Position of the material creditor in the restructuring proceedings

Position of the material creditor in the restructuring proceedings

In the course of the sanitation proceedings, the creditors of the debtor may, as a rule, seek satisfaction of their claims only in the arrangement concluded with the debtor. This obviously does not apply to current claims, which the debtor is obliged to pay during the proceedings. The arrangement is the culmination of the procedure of identifying and classifying claims on the list of claims and working out arrangement proposals. However, it very rarely ensures full repayment of the principal debt to creditors, not to mention interest.

There is, however, a category of privileged creditors who do not have to wait for the restructuring procedure to be completed and their satisfaction often far exceeds that of other creditors. These are, of course, creditors secured in kind.

Right of separation

Satisfaction of the creditors in kind in the restructuring proceedings takes place by liquidating the object of security. The sums obtained from the sale are mainly used to satisfy this category of creditors. On the basis of the reference provision (Article 323(4) of the restructuring law), this procedure is governed by bankruptcy law.

Pursuant to the so-called “law of separation”, a creditor secured in kind is satisfied from the sum obtained from the liquidation of the object of collateral. Such creditors are covered by the arrangement only if they agree to it. The obligatory arrangement applies only to the part of the claim which has not been satisfied by liquidating the object.

The position of the material creditor is strong. This creditor is satisfied, as it were, before all other creditors, and as a rule he is not affected by the arrangement.

Liquidation of the object of security

After the liquidation of the debtor’s assets encumbered in kind, the administrator prepares a so-called separate distribution plan. In this plan, the administrator shall include the sum he obtained from the sale of the assets, and shall present a list of creditors in kind who are to be satisfied from these sums. In addition, the individual costs that have to be covered from the sum obtained from the liquidation are separated.

The sum intended to satisfy the material creditors is reduced by the costs of liquidation (i.e. the costs of notarial deeds, mediation, marketing) and the costs of proceedings. Reductions cannot exceed 10% of the total amount obtained. The determined amount is primarily included in the main receivable of the material creditor. Later on, it is also used as a side benefit.

Partial separate distribution plan

The participation of the material creditor in the restructuring proceedings shall, in principle, end with a separate plan of division. However, in some cases it is not possible to quickly realise the assets covered by the security and it is necessary to draw up a partial separate divisional plan (Article 347(1)(5) of the restructuring law). Such a situation may occur e.g. in proceedings against an indebted developer. In the proceedings, the manager gradually separates and sells the apartments as the next phases of the investment are completed.

Therefore, the question arises whether, once a separate division plan is executed, consisting in separating and selling part of the apartments, the mortgage charged on the land is proportionally reduced. This question is important for the calculation of interest on the mortgage claim as it may lead to a reduction of the main claim on which interest is calculated.

The above will depend on drawing up a separate distribution plan by the administrator. If the administrator, after selling the premises, submits a separate distribution plan to the case file, interest will be charged on the original amount of the claim. However, until the date of filing the plan with the case file. Then the interest will be calculated on the remaining receivable.

If, on the other hand, the administrator draws up a separate plan for the division after the sale of several premises, interest will be calculated on the original amount of the claim until the date of submission of the separate division plan.

 

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