Member Article

Corporate recovery involves a company which faces under-capitalisation (insufficiency) or which faces difficulties in meeting its obligations to lenders and other creditors (insolvency) undertaking an informal corporate reorganisation (outside the scope of the Company Reorganisation Act) in cooperation with the owners concerned, the board, the management and creditors under a duty of confidentiality. The purpose is to avoid insufficiency and the ensuing liability for the directors or an insolvency situation which may lead to bankruptcy but instead to safeguard the equity and the requisite ability to meet liabilities and to maintain confidence on the relevant market. Such corporate recovery can include:

• Agreements on moratorium for re-negotiation with certain creditors during the restructuring process

• Re-negotiation of covenants in the loan agreements

• Debt write-downs

• Negotiations with creditors other than banks and credit institutes

• Appointment of new board of directors and management

• Sale of pledged assets, e.g. shares in subsidiaries

• Sale of other assets, e.g. businesses and leasing portfolios

• Staff reductions

• Negotiations with owners and new investors regarding capital contributions etc.

• New company structure

• Contacts with the Swedish Financial Supervisory Authority, stock exchanges etc.

Our practice groups Banking and Finance, M&A, Corporate, Real Estate, Securities, Tax, Commercial Contracts, Insolvency and Bankruptcy, Labour Law and Dispute Resolution, enable Delphi to assist creditors and other stakeholders in a financially difficult situation, with advice in both Swedish and cross-border situations. Within Delphi’s Insolvency and Bankruptcy group, there are also lawyers who are regularly appointed as trustees under the auspices of the Company Reorganization Act.

Delphi provides teams composed of the specialists deemed to be of importance to each specific case of restructuring. In a financially strained situation, which can sometimes lead to disputes between the stakeholders, it is of the utmost importance that the legal advisor is independent and that there are no conflicts of interest. This has been especially appreciated by our clients in previous financial crises in Sweden. Delphi is an independent law firm and has rigorous conflict of interest routines.

Delphi has advised in voluntary reorganizations and corporate recovery as well as in company reorganizations under the Company Reorganization Act. Many of our specialists have experience from previous financial crises in Sweden.