On May 26, the lower house of parliament passed the new law homologation private agreement. This bill means that the court can approve a private settlement between a company and its creditors and shareholders regarding a debt restructuring. The composition is then binding for all parties involved in the composition. The law should strengthen the restructuring capacity of companies and prevent unnecessary bankruptcies.
To reach an agreement, it is important that two valuations are made. The first valuation is a value indication of the expected proceeds of the company in the event of bankruptcy. The second indicates the expected value after the relevant restructuring. Disagreements may arise in the valuation process about the valuation outcomes and the adequacy of the information assessing the valuation. In this situation, the judge can appoint an independent expert to answer certain valuation questions.
Finally, if it has been demonstrated that the outcome of the second valuation is higher than the first valuation, the court may approve a financial restructuring of the company.
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