DENMARK Law and Practice Contributed by: Henrik Sjørslev, Peter H. Knudsen, Henrik Lund-Koefoed and Levent Kitir, DLA Piper Denmark
3.2 Legal Status Regarding the legal status of an out-of-court restruc - turing, please see 3.1 Out-of-Court Restructuring Process . 4. Statutory Restructuring, Rehabilitation and Reorganisation Proceedings 4.1 Opening of Statutory Restructuring, Rehabilitation and Reorganisation Under Danish law, there are only three forms of formal insolvency proceedings: • preventative restructuring; • ordinary restructuring; and • bankruptcy. Please see 1.2 Types of Insolvency for further infor- mation on in-court proceedings. Due to the previous lack of flexibility of the formal restructuring rules, it was not uncommon for a de fac - to restructuring process to be carried out by means of a business transfer through the bankruptcy proceed - ings rather than through formal restructuring proceed - ings. With the amendments of the restructuring rules, including the introduction of preventative restructur - ing, fast-track business transfers and voting classes, it is possible that more restructurings will in fact be conducted through these schemes and not through bankruptcy proceedings. There are no group restructuring proceedings avail - able, but it is possible to co-ordinate the separate restructuring proceedings for each company and to thereby achieve a somewhat similar result to actual group proceedings. 4.2 Statutory Restructuring, Rehabilitation and Reorganisation Procedure The ordinary in-court restructuring proceedings effec - tively block enforcement proceedings against a com - pany, offering a de facto moratorium, and under the new rules offer a four-to-eight-week timeout for the debtor. This does, however, only extend to pre-exist - ing claims, as new claims stemming from continued
operations have priority and must be honoured con - tinuously. In bankruptcy proceedings, a qualified minority of creditors may require the formation of a creditors’ committee consisting of up to three members. The insolvency court decides how the members of such a committee are to be elected so as to ensure a diverse representation of the general body of creditors. The trustee must inform the creditors’ committee of any significant actions taken and, unless doing so would be detrimental for the estate, must inform the creditors’ committee of any particularly significant planned actions to be taken. The creditors’ committee is strictly of an advisory nature to the trustee and the insolvency court, wield - ing no special powers. The trustee must suggest to the insolvency court how the members of the credi - tors’ committee are to be remunerated. The costs are borne by the estate alongside the trustee’s remunera - tion in the order of priority of claims. The principle of pari passu regarding creditor rights and responsibilities is subject to certain modifica - tions, since creditors are only equal with creditors of the same ranking in the hierarchy defined by the Bankruptcy Act’s waterfall schedule of dividend dis - tribution. Please see 2.1 Types of Creditors and 2.3 Secured Creditors for further details. Danish insolvency law does not distinguish between different classes of creditors as such (apart from secured and unsecured creditors and apart from the subclasses of the unsecured creditors). A passed restructuring can, however, imply a cram-down imposed on dissenting creditors as it is – by virtue of law – globally binding for all unsecured creditors (known or unknown). Other claims, including secured creditor liens and security arrangements, can be released only if the secured creditor accepts the release. Danish insolvency law does not afford new money super-priority as such, although an intercreditor agree - ment may afford super-priority for new monies (which
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