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.
14 CHAMBERS.COM
Powered by FlippingBook