Advantages and disadvantages of restructuring

Advantages of restructuring

• legal protection of the debtor from creditors
• recovery of society based on the forgiveness of liabilities (debt elimination)
• protection of assets (it is not possible for the creditors to proceed with the execution of lien, distraint and legal proceedings are suspended and subsequently stopped)
• providing time for the re-launch of the copmany (7-9 months)
• if a creditor's bankruptcy claim comes to court during restructuring, the court will deny such claim by court order
  the debtor's old obligations cease to exist and he is given a chance to succesfully continue his business activities
• maintenance of economic independence and legal personality of the debtor
• preserving jobs etc.
• unblocking of the debtor's bank accounts
• the inability to count old liabilities with new liabilities that arose after the beginning of the restructuring process (the company does not carry out old obligations after the beginning of restructuring; others have to carry out obligations towards the restructured company)
• supervision of the administrator over the process of restructuring
• after succesful restructuring, a company can operate without restrictions
• greater satisfaction of creditors than during bankruptcy
• relative and gradual satisfaction of creditors (distribution of liabilities over a longer period of time)

Disadvantages of restructuring

• During the restructuring process, the administrator approves the debtor's legal actions (with the exception of common legal actions)
• In case the restructuring plan is not approved, the company is declared bankrupt (There is a possibility to replace a group disapproval with the restructuring plan with a court decree)
• In case the plan towards the creditor is not being fulfilled (even after additional appeal) the plan becomes legally unenforceable towards this creditor