory System for Insolvency/Restructuring/ Liquidation 1.1 Legal Framework The laws and statutory regimes applicable to insolven - cies in Andorra are the following. • Decree on insolvencies and bankruptcies of 4 October 1969, Decret en relació a la cessació de pagaments i fallides, del 4 d’octubre de 1969 (the “Insolvency Decree”), which establishes the statu - tory regime applicable to judicial insolvencies and bankruptcy proceedings in Andorra. • Act 7/2021, of 29 April 2021 on recovery and resolution of banking entities and investment firms, Llei 7/2021, del 29 d’abril, de recuperació i de reso- lució d’entitats bancàries i d’empreses d’inversió (the “Banking Recovery Act”), based on Directive 2014/59/EU of the European Parliament and of the Council of 15 May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms. • Act 7/2024, of 27 May 2024, which covers the organisation and operating conditions of operat - ing entities in the Andorran financial system and market abuse, Llei 7/2024, del 27 de maig, sobre organització i funcionament de les entitats opera- tives del sistema financer i l’abús de mercat (the “Financial Act”), sets the effects of insolvency or bankruptcy proceedings in respect of netting agreements or collateral arrangements. • Act 12/2017, of 22 June 2017 on the organisation and supervision of insurance and reinsurance of the Principality of Andorra, Llei 12/2017, del 22
de juny, d’ordenació i supervisió d’assegurances i reassegurances del Principat d’Andorra (the “Insur - ance Act”), provides specific control measures that could be adopted by the Andorran Financial Authority in case of financial hardship. • Act 20/2007, of 18 October 2007, on limited liability companies, Llei 20/2007, del 18 d’octubre, de societats anònimes i de responsabilitat limitada (the “Companies Act”), on the liquidation of companies as well as the duties of officers and directors. • Act 9/2005, of 21 February 2005 of the Criminal Code, Llei 9/2005, del 21 de febrer, qualificada del Codi penal (the “Criminal Code”), establishes the actions carried out by any debtor leading to a bankruptcy situation to the detriment of third par - ties as a criminal offence. • Act 22/2021, of 17 September 2021 of the Civil Procedure Code, Llei 22/2021, del 17 de setembre, del Codi de procediment civil (the “Civil Procedure Code”), amends the procedural provisions stated in the Insolvency Decree to align them with the new civil judicial proceedings. One of the main priorities of the Andorran govern - ment is to introduce an effective insolvency regime, by updating and improving the current insolvency regula - tions, specifically the Insolvency Decree. To do this, a new bill is being drafted with the aim of modernising and adapting the existing regulations to international insolvency law standards. It is expected that the new bill will be drafted to strike a balance between the debtor’s financial difficulties, the interests of the credi - tors and public policy concerns. The bill will specifical - ly take the exponential increase of international trade
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ANDORRA Law and Practice Contributed by: Miguel Cases, Marc Ambrós and Marta Felipó, Cases & Lacambra
into account, by effectively co-ordinating insolvency proceedings involving multiple jurisdictions. 1.2 Types of Insolvency Andorran law does not expressly distinguish between voluntary and involuntary insolvency proceedings. Nonetheless, any debtor unable to comply with its payment liabilities must file for insolvency before the Andorran courts. Additionally, creditors may request the pursuit of these proceedings and the Andorran court, of its own initiative, may also open an insol - vency judicial proceeding. An insolvency proceeding may be qualified either as a judicial restructuring or settlement proceeding ( arran- jament judicial ) or a bankruptcy proceeding ( fallida ), depending on whether the financial distress of the company can be reversed. 1.3 Statutory Officers The statutory officers in insolvency or restructuring proceedings are the following: • the competent supervisory judge, who supervises and decides on the operations and management of the procedure; • the administrators appointed by the court (one to three administrators can be appointed); and • the controllers (one to three controllers can be appointed), who are accounting experts and are chosen from the creditors. Their role is voluntary and non-remunerated. In all cases, the relatives of the debtor, up to the fourth degree of consanguinity or affinity, cannot be appoint - ed as administrators or controllers. A judge ( ponent del Tribunal de Batlles ) will be appointed as the person responsible for monitoring and deciding on the operations and management of the insolvency proceeding. The judge may freely appoint the administrators or controllers and may also remove them should they not accomplish their task. The insolvency administrator(s) will have the obliga - tion to inform the judge every three months on the
development of the viability of the debtor subject to judicial settlement or bankruptcy. The controllers will verify the accounts and assist the judge in the supervision of the operations of the insol - vency administrators. The controllers may also verify the status of the proceeding as well as the revenues obtained and the payments transferred.
2. Creditors 2.1 Types of Creditors
According to the insolvency rules and Andorran case law, a distinction is made between special privileges ( privilegis especials ) and general privileges ( privilegis generals ) over movable assets ( béns mobles ) and real estate assets ( béns immobles ). Consequently, creditors are to be paid in the follow - ing order. • Creditors granted a special privilege over mov - able assets (pledges along with bonds and certain specific privileges, such as those afforded to the sellers of movable assets). • Creditors granted a special privilege over real estate assets (mortgages and concrete privileges, such as those in favour of architects, real estate asset sellers and real estate asset acquirers to recover the price paid plus legal interests on the termination of the sale agreement). • Creditors granted a general privilege (such as the privilege provided to workers for their salary amounts). • The rest of the creditors, pro rata of their respec - tive credits upon verification and admission by the insolvency administration. Concerning special privileges (claims secured by means of mortgages, pledges, bonds or any other special privilege over movable or real estate assets), creditors are favoured with a segregated enforcement right, which allows the enforcement of the specific guarantee on the creditor’s own benefit regardless of the development of the insolvency proceeding(s).
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ANDORRA Law and Practice Contributed by: Miguel Cases, Marc Ambrós and Marta Felipó, Cases & Lacambra
2.2 Priority Claims in Restructuring and Insolvency Proceedings Priority claims are generally classified considering whether their privilege is qualified as special or gen - eral (see 2.1 Types of Creditors ). Employees’ salaries and social security claims benefit from a general privi - lege over unsecured credits. However, secured credi - tors holding mortgages or pledges over the debtor’s assets have priority over those general privileges. In the event of a bankruptcy or restructuring proce - dure of an entity provided for in the Banking Recovery Act, the following are considered credits with special privilege: • credits of the beneficiaries of the Andorran deposit guarantee fund (the “Fagadi”) and the Andorran investment guarantee system (SAGI) and of the Fagadi and SAGI itself; and • the part of the eligible deposits of natural persons and any natural or legal person, regardless of its legal form, that carries out an economic activity, employs fewer than five people and has an annual activity volume or an annual balance not exceed - ing EUR300,000 that exceeds the level of cover - age provided for in Law 20/2018, of 13 September 2018, regulating the Andorran Deposit Guarantee Fund and the Andorran Investment Guarantee System. Ordinary preferential credits are considered, with pri - ority in the order of precedence over the rest of the ordinary credits and behind credits with special privi - lege, those resulting from debt instruments that do not meet the following conditions: • that have been issued or created with an effective maturity term equal to or greater than one year; • that are not derivative financial instruments or implicit derivative financial instruments; and • that the terms and conditions and, where appli - cable, the brochure relating to the issue, include a clause establishing that they have a lower bank - ruptcy priority compared to the rest of the ordinary credits and that, therefore, the credits derived from these debt instruments must be satisfied after the rest of the ordinary credits.
Ordinary preferential credits that meet these condi - tions have the same rank among themselves with a higher priority than the other ordinary credits and subordinated credits and must be paid prior to them. 2.3 Secured Creditors Secured creditors are entitled to take mortgages over real estate. They may also take pledges over accounts, equity shares, movable property, credit rights and intangible and intellectual property. The Insolvency Decree establishes a special privi - leged regime applicable to secured creditors holding mortgages or pledges over the debtor’s assets. These assets are therefore excluded from the insolvency estate and will be sold to the exclusive benefit of the secured creditors. In an informal consensual restructuring proceeding, secured creditors may enforce their liens/security through an agreed specific enforcement procedure. Outside of the insolvency proceedings, these rights and remedies may therefore be subject to contractual intercreditor covenants and to the terms freely agreed by the parties. The Insolvency Decree establishes that unsecured creditors must respect the principle of par conditio creditorum. However, secured creditors who benefit from special privileges are not bound by the par conditio credito - rum principle, as these creditors are not part of the insolvency estate, except when the security or guar - antee is not sufficient to cover all the credit. Concerning the possibility of creditors disrupting or blocking judicial proceedings, under the judicial settle - ment proceeding, dissenting creditors and those who have not participated in the approval of the agreement may, within eight days of the approval, object to the judicial approval of the agreement. 2.4 Unsecured Creditors Outside of a restructuring or insolvency context, unse - cured creditors may request the adoption of several remedies such as pre-judgment attachments, which allow the debtor to secure their property, set offs, and
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ANDORRA Law and Practice Contributed by: Miguel Cases, Marc Ambrós and Marta Felipó, Cases & Lacambra
reducing or extinguishing obligations between the parties, as well as seizing the assets or property of the debtor. These remedies must be requested before a judge and therefore involve a judicial procedure filed by the creditor against the debtor. 3. Out-of-Court Restructuring 3.1 Out-of-Court Restructuring Process No formal requirements exist for out-of-court restruc - turings and it is not mandatory to enter consensual restructuring negotiations before a formal statutory process. In these circumstances, companies experienc - ing financial distress will be supported by financial lenders, provided that a debt repayment schedule is agreed between the debtor and these lenders, increasing guarantees to support the repayment of the principal debt. Since the Andorran laws do not provide specific reg - ulation of out-of-court workouts and restructurings, these agreements may be voided by the claw-back regime established by the Insolvency Decree. It is common practice for creditors to enter into “standstills” with the debtor, which are intended to enable both parties to negotiate a credit agreement in good faith and to prevent creditors from bringing individual actions to enforce the debtor’s assets. The debtor, during the informal and consensual work - out/restructuring process, may adopt certain under - takings and obligations such as, inter alia: • not to distribute dividends or other items of remu- neration on the capital of the company; • not to incur additional financial indebtedness other than that incurred in the ordinary course of busi - ness; • not to make any transfer of assets; or • not to modify the working conditions of its key employees.
Accordingly, the information that is generally provided to creditors, committees and other stakeholders dur - ing the restructuring process is related, inter alia, to: • balance sheets; • accounting information; and • payment forecasts over the next few years. The changes of contractual priorities, security/lien pri - orities, equity holder and intercompany priority rights, as well as the relative positions of competing creditor classes, are therefore subject to the principle of auton - omy of will. Consequently, they are freely negotiated by the contractual parties. 3.2 Legal Status Out-of-court restructuring procedures are contractual in nature. While no specific procedure is set in Andor - ran law the agreement resulting from the negotiations between the parties may be enforced through an enforcement procedure brought before the Andorran courts. 4. Statutory Restructuring, Rehabilitation and Reorganisation Proceedings 4.1 Opening of Statutory Restructuring, Rehabilitation and Reorganisation According to the Insolvency Decree, any merchant who is generally unable to meet commercial payments must file for insolvency within eight business days. This procedure may involve individuals, corporate entities or even a group of entities. Additionally, any creditor or even the Andorran court may commence an insolvency proceeding. No spe - cific obligations or deadlines are provided for creditors or the court. The process is formally initiated with a request filed before the Andorran courts. The judge in charge of the insolvency procedure will consider all the elements, in particular, the amount of claims as well as the use of fraudulent procedures to artificially maintain com - mercial credit.
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ANDORRA Law and Practice Contributed by: Miguel Cases, Marc Ambrós and Marta Felipó, Cases & Lacambra
4.3 The End of the Restructuring, Rehabilitation and Reorganisation Procedure The involvement of judicial authorities is necessary to confirm the restructuring plan. Once all creditors have been accepted, the debtor in a rehabilitation and reorganisation procedure must propose an agree - ment which must be accepted by all creditors. The proposed restructuring plan must detail the specific measures that are considered appropriate to restore the liabilities, identifying the proposed amount, the term as well as the guarantees. If the debtor fails to present an agreement, the procedure will automati - cally become a bankruptcy procedure. The proposed restructuring plan will be considered accepted, when it obtains the favourable vote of creditors, whose credits add up to three-fifths of the debtor’s liabilities, deducting the credits of those who had exercised their right of abstention – ie, those privi - leged by real guarantee, bail or personal work. If the proposed restructuring plan is not approved by the creditors, another proposal can be submitted for discussion and approval by any creditor. If this proposal is approved by at least three-fifths of the creditors, the debtor must accept it. The debtor can request the court grant them a term not exceeding eight working days to state whether or not they accept the proposal of arrangement or agreement. If none or the proposals are accepted, the procedure becomes a bankruptcy. After approving the proposed restructuring plan, the debtor can freely administer and dispose of its assets. Failing to observe the terms of an approved restruc - turing plan will result in its annulment. The plan will also be cancelled if: • fraud was committed by the debtor by hiding assets or increasing liabilities; and • if the debtor is condemned for fraudulent bank - ruptcy.
The judge in charge of the judicial procedure will declare a restructuring procedure when the debtor is entitled to propose a serious agreement, because the economic situation of the business or company may be restored, provided that serious misconduct has not been committed. If these conditions are not met, the judge will declare a bankruptcy procedure. 4.2 Statutory Restructuring, Rehabilitation and Reorganisation Procedure The decree by which the judicial arrangement is declared entails, from the day it is issued, that the debtor must be assisted by the administrator to per - form any activities concerning the administration and disposal of their assets. If the debtor refuses to exe - cute a decision that is necessary to safeguard their assets, the administrator may proceed as they deem most appropriate, after being authorised to do so by the judge in charge of the proceeding. They may also request the judge’s authorisation to adopt precaution - ary measures aimed at collecting receivables or carry - ing out acts necessary to protect the debtor’s assets. The debtor’s activities and, in particular, the operation of the business or company, may continue if author - ised by the judge in charge of the procedure, as long as they deem it appropriate. They may also revoke this authorisation if necessary. The administrator must notify the judge of the results of the debtor’s activities and the development of the business or company at least every three months, on the last business day. The Andorran law does not provide specific circum - stances under which third-party or non-debtor releas - es are permitted. An automatic stay is imposed against individual credi - tors’ claims, excluding those with a special privilege, security or mortgage. Restructuring and reorganisation procedures under an insolvency scheme are submitted mandatorily under Andorran law; therefore there is no possibility to opt for arbitration instead of court proceedings.
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ANDORRA Law and Practice Contributed by: Miguel Cases, Marc Ambrós and Marta Felipó, Cases & Lacambra
4.4 The Position of the Debtor in Restructuring, Rehabilitation and Reorganisation
the income obtained and the deliveries that have been made. Their role is not remunerated. From the moment the bankruptcy is declared, the debtor is deprived of the ability to administer and dis - pose of their assets. The debtor’s rights and actions, concerning their assets, are exercised during the time of bankruptcy, by the administrators. 4.6 The Position of Shareholders and Creditors in Restructuring, Rehabilitation and Reorganisation The involvement and position of shareholders in a restructuring procedure is not provided for in the law. Creditors actively participate in the procedure, as the proposed restructuring agreement will be deemed accepted when it obtains the favourable vote of creditors, whose credits add up to three-fifths of the debtor’s liabilities, after the credits of those who had exercised their right to abstain (those privileged by real guarantee or surety or personal work) have been deducted. In the event of a restructuring procedure of an entity foreseen in the Banking Recovery Act, the sharehold - ers must bear the losses, debts and costs in the first place. 5. Statutory Insolvency and Liquidation Procedures 5.1 The Different Types of Liquidation Procedure The initiation of the liquidation procedure is specifi - cally applicable to corporate entities and it is primarily triggered by: • the dissolution of the company, whether by legal grounds or under its articles of association (among others, when the company’s inability to meet its financial obligations or when the duration period for which the company was incorporated expires); or • the termination of an insolvency procedure. The insolvency procedure is identical to the restructur - ing procedure (see 4. Statutory Restructuring, Rehabilitation and Reorganisation Proceedings )
In a restructuring process, the debtor must be assisted by the administrator to perform any activities concern - ing the administration and disposal of their assets. If the debtor refuses to execute a decision that is neces - sary to safeguard their assets, the administrator may proceed as they deem most appropriate, after having been authorised to do so by the judge in charge of the proceeding. They may also request the judge’s authorisation to adopt precautionary measures aimed at collecting receivables or carrying out acts neces - sary to protect the debtor’s assets. The debtor’s activities and, in particular, the operation of the business or company, may continue if author - ised by the judge in charge of the procedure, as long as they deem it appropriate. They may also revoke this authorisation if necessary. The administrator must notify the judge of the results of the debtor’s activities and the development of the business or company at least every three months, on the last business day. The bankruptcy administrator must liquidate the debtor’s assets under the best possible conditions, acting with the utmost diligence. They therefore have the broadest powers to collect credits and sell the debtor’s goods and movable effects. The sales must be made by public auction. The administrator may exercise the judicial actions that are necessary to achieve the appropriate liqui - dation of the debtor’s assets and may also agree or compromise on assets and rights belonging to the debtor, with the authorisation of the judge in charge of the bankruptcy process. 4.5 The Position of Office Holders in Restructuring, Rehabilitation and Reorganisation Controllers must be experts in accounting and may be chosen from among the creditors of the bankruptcy process. Their tasks consist of verifying the account - ing and assisting the judge in monitoring the work of the administrators. They may at any time request that they be given accounts of the state of the procedure,
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ANDORRA Law and Practice Contributed by: Miguel Cases, Marc Ambrós and Marta Felipó, Cases & Lacambra
although in insolvency the company cannot be rehabilitated, either because an agreement with creditors has not been reached or because serious faults have been committed. The company’s directors, unless otherwise stipulated in the articles of association, become the liquidators upon the opening of the liquidation process. There does not appear to be an explicit obligation for any party to initiate the procedure, but it is an essential step once dissolution occurs or the insolvency pro - cedure ends. 5.2 Course of the Liquidation Procedure Upon the initiation of the liquidation procedure, the company continues to retain its legal personality, but it must include the term “in liquidation” (en liquidació) in its corporate name. The company’s directors cease their usual duties and, unless otherwise stipulated by the articles of asso - ciation, become liquidators, assuming responsibility for the liquidation process and becoming the primary actors in the liquidation. Their tasks include preparing the inventory and balance sheet, overseeing the liqui - dation of assets and distributing the remaining assets among shareholders. Liquidators must act in the best interests of the company’s creditors and shareholders. Their facul - ties include representing the company, undertaking necessary legal and financial actions to conclude the liquidation and ensuring creditors are paid before any distribution to shareholders. They must ensure that the rights of creditors are protected, and if needed, can be removed or replaced if they fail to perform their duties adequately. During the liquidation procedure, existing contracts and obligations of the company remain in effect, sub - ject to the liquidation framework. The company is required to fulfil its accounting obligations, providing reports on the operations and outcomes of the liqui - dation. Liquidation does not automatically release the company from its liabilities under pre-existing agree - ments, and contracts may need to be reviewed or ter - minated as part of the liquidation process, ensuring
the proper satisfaction of creditors before distributing the remaining assets to shareholders. Under an insolvency scheme and further liquidation procedure Andorran law is mandatorily applicable; therefore there is no possibility to opt for arbitration instead of court proceedings. 5.3 The End of the Liquidation Procedure(s) The liquidation procedure ends when the final liquida - tion balance is approved by a meeting of the compa - ny’s shareholders and the liquidation of the company’s assets is complete. Once the liquidators have settled the creditors’ claims, distributed the remaining assets, and ensured that all obligations have been met, they must carry out a public deed confirming the liquidation of the com - pany. Following registration of the public deed with the Company Register, the company ceases to exist as a legal entity. Should any assets or liabilities emerge after the company’s dissolution, the former liquidators will be responsible for managing them. In certain instances, the court may appoint new liquidators to carry out these duties. 5.4 The Position of Shareholders and Creditors in Liquidation In the event of liquidation, pre-insolvency attachments continue to be effective, even though the liquidation procedure may require a review of their validity and priority. Retention of title clauses and set-off rights may be maintained, provided that they are consistent with the liquidation process. Provided that secured creditors intend to enforce their security interest, they must act within the frame - work of the liquidation procedure. The liquidators are responsible for overseeing the liquidation of the company’s assets and settling outstanding debts with creditors, ensuring that secured creditors are paid in the proper order of priority. With regards to unsecured creditors, they are entitled to seek recovery from the company’s remaining assets once the secured credi - tors have been fully satisfied.
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