Composition with creditors (concordat)

Composition with creditors (konkordato) allows a debtor unable, or at risk of becoming unable, to pay debts as they fall due to restructure them through a court-supervised arrangement. Its aim is to avert bankruptcy and keep the business operating.

The process starts with an application to the commercial court accompanied by a preliminary project and the documents listed by statute. The court grants a provisional respite and appoints a trustee; where the conditions hold, a definitive respite follows. During the respite, proceedings against the debtor are as a rule barred and pending ones are stayed. The project is adopted at the creditors' meeting by the statutory majorities of creditors and claims, and becomes binding upon court approval.

An approved project binds dissenting creditors as well, with maturity extensions and partial write-downs as typical content. If the process fails, the debtor may be declared bankrupt where the conditions are met. Applications rise markedly in periods of economic turbulence.