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John Houghton, Howard Lam and Mitchell Seider of Latham & Watkins introduce the Insolvency and Corporate Reorganisation Survey, highlighting several trends in restructuring markets around the world

Relief from creditors can be sought by filing for bankruptcy (concurso de acreedores).

Bankruptcy proceedings are governed by the Bankruptcy Act, while reorganisation proceedings are governed by the Pre-bankruptcy Settlement Agreement Act. In both cases, bankruptcy and reorganisation, a company must be insolvent to seek relief from creditors. In principle, Croatian legislation is familiar with three insolvency tests: (i) illiquidity; (ii) incapacity to pay; and (iii) over-indebtedness.

The Austrian Insolvency Code provides for bankruptcy proceedings, which lead to the winding-up and liquidation of a debtor company and restructuring proceedings, which seek to rescue a debtor company. Restructuring proceedings may be initiated with self-administration or without self-administration. Only restructuring proceedings under the Insolvency Code may lead to the relief from creditors.

The Cyprus Companies Law is based on the UK Companies Act 1948. It provides four main procedures for dealing with financially troubled companies. In increasing order of formality and finality they are:

Certain corporate restructuring procedures such as voluntary arrangements (CVAs) under the Insolvency Act 1986 (IA) or schemes of arrangement under the Companies Act 2006 (a process involving a compromise or other arrangement with creditors or members) do not require a company to be insolvent, although in most restructuring cases the company will be tinkering on the brink of insolvency.

As a general rule, a company may be declared insolvent (concurso mercantil) when it has defaulted in its payment obligations to two or more creditors, and on the date of filing of the insolvency petition: (i) its due obligations that have been delinquent for more than 30 days represent 35% or more of its total outstanding obligations; and/or (ii) it does not have sufficient liquid assets (cash and cash equivalents, such as bank deposits and other receivables with a maturity of no more than 90 days, or securities that may be sold within 30 days, in each case from the date of filing of the insolvency request) to pay for at least 80% of its obligations that are due and payable on such date.