EN ECB -PUBLIC  
 
 
OPINION OF THE EUROPEAN CENTRAL BANK  
of 5 November 2013  
on financial restructuring of companies  
(CON/20 13/75) 
 
Introduction and legal basis  
On 21 October 2013, the European Central Bank (ECB) received a request from the Slovenian Ministry 
of Justice for an  opinion on a draft law amending the Law on financial operations, insolvency proceedings 
and compulsory dissolution1 (hereinafter the ‘draft law’).  On 25 October 2013 , the ECB received a 
revised version of the draft law.  
The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the 
Functioning of the European Union and the sixth indent of Article 2(1) of Council Decision 98/415/EC of 
29 June 1998 on the consultation of the European Central Bank by national authoritie s regarding draft 
legislative provisions2, as the draft law relates to rules applicable to financial institutions insofar as they 
materially influence the stability of financial institutions and markets. In accordance with the first 
sentence of Article 17. 5 of the Rules of Procedure of the European Central Bank, the Governing Council 
has adopted this opinion.  
 
1. Purpose of the draft law  
1.1 The existing Slovenian Law on  insolvency regulates two types of court proceedings applicable to 
insolvent companies : (a) compulsory settlement proceedings aimed at restructuring insolvent 
entities  by, inter alia , restructuring their liabilities;  and (b) bankruptcy proceedings aimed at their 
winding up. The main aim of the draft law is to amend the Law on insolvency with a view to 
improving financial restructuring of distressed companies as well as the  efficiency of inso lvency 
proceedings in general.  
1.2 To this end , the draft law ( a) proposes certain amendments to the general rules on compulsory 
settlements , including  an explicit reference to  the ‘absolute priority rule ’ pursuant  to which the 
compulsory settlement  as a restructuring proceeding  shall be carried out in a way that reflects the 
burden -sharing rules among shareholders and different classes of creditors as appli cable in 
bankruptcy proceedings3; (b) broadens the scope of simplified compulsory settlement proceedings 
                                                 
1 Zakon o finančnem poslovanju, postopkih zaradi insolventnosti in prisilnem preneha nju (ZFPPIPP) (Ur.l. RS No 
63/201 3-official consolidated text) (the ‘Law on insolvency’).  
2 OJ L 189, 3.7.1998, p. 42.  
3 See, in particular, Article 9 of the draft law amending Article 136 of the Law on i nsolvency.  
ECB -PUBLIC  
2 to make them available to both micro companies  and small  companies4 and further simplifies the 
prerequisites in the application of  those proceedings ; (c) amends some other existing rules of the 
Law on insolvency to improve the bankruptcy proceedings and to streamline  the role of the courts 
in insolvency proceedings ; and ( d) introduces regulations for a new  form  of restructuring  
proceeding  for large or me dium -sized companies5, as briefly described below . 
1.3 For large or medium -sized companies  that are not yet insolvent but are likely to become insolvent 
within a year , the draft law enables such companies to apply new preventive restructuring  
proceedings  proposed  by th e draft law6. The aim of such proceedings is to facilitate early 
restructuring and to eliminate the  causes for the  insolv ency of distressed companies by, inter alia , 
extending the binding effects of  a concluded restructuring agreement that has  been confirmed by 
the court  to creditors who have not entered into the restructuring agreement , subject to having a 
certain majority of creditors supporting the agreement.  The preventive restructuring  proceedings 
are focused on the restructuring of financ ial claims7, so that binding effects of the restructuring 
agreement may be imposed only on dissenting creditors holding that type of  claim . Where the 
restructuring agreement provides for the  restructuring of unsecured financial claims, such 
restructuring m ay entail the reduction of the principal or the extension of the maturity of the claims. 
If the secured financial claims  are to be restructured as well, only their maturity may be extended or 
the interest rate  modified . 
1.4 Where companies  are already inso lvent, they may be restructured  within compulsory settlement 
proceedings, rather than liquid ated in bankruptcy  proceedings , if the former  would likely result in 
better repayment conditions for creditors than the latter . To facilitate the restructuring of insolvent 
large and medium -sized companies within the compulsory settlement proceedings on the basis of, 
inter alia , the required majority vote in relevant creditor classes, the draft law introduces certain 
special rules8. Pursuant to th ose special rules, it will be possible , among other things , to provide for 
the restructuring of only unsecured ordinary financial claims  rather than all ordinary claims,  as well 
as the restructuring of secured claims , the pooling of collateral  and spin -offs. If secured claim s are 
to be restructured, such claim s may be split and converted into two new  claims , a secured and an 
unsecured claim , based on  the market value of the assets , subject to security  as determined within 
the compulsory settlement proceedings. The secured clai ms may be restructured by way of 
extension of the maturity or modification of the interest rate. Since the restructuring of insolvent 
large or medium -sized companies  within the compulsory settlement proceedings may have 
significant effects to the stability  of banks, Banka Slovenije shall be notified on the initiation of the 
proceedings.  
 
                                                 
4 As defined in Article 55 of the Law on companies ( Zakon o gospodarskih družbah  – ZGD -1). 
5 As defined in Article 55 of the Law on companies.  
6 See Article 4 of the draft law introducing a new Section 2.3 to the Law on insolvency.  
7 See the definition of ‘financial claim’ in Article 3 of the draft law intr oducing a new article 20.a to the Law on 
insolvency.  
8 See Article 37 of the draft law introducing a new Section 4.8 to the Law on insolvency.  
ECB -PUBLIC  
3 2. General observation s 
2.1 The ECB welcomes the draft law as it broadens and strengthens the procedures  and tools available 
for the restructuring of Slovenian companie s. The new amendments should provide more efficient 
option s for preserving as a going concern companies  that are in distress or already insolvent , but 
are deemed  economically viable  upon potential debt restructuring . Especially in connection to the 
latter case , the clearer stipulation of the absolute priority rule and the premise that creditors of 
failing companies would be better off with a  restructuring rather than a winding up of insolvent 
companies, as required by the draft law, should contribute to the success ful execution of corporate 
restructuring  procedure s. 
2.2 The draft law contains provisions that attempt to reasonably and proportionately balance the 
interests of both the debtor and its creditors in a restructuring process. Nevertheless , the ECB 
considers tha t the proposed significant changes to the existing regime could be accompanied by an 
economic and legal impact assessment that would inform authorities about the potential 
implications of applying the restructuring  procedures provided for in the draft law on the economy 
in general and , in particular , on the balance sheets and profitability of credit institutions in their 
capacity as creditors of companies availing of the new procedures.  
2.3 Furthermore, the impact of the new procedures should be monitored on a continuous basis and in 
the event that risks to financial stability emerge, the framework should be  revised to address 
potential adverse impacts. Such monitoring appears warranted , specifically as the draft law 
regulates several new restructuring solutions , including the preventive restructuring proceedings 
and special rules for compulsory settlement proceedings applicable to large and medium -sized 
companies that specifically  relate to  credit and other financial institutions as holders of financial 
claims a s defined under the draft law.  
 
This opinion will be published on the ECB’s website.  
 
 
Done at Frankfurt am Main,  5 November 2013 . 
 
[signed]  
 
The President of the ECB  
Mario DRAGHI