Standstill Agreement In German

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Before having out-of-court training sessions, the debtor should consider whether there is a realistic way to resolve his financial difficulties in terms of long-term profitability. If it is not possible to restore the debtor`s long-term viability, other remedies, such as the liquidation of the debtor, should be considered in the context of a formal insolvency procedure. The status quo period should be limited to the time reasonably required to establish a viable restructuring plan or to establish that such a plan cannot be established within an acceptable time frame. The status quo period will vary from case to case, although it is usually no more than a few weeks. During the status quo period, it is essential that the creditors concerned receive sufficient reliable information to assess the debtor`s financial situation, understand the causes of the underlying financial problems and evaluate all proposed solutions. When an agreed status quo period expires, but the creditor is satisfied that the company has made good efforts to address its liquidity problems and that the creditor`s debts are reasonably expected to be met soon, it is not uncommon for a status quo agreement to be shaken up and for a new period of leniency to be agreed upon, perhaps with heavier terms; For example, creditors may insist that there be more transparency and/or an agreement so that there is no debt challenge in a liquidation procedure when necessary. As was discussed last time, a status quo agreement is only effective to the extent that it applies to creditors who conduct a transaction for payment. In practice, the best way for a borrower is to reach a compromise with each of its creditors in succession, starting with the most aggressive ones. If there is only one lender under a facility, the situation is simple, but the syndication of the debt or the management of a changing body of bondholders is clearly more difficult. Therefore, if you put the creditors around the table and make it a status quo agreement, you have to make sure that the parties to the membership represent either all or at least a “dominant” interest in the debts involved. Credit facility agreements and loan agreements that constitute documents often, but not always, provide that the creditor`s unanimity is not necessary to renounce the borrower`s or issuer`s violations and to reach a compromise – there is some kind of majority rule. Nevertheless, it pays to ensure that in the event of debt cancellation, debt restructuring or restructuring, the formal requirements for obtaining a solution by a super-majority are met, including, in some cases, holding a meeting or conducting an investigation into compensation systems. Globally, most defaults would be expected to be in the offshore oil and gas sector in the short to medium term, as are the most indebted.