Corporate reorganisation is aimed at arranging your company’s debts and continuing its operation. You can apply for corporate reorganisation if your company is facing financial difficulties and at least two of your creditors are in favour of your application. The court-appointed administrator prepares a reorganisation programme that your company’s operation must follow during the reorganisation process.
If your company is in serious financial difficulties, corporate reorganisation may be the right solution. In the programme, your company is provided with a sound operating basis and its debts are arranged. The objective is to comprehensively rehabilitate your company and safeguard the continuation of its operations.
The purpose of a corporate reorganisation is to ensure that your basically healthy company can avoid bankruptcy. You should seek corporate reorganisation before it is too late because it is no longer possible when your company is bankrupt.
A corporate reorganisation usually lasts for between five and ten years. During the corporate reorganisation, your company can continue its operations in accordance with a reorganisation programme tailored to its needs. The programme sets out what needs to be changed in your business operations and how your company’s debts are arranged. After your company has met all the requirements and paid all the payments under the reorganisation programme, it is released from its debts and the reorganisation programme will end.
The corporate reorganisation programme may also be terminated if your company is unable to meet the requirements laid out in the payment programme. In such cases, bankruptcy is usually the only option.
An entry of a corporate reorganisation is added to your company details in the trade register.
You can seek corporate reorganisation if
- your company is threatened with insolvency or it is already insolvent
- at least two of your company's creditors are in favour of your application.
Note that the combined claims of these two creditors must account for at least one fifth of all debts of your company. A creditor may also file an application to start the corporate reorganisation of your company.
Corporate reorganisation is not possible if
- the reorganisation programme is unlikely to make your company solvent again
- your company is unable to pay its debts that have accumulated after the start of the reorganisation or the costs generated by the reorganisation
- the purpose of the reorganisation would be to prevent the collection of debts or other violation of the creditors’ or debtors’ rights
- the conditions for the implementation or approval of the reorganisation programme do not exist (for example, the creditors do not have enough trust in your company)
- there are inadequacies in your company's bookkeeping.
Corporate reorganisation can be applied to all forms of business. You should submit the application for the start of a corporate reorganisation to a court.
In a corporate reorganisation, the court appoints an administrator for your company. The task of the administrator is to determine how your business operations can be rehabilitated. The administrator conducts negotiations with your company and its creditors to find solutions to the problems affecting your business operations.
The administrator prepares a report on the assets, debts and other liabilities of your company, as well as factors impacting its growth. The administrator also audits your company’s business operations for the period before the corporate reorganisation.
Usually, the administrator also prepares a proposal for a reorganisation programme in cooperation with your company, its creditors and external experts. The proposal can also be prepared by your company or its creditors.
The administrator also monitors and supervises the operations of your company until the court has approved the reorganisation programme. As the entrepreneur, you will be in control of your company also during the reorganisation procedure. However, you will not be able to sell any property of your company or take out a debt without the administrator’s permission.
Corporate reorganisations and the work of the administrators are supervised by the Bankruptcy Ombudsman.