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NPL Event Presentation - Deloitte · · 2018-02-25•EC Finance Ministers sub-committee on NPLs...
Transcript of NPL Event Presentation - Deloitte · · 2018-02-25•EC Finance Ministers sub-committee on NPLs...
NPL Event30.5.2017
© 2017 Deloitte Financial Advisory GmbH 2
Deloitte speakers
Tel. +36 (1) 428 6865Email: [email protected]
Contact
Balázs Bíró
Partner, Hungary
Tel. +43 1 537 00 2950Email: [email protected]
Contact
Ben Trask
Partner, Austria
Tel: +43 1 537 00 2900Email: [email protected]
Contact
Albert Hannak
Partner, Austria
Tel: +44 20 7007 9191Email: [email protected]
Contact
Will Newton
Partner, UK
Tel: +44 20 7007 7323Email: [email protected]
Contact
Amo Chahal
Director, UK
Tel. +43 1 537 00 2918 Email: [email protected]
Contact
Stephan Brandweiner
Senior Consultant, Austria
Tel. +40 (21) 2075 205Email: [email protected]
Contact
Andrei Burz-Pinzaru
Partner, Romania
© 2017 Deloitte Financial Advisory GmbH 3
Ben TraskIntroduction and welcome
© 2017 Deloitte Financial Advisory GmbH 4
Austria’s share of total exposure to CESEE is with 22% the highest among all EU-15 countries
KPI’s EU banking market
22%
19%
16%
10%
7%
5%
3%
17%
EU-15 banks' shares in total exposure to CESEE in Q3 16
Source: BIS
Austria
France
Italy
Germany
Belgium
Netherlands
Greece
Other
© 2017 Deloitte Financial Advisory GmbH 5
Overview
KPI’s EU banking market
0
1
2
3
4
5
6
7
11
12
UK
Germ
any
Fra
nce
Spa
in
Italy
Neth
erla
nds
Sw
ede
n
Austr
ia
Belg
ium
Denm
ark
Luxe
mb
ou
rg
Fin
land
Ire
land
Port
ug
al
Pola
nd
Gre
ece
Czech R
ep
ub
lic
Hung
ary
Rom
ania
Cypru
s
Slo
vakia
Cro
atia
Ma
lta
Bulg
aria
Slo
ven
ia
Latv
ia
Lithu
ania
Esto
nia
EU
Rtln
Total banking assets in EU countries
31.12.2015Source: ECB
Exposure in Austria and CESEE
EURbn
CEE Local: c. 1,053
Austria Local and CEE Exposure: c. 1,057
France CESEE Exposure: c. 159
Italy CESEE Exposure: c. 134
Germany CESEE Exposure: c. 84
Others CESEE Exposure: c. 277
Total: c. 2,764
Source: BIS, OeNB & ECB
© 2017 Deloitte Financial Advisory GmbH 6
Overview
KPI’s EU banking market
0%
5%
10%
15%
20%
40%
45%
50%
Gre
ece
Cypru
s
Port
ug
al
Italy
Slo
ven
ia
Ire
land
Bulg
aria
Hung
ary
Cro
atia
Rom
ania
Pola
nd
Spa
in
Austr
ia
Ma
lta
Slo
vakia
Lithu
ania
Fra
nce
Belg
ium
Latv
ia
Denm
ark
Germ
any
Neth
erla
nds
Cze
ch R
ep
ub
lic UK
Norw
ay
Fin
land
Esto
nia
Luxe
mb
ou
rg
Sw
ede
n
NPL ratio in EU countries
31.12.2016 EU averageSource: EBA Risk Dashboard
© 2017 Deloitte Financial Advisory GmbH 7
Albert HannakRestructuring procedures in Austria & CEE
© 2017 Deloitte Financial Advisory GmbH 8
Significant changes have been implemented (or are planned) to restructuring legislation across Austria and CE
Introduction
• Efforts to standardize and simplify restructuring procedures across the region influenced by EU attempts to harmonize legislation
• General desire to make restructuring easier and a more effective resolution tool
• Croatia’s new restructuring law (‘Law on the Procedure of extraordinary administration in companies of systemic importance for the Republic of Croatia’ or ‘Lex Agrokor’)
• Proposals to implement an Austrian Reorganization Act, similar to the UK Scheme of Arrangement
• Well-functioning insolvency and restructuring systems are key to supporting economic growth and job creation. EU Insolvency initiative aims to:
1. Increase opportunities for companies to restructure early
2. Help prevent bankruptcy and avoid laying off staff
3. Ensure entrepreneurs get a second chance after bankruptcy
4. Lead to more effective and efficient insolvency procedures throughout the EU
© 2017 Deloitte Financial Advisory GmbH 9
Croatian government passed an emergency law to protect the national economy from a potential collapse of Agrokor
Lex Agrokor
• Protect the viability of companies of systemic importance for Croatia
• A rapid and effective procedure for restructuring
• Provide liquidity, stability and sustainability for the company
• reach a settlement with creditors
• 6 April 2017: Croatian Parliament passed the ‘Law on the Procedure of extraordinary administration in companies of systemic importance for the Republic of Croatia’ aka Lex Agrokor
• 7 April 2017: Agrokor applies to Court to enter the new procedure with immediate effect
• 10 April 2017: Court places Agrokor into the new procedure and appoints Ante Ramjlak special trusteeTimeline
Stated Goals
• Largest privately owned Croatian retail group
• €6.5bn in revenue, 60,000 employees in 2015, €6bn debt (six times equity)
• Making headlines since early 2016 – growing speculation regarding restructuring
© 2017 Deloitte Financial Advisory GmbH 10
Lex Agrokor gives extensive powers to the trustee, but also offers creditors a super-seniority olive branch
Lex Agrokor
New roles
Outlook
• Special trustee: Authorized to undertake all actions for regular business operations
• Creditor’s council: Up to nine members representing each class of creditor
• Advisory body: Provides its opinions on the actions and decisions of the Special trustee at the request of either the Croatian Ministry or the Court
• Super seniority for new financial lending (i.e. DIP financing)
• Settlement agreement between debtor and creditors within 12 months
• Extraordinary administration creates a moratorium => protection from creditors
• If special administration fails: insolvency would likely result in a chain reaction supplier of insolvencies
• Potential issues: The new law could contravene Croatian constitutional property ownership rights
Key terms
© 2017 Deloitte Financial Advisory GmbH 11
A more dynamic pre-insolvency/restructuring procedure
Austrian Reorganization Act
Austrian Ministry of Justice
The new Law is currently under consideration by a working group within the Austrian Ministry of Justice
Going concern
Positive going concern forecast as required by the current LawBut no imminent insolvency (contrary to AIA)
Business size
Procedure open to small, cross border and listed stock companies
Purpose
Modernization by furthering efficiencyAvoiding insolvency while going concern is at riskEnhancing depth and liquidity of Austrian capital marketsAttracting creditors to lend, companies to restructure
Legislative agenda for 2017
New court-approved out-of-court restructuring solution
Recognized flexible tool for implementing complex international restructurings
Current status: Law on Reorganizations is inflexible, time consuming and difficult to utilize in practice.
Reference to the UK Scheme of Arrangement
LawReform
© 2017 Deloitte Financial Advisory GmbH 12
Proposed new law envisages the following procedural steps
Austrian Reorganization Act
• Detailed restructuring plan (specific crisis management/ defensemeasures)
• Vote by a majority in number and 75% in value of entitled creditors
• Flexible structure
• Between documents posting to creditors and agreement takingeffect is a maximum of 30 days
• Court acts as senate including presiding judge and two specialistslay judges
• Voting requirements fulfilled, administrator review, enforceable andbinding agreement for all creditors, including non-consentingminority creditors
• No enforcement proceedings / deferral of payments
• Same value as an enforceable court title
• Binding declaration of intents included in the reorganizationagreement
• Once court approves the agreement, no action for annulment / forresumption (except if abuse of rights, disregard of principles of fairhearing / violation of law)
The reorganization
plan
Reorganization
agreement
Duration
Jurisdiction
Effects
Dissenting
creditors
© 2017 Deloitte Financial Advisory GmbH 13
In-line with proposed EU reforms, there is a general trend away from formal insolvency towards pre-insolvency restructuring procedures which seek to maximize value for all stakeholders
Conclusion
Austrian Reorganization Act
• Moving the emphasis away from formal insolvency procedures to a more dynamic pre-insolvency / restructuring procedure
• Create a more attractive environment for creditors to lend and companies to restructure their debts
• Our view: The implementation of this new restructuring tool could constitute a considerable step towards making Austria a more attractive location for lenders and creditors alike
Lex Agrokor
• Though the law was implemented in a expedited manner, it has provided a degree of stability to the beleaguered company, avoided a potentially catastrophic insolvency and created platform on which to negotiate a restructuring
• Risks remain that the law could be challenged
• Our view: The real question is not the letter of the law, but how it is implemented and whether it treats all creditors fairly – we will start to see the answer later this year and into 2018
© 2017 Deloitte Financial Advisory GmbH 14
Will NewtonECB regulations
© 2017 Deloitte Financial Advisory GmbH 15
The past 18 months have finally seen European authorities wake up to the durability of the NPL problem in Europe
Political agenda
Working groups
• EC Finance Ministers sub-committee on NPLs
• ECB/EBA joint working group
• ECB task force
Initiatives
• Data
• Securitisation
• Bad banks
Guidelines
• ECB SREP priorities for 2017
• ECB NPL guidelines
• ECB leveraged lending guidelines
Thought papers & speeches
• ECB Board member speeches
• ECB Financial Stability Review
© 2017 Deloitte Financial Advisory GmbH 16
Thoughts & initiatives to help fix a “failing” market
ECB Financial Stability Review – May 2017
• “Large stocks of NPLs … continue to present risks to financial stability”
• “Significant legal and administrative reforms have been undertaken in
recent years … yet the market continues to provide low level NPL
valuations that result in wide bid-ask spreads thus impeding large-scale
NPL sales”
• “Recent publication of the ECBs guidance … should provide an important
supply-side impetus”
• “Demand-side impediments … remain a factor in many markets”
• “… the market has not yet priced-in the effect of reforms due to concerns
regarding the efficiency of their actual implementation and/or because of a
highly conservative approach to valuation”
• “… some degree of market failure may be playing a role in the persistence
of large bid-ask spreads …”
• “… information asymmetries may be a key factor in explaining these wide
bid-ask spreads”
• “A comprehensive range of policy options may have to be pursued to tackle
large stocks of NPLs and to address the attendant market failures”
© 2017 Deloitte Financial Advisory GmbH 17
Increased intervention in the market in the future
Proposed & potential initiatives
Securitisation
• GACS
• FSR proposals: State guarantee of junior
tranches
Forward purchase scheme
• FSR proposals on partial financing by State
of direct NPL sales
• Low cost financing of forward price element
in excess of normal bid price
Bad banks
• Constancio speech on central Europe-wide
AMC
• ECB initiative to explore possibilities within
State Aid framework
Data harmonisation
• EBA initiative
• Potential for future NPL clearing
© 2017 Deloitte Financial Advisory GmbH 18
A summary
ECB NPL guidelines
• Definition of ambitious but realistic NPL strategies
• Quantitative NPL reduction targets
• Credible operational plans
• Banks will not get it right first, or second, or third time
• Banks do not yet seem to realise just how much detail we will
require
• This is going to be a multi-year, iterative process Supervisory approach
Requirements
Intention
• Increased provisioning
• Narrowing bid-ask spread
• Increased loan sales
• Enhanced supervision
© 2017 Deloitte Financial Advisory GmbH 19
Amo ChahalEurope market overview
20© 2017 Deloitte Financial Advisory GmbH
Key activity drivers
2016 – another record year
Size of market
Outstanding non-core and NPL universe c. €2trn
Market pressure
Pressure to clean house and focus on return on capital
Regulations
Ever increasing regulatory pressure and oversight – Basel III, SII, IFRS, SSM
Investor demand
Ever growing buyer demand for European assets – €100bn in capital raised and rising
21© 2017 Deloitte Financial Advisory GmbH
European market overview – Size and nature of market
€410bn
1.4%
€79bn
10.9%
€355bn
9.1%
€71bn
7.3%
€220bn
4.6%
€175bn
5.5%
€354bn
12%
€50bn
2.3%
Total Non-core and NPL
€2trn
€203bn
2.7%€61bn
10.3%*
CEE
€133bn
34.4%
Non-core and NPL volume
NPL ratio
*average
22© 2017 Deloitte Financial Advisory GmbH
European market overview
€103.3
€104.3
€82.9
€69.5 €172.82016
2015
2014
Completed Ongoing
43
31 22
11
11
875
Italy Spain Austria & CEE
Portugal Netherlands Ireland
UK Germany
Strong activity levels seen in Southern Europe, led notably by Italy and Spain
Improving economies are bringing better values for loan securities
Regulatory pressures continue to push banks to resolve NPL and non-core issues
Deal rate is expected to rise in 2017 as paused deals are completed
Shift in the asset mix expected
The record rate of loan disposals achieved in 2015 has been repeated again in 2016, with just over €103bn of completed deals
Note: data correct as of 31 December 2016 and based on GBV
Activity by year
# completed deals 2016
23© 2017 Deloitte Financial Advisory GmbH
The loan sale market in Italy continues to grow
European market overview
8.1
30.6
23.5
21.9
2.2
2.1
17.3
22.9
40.2
14.0
5.3
2.1
2.2
1.6
36.0
13.0
13.0
13.3
7.5
6.4
11.8
2.3
39.7
19.1
2.3
4.2
0.3
3.1
1.3
0 20 40 60 80 100 120
Italy
Ireland
UK
Spain
Germany
Austria &CEE
Netherlands
Portugal
Greece
Completed 2014 Completed 2015 Completed 2016 Ongoing 2016
Note: data correct as of 31 December 2016 and based on GBV
Activity by country
24© 2017 Deloitte Financial Advisory GmbH
Sale of residential and mixed loan portfolios picking up
European market overview
9.9
33.3
34.9
5.8
7.8
4.0
0.4
8.6
24.6
9.5
23.7
22.4
6.5
5.6
6.4
4.2
40.6
20.4
1.7
2.0
4.2
0.4
1.8
0 10 20 30 40 50 60 70 80
Mixed
Residential
CRE
Consumer
Corporate
RED
AssetFinance
REO
Other
2015 2016 Ongoing
Note: data correct as of 31 December 2016 and based on GBV
Activity by asset class
25© 2017 Deloitte Financial Advisory GmbH
Top sellers and buyers
European market overview
16.0
12.0
4.0
10.6
6.8 5.6
32.4
5.4
5.8
3
9.1
6
13.5 2.5
6.2 8.65.2
0
10
20
30
40
50
60
70
€bn
2016
2015
2014
7.3
2.6
21.3
3.4
7.3
4.25.1
11.3
4.6
17.9
5 12.9
5.5
4.1 3.2
10.220.7
3.2 2.6
8.6 3.1
0
5
10
15
20
25
30
35
€bn
2016
2015
2014
Note: data correct as of 31 December 2016 and based on GBV
Top sellers Top buyers
© 2017 Deloitte Financial Advisory GmbH 26
Stephan BrandweinerAustrian banking update
© 2017 Deloitte Financial Advisory GmbH 27
Austrian banks continue to be faced with weak economic growth
Austrian banking market
600
620
640
660
680
700
720
740
760
780
800
-
200
400
600
800
1,000
1,200
2013 2014 2015 2016
#E
UR
bn
Austrian banking market
Total assets (consolidated) Exposure to CESEE (consolidated)
Number of credit instiutionsSource: OeNB
© 2017 Deloitte Financial Advisory GmbH 28
In this challenging environment, Austrian banks progressed with the necessary structural adjustment process in 2016 to increase efficiency and hence step up profitability in the longer term.
Austrian banking market
-0.2%
-0.1%
0.0%
0.1%
0.2%
0.3%
0.4%
0.5%
0.6%
0.7%
(2)
(1)
-
1
2
3
4
5
6
7
2013 2014 2015 2016
EU
Rb
n
Austrian banks - Profitability
Net result after tax Return on assets (annualized)Source: OeNB
© 2017 Deloitte Financial Advisory GmbH 29
NPL ratios have steadily decreased over the past years
Austrian banking market
0%
2%
4%
6%
8%
10%
12%
14%
BAWAG Erste Group RBI Group Raiffeisen OÖ Raiffeisen NÖWien
Bank Austria
NPL ratios
2014 2015 2016 EU averageSource: Annual Reports
© 2017 Deloitte Financial Advisory GmbH 30
CESEE has been profitable in all years from 2008 to 2016
Austrian banking market
(3)
(2)
(1)
-
1
2
3
4
5
2008 2009 2010 2011 2012 2013 2014 2015 2016
EU
Rb
n
Net results of Austrian banks' subsidiaries in CESEE
Czech Republic Slovakia Russia Romania Croatia
Hungary Ukraine Other CESEE totalSource: OeNB
© 2017 Deloitte Financial Advisory GmbH 31
Balazs BiroCEE market update
© 2017 Deloitte Financial Advisory GmbH 32
The improving macroeconomic environment remained the main catalyst for NPL markets
-2%
-1%
0%
1%
2%
3%
4%
5%
AT HR CZ HU PL RO SK SI BG SRB
2014 2015 2016 FSource: Local national banks, EIU
70
80
90
100
110
120
130
Hungary Romania Slovenia CroatiaSource: Eurostat
GDP growth in the CEE region (2014 - 2016 F)
House price index - Residential properties (2010 = 100)
© 2017 Deloitte Financial Advisory GmbH 33
Both NPL volumes and ratios fell in 2016 compared to 2014
0%
5%
10%
15%
20%
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
2013
2014
Q1 2
015
Q2 2
015
Q3 2
015
Q4 2
015
Q2 2
016
2013
2014
Q1 2
015
Q2 2
015
Q3 2
015
Q4 2
015
Q2 2
016
2013
2014
Q1 2
015
Q2 2
015
Q3 2
015
Q4 2
015
Q2 2
016
2013
2014
Q1 2
015
Q2 2
015
Q3 2
015
Q4 2
015
Q2 2
016
2013
2014
Q1 2
015
Q2 2
015
Q3 2
015
Q4 2
015
Q2 2
016
2013
2014
Q1 2
015
Q2 2
015
Q3 2
015
Q4 2
015
Q2 2
016
2013
2014
Q1 2
015
Q2 2
015
Q3 2
015
Q4 2
015
Q2 2
016
2013
2014
Q1 2
015
Q2 2
015
Q3 2
015
Q4 2
015
Q2 2
016
2013
2014
Q1 2
015
Q2 2
015
Q3 2
015
Q4 2
015
Q2 2
016
Poland Czech Republic Slovakia Hungary Romania Slovenia Croatia Bulgaria Serbia
NP
L r
ati
o (
%)
NP
L v
olu
me (
EU
R m
n)
Retail NPL (EUR mn) Corporate NPL (EUR mn) NPL ratio (%), right axis
Source: National Banks, Deloitte analysis
© 2017 Deloitte Financial Advisory GmbH 34
Banking trends – deleveraging at full steam, consolidation starting
Deleveraging2014 -
20
08
20
14
20
16
20
10
20
12
Freeze2008 - 2014
Consolidation
2016 -
Banking Market
Activity by year - CEE (€ bn)
4.3
6.2 5.2 11.5
2015
2016
Completed Ongoing
Source: Deloitte Intelligence as of 31 Dec 2016
3.4
0.5
0.2
0.3
2.2
1.0
1.7
1.4
2.7
1.4
1.1
8.2
2.9
2.8
1.6
Corporate
Mixed/other
Residential
Consumer
Not disclosed
Completed 2015 Completed 2016 Ongoing
Source: Deloitte Intelligence as of 31 Dec 2016
Activity by asset class - CEE, 2015 - 2016 (€ bn)
© 2017 Deloitte Financial Advisory GmbH 35
Consolidation of the banking industry is expected to promote transaction activity in the CEE region
Gradually exiting the region Active buyers in the regionNumerous banks are present in each country
~30+
~30+
~20-30
~30+
~20-30
~30+
~30+
~20-30
~20-30
Bank consolidation
© 2017 Deloitte Financial Advisory GmbH 36
Recent trends and CEE outlook
Investors turned their interest towards retail mortgages in 2016
Transaction activity will level off or possibly further increase in 2017
Corporate NPL volumes are shrinking considerably in Romania and Hungary, although NPL
supply showed only a moderate decrease in the Adriatic region
The declining supply of unsecured NPLs resulted in increasing prices
Secondary NPL transaction markets are reviving and activity is expected to further increase in
the forthcoming years
Consolidation of the CEE banking sector is expected
NPL investors are expected to show higher interest in acquiring banks
© 2017 Deloitte Financial Advisory GmbH 37
Andrei Burz-PinzaruKey legal issues in distressed debt acquisitions
© 2017 Deloitte Financial Advisory GmbH 38
Loan Transfer Deals Experience in Romania
• Legal advisor in more than 10 loan transfer transactions (aggregate par value close to €3 bn).
• Type of projects assisted:1. deal structuring2. sell side/buy side assistance3. portfolio/single ticket deals4. local/cross-border transfers5. true sale/synthetic transfers6. performing / non-performing portfolios
• Sample NPL portfolio engagements include1. Buy side legal advisor in over EUR 300 m corporate and retail portfolio2. Buy side legal advisor in EUR 400 m corporate and retail portfolio3. Buy side legal advisor in multiple large corporate real estate single tickets4. Sell side legal advisor in EUR 261 m secured SME and corporate portfolio5. Sell side legal advisor in over EUR 500 m secured corporate portfolio6. Sell side legal advisor in EUR 200 m unsecured portfolio 7. Sell side legal advisor in EUR 165 m secured corporate and retail portfolio8. Sell side legal advisor in EUR 16.8 m unsecured corporate and retail leasing portfolio
© 2017 Deloitte Financial Advisory GmbH 39
A long, hot summer for Romanian NPL market
EUR 1.5 bln
portfolio deals expected for second half of 2017
© 2017 Deloitte Financial Advisory GmbH 40
Portfolio deals versus single ticket transactions
Investor challenges
Readiness of banks
Porfolios: A committed seller (coverage ratio) is key as there have been too many failed deals. Lack of data from the seller is also an issue and results in the perception that the seller is not committed Single tickets: Seller commitment – same as above. Lack of data normally not an issue by reference to loan/security docs. Usually an issue by reference to updated info on collateral (particularly for income producing assets)
Portfolio composition
Portfolios: International Investors do not like multi-country portfolios as they result in high due diligence costs (unless they already have portfolios in such countries)Single ticket: buyers are usually specialized investors (local or international with strong local presence)
Collection process
Portfolios: Investors require a suitable collection servicer (loan servicer) to manage the portfolio post acquisition. Understanding the legal framework is also a key consideration Single ticket: understanding the legal framework is even more important. Distressed corporate debt servicing: in-house vs outsourced
1
2
3
© 2017 Deloitte Financial Advisory GmbH 41
Portfolio deals versus single ticket transactions
Investor challenges
Collaterals
Portfolios: Investors prefer liquid collaterals (e.g. office and retail) rather than development land and rural industrial. Investors require a local real estate valuers and comparables in order to accurately underwrite the portfoliosSingle ticket: development/turnaround
Portfolio composition
Portfolios: well-prepared and transparent processes together with well prepared documentation and data. Limited competition and timing is also key (due to competing deals)Single ticket: less organized process. Many times is ad-hoc. Usually no outside advisors sell-side (except for lawyers).
4
5
© 2017 Deloitte Financial Advisory GmbH 42
Seller’s proposal is for the Buyer to incur…
Structuring the NPL deal… on who’s risks and costs?
Transaction costs
Authentication of SPA
Publicity of change of creditor
Notification of assigned debtors
Taking over the underlying documentation
Custodian
MATRIX: Risks & Costs
Historical expenses Obligation to take over
ongoing agreements
Current or future litigations
Criminal seizures/ attachments
Fraud cases Fulfilment of notification
formalities
Structure Form (i.e. notarized or
not) Acquisition vehicle Change of law etc.
Other related costs Other risks
Risk of the contract
© 2017 Deloitte Financial Advisory GmbH 43
A glimpse into the insolvency maze
Request for
opening of
insolvency
procedure
T0
T0
Submitted
by a
creditor
Notificatio
n of the
debtor/fisc
al
authority
Possible
challenge
of
insolvency
by debtor
T1= 48h since T0 10 days since T1
Decision on opening
of the insolvency
procedure
Decision of dismissal
of the claim
Submitted
by debtor
Decision on opening
of the insolvency
procedure
Decision of dismissal
of the claim
T1 =10 days since
T0
Possible
challenge by
creditors
T2 =10 days since
notification
Decision of
dismissal of
the challenge
Decision of
revoking the
opening
T3 - 5 days since
T2
Opening of
insolvency
procedure
Simplified
procedure
General
procedure
Bankruptcy
Reorgani
zation
plan
Bankruptcy
Closing
Bankruptcy
Max 4 years
© 2017 Deloitte Financial Advisory GmbH 44
Key legal aspects concerning to receivables to be acquired
A glimpse into the insolvency maze
• Proper registration of the receivables (secured/not secured, the entire amount requested, if the entire amount is due or not);
• Consider if the receivable could potentially be subjected to a haircut through the reorganization plan and to what extent (depending on the category of the receivable and the status of the insolvency process);
• Consider if the receivable to be acquired would allow you to:
1. change the judicial administrator (to extent there are grounds for such change assuming you would have such intentions);
2. run the procedure to a more rapid closing/swifter acquisition of secured assets (position to impact on the decisions of the creditors’ meetings or, on the contrary, no power to actually influence the outcome of the creditors committees’/creditors meetings’ decisions);
3. oppose to the approval of a reorganization plan (e.g. by identifying the number of categories of creditors, identifying various scenarios under which a reorganization plan might be approved by the creditors).
© 2017 Deloitte Financial Advisory GmbH 45
Key legal aspects concerning to receivables to be acquired
A glimpse into the insolvency maze
• Understand the overall status of the insolvency procedure, in order to identify:
1. potential risks for the procedure to be blocked/delayed by other creditors (e.g. creditors in the same group with the debtor);
2. fees / costs incurred by the company which may have higher priority than your secured claims (in addition to liquidator’s fees);
3. challenges against the receivable to be acquired that would endanger your position in the insolvency procedure (e.g. challenges against the amount of the receivable/security counterclaims);
4. various transactions/contracts executed by the debtor prior to the opening of the insolvency procedure aiming at diminishing the assets owned by the debtor (e.g. promissory sale-purchase agreement/other agreements concluded with other affiliated creditors).
5. existence of litigations outside the insolvency process which could impact the creditors’ table (and consequently your position as creditor entitled to insolvency proceedings).
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Time(ing) is of the essence
A glimpse into the insolvency maze
• Certain strict deadlines must be observed within the insolvency proceedings to insure protection of creditors’ interests (e.g. registration as creditor, submitting a reorganization plan).
• Various challenges within the procedure (even vexatious challenges) may “steal” time and block the course of the procedure (e.g. challenges against preliminary table of receivables which must be finally resolved as a condition, together with the evaluation of securities, to proceed to the preparation of the final table of receivables).
• The insolvency proceedings are long term procedures – be prepared
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Reff & Associates – Deloitte Legal in a nutshell
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Panel discussion
© 2017 Deloitte Financial Advisory GmbH 49
Panel participants
Balázs Bíró – Deloitte
Klaus Gugglberger – HETA
Viktor Levkanič - APS
Pavel Haskovec - UniCredit