International Debt Collection Handbook · Amicable Phase Interest Debt collection costs Accepted Payment Methods Dispute LDC Other Actions Miscellaneous Information Legal Procedures

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InternationalDebtCollectionHandbook

Allyouneedtoknowaboutdebtcollectionsinaforeigncountry.

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page Index

AboutAtradius

HistoryAtradiusinanutshell:OurCommonInternationalAmicableApproach

Australia

AmicableCollectionLegalPhase:ANSWperspectiveStage1:InformationExchangeCommencingActionDefendingActionsStage2:AdjudicationandJudgementDefaultJudgementAppealGarnisheeOrdersInsolvency

Austria

AmicablePhaseInterestDebtcollectioncostsAcceptedPaymentMethodsDisputeOtherActionsPublicregistersPrivateinvestigatorSecuringthedebtLegalProceduresLegalDunningProcedure(Mahnklage)CourtprocedureEnforcementTimelinesforthelegalproceduresandtheenforcementInsolvencyProcedureMiscellaneousCostsRetentionoftitle

Belgium

GeneralobservationLDCAmicablephaseLegalphaseInformationaboutfinancialhealthofthedebtorInterests&PenaltyClauseInterestsAmicablephaseLegalphasePenaltyclauseAmicablephaseLegalphaseLegalproceedings

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page ApplicablelawJudicialorganizationDocumentsneededforlegalactionLegalproceedingsSummonsbybailiffIntroductoryhearing&judgmentAveragedurationofalegalprocedureCostsoflegalactionSummaryprocedurePowerofattorneyExecutionofajudgmentCollectioncosts(Chargedtodebtor)CostsofthelegalproceedingsCostsoftheenforcementofajudgmentRetentionoftitleInsolvencyproceduresBankruptcyCompositionLawoncontinuityoftheCompaniesTypeofcompanies

Brazil

LDCInterestsLegalphase/DocumentsrequiredLegalactions(type&costs)ExecutionproceedingsMonitoryactionBankruptcyPowerofAttorneyExecutionofJudgementExpectedTimeFrameInsolvencyproceedingsPreventivereorganizationSuspensivereorganizationBankruptcyTypeofcompaniesRetentionoftitle

Canada

Amicable CollectionProcessDisputesLDCInterestLanguageLegalPhaseLawyerdebtcollectionLegalsystemoverviewJurisdictionofCourtCaseamountCourtCostsBasicrequirementsforfilingStatutesoflimitationCurrencyJudgement

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JurisdictionofCourtCaseamountCourtCostsBasicrequirementsforfilingStatutesoflimitationCurrencyJudgementJurisdictionofCourtCaseAmountCourtCostsStatuteofLimitationCurrencyJudgementRecognitionofForeignJudgementsJurisdictionofCourtCaseamountCourtCostsBasicrequirementforfilingStatuteoflimitationCurrencyJurisdictionofCourtCaseamountCourtcostsStatuteoflimitationCurrencyJudgementInsolvencies-Canada

CzechRepublic

AmicableGeneralLocalagentLawyerCostsLegalactionsGeneralJurisdictionArbitrationNeededDocumentsPowerofattorneyExecutionofajudgementoranarbitrationawardCostsInsolvencyGeneralBankruptcyReorganizationDischargefromdebtsCostsOtherTypeofcompanies

Denmark

AmicableDisputesLegalaction


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Debtsbelow50000DKK(approx.6700EUR)Debtsabove50000DKK(approx.6700EUR)EnforcementproceedingsRetentionOfTitle(ROT)InsolvencyProceduresEnforcedDissolutionLegalSuspensionofPaymentsBankruptcyInterestsCostsTypeofcompaniesLegislation

France

AmicablephaseDisputeLDCOtheractionsInterestsLegalphaseLegalactions(typeandcosts)AnInjunctionPowerofattorneyExecutionofjudgementCollectioncostsExpectedtimeframeMiscellaneousinformation/insolvencyprocedures

Germany

AmicablePhaseInterestDebtcollectioncostsAcceptedPaymentMethodsDisputeLDCOtherActionsMiscellaneousInformationLegalProceduresLegaldunningprocedureCivilLawsuitProceedingsrestrictedtodocumentaryevidence(Urkundsverfahren)Arrest(inpersonamorinrem)EnforcementEnforcementindebtsEnforcementinmovablegoodsEnforcementinimmovablegoodsSpecialProceduresPetitionforwinding-upCriminalcomplaintStatueofLimitation/PrescriptionPowerofAttorneyInsolvencyProceedingsandPoolofCreditors:GeneralfactsLimitedcompanies


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Unlimitedcompanies/individualsPoolofcreditorsRescission

Greece

LDCOtheractionsInterestsLegalphaseLegalactions(typeandcosts).Paymentorder:OrdinaryprocedureCostsExpectedTimeFrameAttemptforconciliationExecutionofthejudgmentStatuteoflimitationInsolvencyproceedingsBankruptcyJudicialRecovery/composition(law1892/90):Specialliquidation(law1876/90)RetentionoftitleLDCOtheractionsInterestsLegalphaseLegalaction(types&costs)Summary ActionExpectedTimeFrameExecutionofthejudgmentStatuteofLimitationInsolvencyproceedingsTypesofcompaniesRetentionoftitle

Hungary

CreditsafeguardsPaymentPracticeOutofcourtcollectionLegalproceedingsExpectedbudgetCourtfeesarefixedbystatute:LawyerfeesDocumentsrequired(original,duplicatesorauthorisedcopies)InsolvencyproceedingsAmendmentstotheBankruptcyActasof1.July2006ExpectedbudgetCourtfeesarefixedbystatute:LawyerfeesDocumentsrequired(originals,duplicates,orauthorisedcopies)

India

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InterestsLegalphaseLegalaction(types&costs)Summary ActionDocumentsneeded:Documentsneeded:Collectioncosts:ExpectedTimeFrameExecutionofthejudgementStatuteofLimitationInsolvencyproceedingsTypesofcompaniesRetentionoftitle

Ireland

StatuteofLimitiations1957LegalActionsEnforcementLegalCostsInsolvency

Italy

LDCOtheractionsInterestsLegalphaseLegalactions(typeandcosts)PowerofattorneyExecutionofajudgementCollectioncosts(Chargedtodebtor)InsolvencyproceduresBankruptcyCompositionwithcreditorsTypeofcompanies

Luxemburg

LDCAmicablephaseLegalphaseInformationaboutfinancialhealthofthedebtorInterests&PenaltyClauseInterests:AmicablephaseLegalphasePenaltyclauseAmicablephaseLegalphaseLegalproceedingsApplicablelawJudicialorganizationCourtCapacityDebtorDocumentsneededforlegalactionLegalproceedingsRemindersenttodebtorbylawyerSummonsbybailiff

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Introductoryhearing&judgementAveragedurationofalegalprocedureCostsoflegalactionSummaryprocedurePowerofattorneyExecutionofajudgementCollectioncosts(Chargedtodebtor)CostsofthelegalproceedingsCostsofenforcementofajudgementRetentionoftitleInsolvencyproceduresBankruptcyCompositionControlledAdministrationTypeofcompanies

Mexico

AmicablephaseDisputeLDCInterestsLegalphaseLegalactionsLegalphase(Process)PowerofattorneyExecutionofajudgementCollectioncosts(Chargedtodebtor)StatueoflimitationExpectedtimeframeMiscellaneousinformation

Netherlands

AmicableDisputesLDCOtheractionsInterestLegalPhaseLegalActionsPowerofAttorneyExecutionofaJudgementCollectionCostsStateofLimitation(prescriptionofthedebt)ExpectedTimeFrameTypeofcompaniesInsolvencyproceduresBankruptcySuspensionofpaymentLawenforcedcompositionwithcreditorsfornaturalpersons’debts(WSNP)

Poland

DisputeMediationSettlement


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ArbitrationDocumentsrequiredLDCOtherActionsInterestMiscellaneousInformationLegalActions(TypeandCosts)GeneralProcedureBeforeBusinessCourtCrucialRequirementsConcerningEvidenceWritofpaymentProcedureSummaryProceedingCourtFeePowerofAttorneyExecutionofJudgementCollectionCosts(ChargedtoDB)Fees-GeneralProcedureBeforeBusinessCourtFees–WritofPaymentFees–SummaryProceedingStatuteofLimitation(PrescriptionoftheDebt)ExpectedTimeFrame(1–10years)MiscellaneousInformationTheCollateralProceedingTheInsolvencyProceeding

Portugal

LDCOtheractionsCollectioncostsPowerofAttorneyExecutionofthejudgementExpectedTimeFrameStatuteofLimitationInsolvencyprocedures.Typesofcompanies

Singapore

AmicablephaseDisputeLDCInterestsTypesofcompaniesLegalphaseLegalsystemProcessWritofsummonsMemorandumofappearanceSummaryjudgementPowerofattorneyPurposeandextentofthepowerofattorney.ExecutionofjudgementCollectioncosts(chargedtodebtor)Statuteoflimitation

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Spain

LDCOtheractionsInterestsCollectioncostsPowerofAttorneyExecutionofthejudgementStatuteofLimitationInsolvencyprocedures.Typesofcompanies

Switzerland

LDCOtheractionsInterestsLegalphasePre-legalactionDocumentsneededCostsLegalactions(types&costs)LiftingoppositionthroughsummaryprocedureDocumentsneededCostsOrdinaryproceedingsPowerofAttorney&DocumentsneededCollectioncostsExpectedtimeframeExecutionofthejudgementStatuteofLimitationInsolvencyproceedingsBankruptcyTheMoratoriumandComposition(Sursisconcordataire)(Nachlaßstundung)TypesofcompaniesRetentionoftitle

Turkey

LDCOtheractionsInterestsLegalphaseLegalactions(typeandcosts):CollectioncostsPowerofAttorneyExecutionofthejudgementExpectedTimeFrameStatuteofLimitationInsolvencyprocedures.BankruptcyJudicialCompositionAdjournmentofBankruptcyProcedure.TypesofcompaniesRetentionoftitle


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UnitedKingdom

LatePaymentofInterestActAmountOwedCompensationTheLimitationsAct1980LegalActionsCourtProcessForObtainingaJudgementEnforcementofJudgementPowerofAttorneyLegalCostsInsolvency

UnitedStates

AmicablecollectionLegalcollectionLegalSystemStatutesofLimitationsAttorneyProcessAttorneyCostsandFeesFilingtheLawsuitProceedingwithLitigationandDiscoveryAlternativeDisputeResolutionObtainingJudgementJudgementExecutionAppealBankruptcy

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InternationalDebt CollectionHandbook

TheInternationalDebtCollectionsHandbook-allyouneedtoknowaboutdebtcollectionsinaforeigncountry.

Werealisebetterthananyoneelsehowthediversityandcomplexityofcountryspecificdebtcollectionsprocedures,legislationandculturalapproachespresentamajorchallengeforcompanies.

Tosupportyouinselectingtherightapproachtodebtcollectionsinyourcountriesofoperations,AtradiusCollectionshascompiledtheTheInternationalDebtCollectionsHandbookforyou.

Chooseacountryfromthelistbelowandfindindepthinsightinthedifferentstagesofamicablesettlement,financialregulationsaroundcollections,Legalproceedingsandinsolvencyprocedures.

LegalNoticeThisdocumentandtheinformationcontainedhereinareconfidentialandprovidedforinformationalpurposesonly.Neitherthisdocumentnortheinformationcontainedhereinmaybemodifiedorreproduced,disclosedorredistributed,inwholeorinpart,bymail,facsimile,electronicorcomputertransmissionorbyanyothermeanstoanyotherpersonexceptasrequiredbyapplicablelaworwiththepriorwrittenconsentofanyoftheAtradiusCollectionsentities.Theinformationcontainedinthisdocumentissubjecttochangewithoutnotice.ByusingthisdocumentyouagreetobeboundbythelimitationssetoutinthisLegalNotice.Thisdocumentisnotintendedtoprovidelegaladviceorfacts,andshouldnotbereliedonortreatedasasubstituteforspecificadviceconcerningindividualsituations.Astheuser,theonusisonyoutoexerciseandtoverifytheaccuracy,completenessorrelevanceofsuchinformationandtoobtainspecific(legal)adviceregardingyourindividualcase.ThescopeofanyservicestobeprovidedbyAtradiusCollectionsdependsonthespecifictermsandconditionsoftheunderlyingagreementwithAtradiusCollections.Norightscanbederivedfromthecontentofthisdocument.

TheinformationcontainedinthisdocumenthasbeenobtainedfromsourceswhichAtradiusCollectionsbelievestobereliable.AtradiusCollectionshasnotindependentlyverifiedthetruthoraccuracyofthisinformation.Asaresult,theinformationinthisdocumentisprovided‘asis’withoutwarrantyofanykindandAtradiusCollectionsprovidesnorepresentationorwarranty,whetherexpressorimplied,astotheaccuracy,reliability,completenessorfitnessforanyparticularpurposeofanyinformationcontainedinthisdocument.Inaddition,AtradiusN.V.,itssubsidiaries,affiliatesandcontrollingpersonsdonotacceptanyliabilitywhatsoeverforanylossordamageasaresultoferrorsoromissionsintheinformation,orfordamagesresultingfromuse,misuseorinabilitytousetheinformationinthisdocument.Thisdocumentmayprovidereferencestootherwebsitesforyourconvenienceinlocatingrelatedinformationandservices.ThesewebsiteshavenotnecessarilybeenreviewedbyAtradiusCollectionsandaremaintainedbythirdpartiesoverwhichAtradiusCollectionsexercisesnocontrol.Accordingly, AtradiusCollectionsexpresslydisclaimsanyresponsibilityforthecontent,theaccuracyoftheinformation,thequalityofproductsorservicesprovidedbyoradvertisedonthesethirdpartywebsites.


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AboutAtradiusHistoryAtradiuswasoriginallyfoundedasNCMintheNetherlandsin1925.Atthattime,thecompanywascreatedwiththegoaltoimprovetradeforcompaniesintheNetherlands.InGermany, Atradius’rootsstemfromGerlingCredit,whichwasestablishedin1954.GerlingCreditoperatedsolelyoutofGermanyuntil1962whenitopeneditsfirstinternationalofficeinSwitzerland.InSpain,CréditoyCaución,foundedin1929,hasfocusedongrowingsteadilytobecomethedominantcreditinsurerandsuretycompanyontheIberianPeninsula.Theheritage,knowledgeandexemplaryservicestan-dardsofthesethreecompaniesisnowcombinedintheAtradiusGroup,thuscreatingAtradiusCollectionsasagloballeaderinbusinesstobusinessdebtcollection.Withsuchapedigreeandglobalreach,AtradiusCollectionsisequippedtoleveragesuccessfuldebtcollectionandisproficienttosetahighstandardinthemarket.

AtradiusCollectionsispartoftheAtradiusGroup andhasbecomeakeyplayerintheB2Bcollec-tionsmarket.AsaconsequenceofbeingaseparatedivisionwithinthetheAtradiusGroup,weholdastrongpositionsharinghistory,knowledgeandreputation.Wedeliverwhenitcomestocollectingyouroutstandingdebts,outsourcingyourreceivablesmanagementorguidingyoualongtheroutetoyourgrowth.Thatiswhatwedobest.

Atradiusprovidesyouwithbestinclasscollectionsplusarangeofsolutionscoveringyourreceivablesmanagementneeds.Ourworldwideintegratednetworkandoperationsareuniqueinthemarket.Weofferyouadedicatedcontactpersonwithprofessionalstaffinthebackgroundtocoveryourneeds.Ourpricingistransparentandvaluebased,withaglobalmindsettokeepitsimple.

WeareuniquewhenitcomestoouronlinecollectionsmanagementsystemCollect@Net.Placeandmanagedebts24hoursaday,365daysperyear.OuronlinecollectionsmanagementsystemCollect@Net offersyoufastandflexibleservice,enablingyoutokeeptrackofyourcasesinreal-time,atanytimeyouwant.Nomatterwhereyouareorwhereyourcashis.Wehavelocalexpertswithaglobalmindsettoimproveyourcashflow.Wespeakyourlanguageandhavetherequiredlocalexpertise,over400collectionsspecialistsinover200countries.Weworkasaseamlessteamwithoneglobalprocessandwithworldwidecoverage.

Atradiusinanutshell:• Agroupof400Collectionsspecialistsprovidecustomersworldwidewithlocalexpertise• Onesinglepointofcontactforourcustomers• OneglobalprocessandITplatformforfastandefficienthandlingofyourdebt• 18officesaroundtheworld• Onegoal…Dowhatwedobest,makinguseasytodobusinesswith

OurCommonInternationalAmicableApproachAtradiushasdevelopedastrongandautomatedamicableprocessbasedonanimmediatecontactwiththedebtor. Thesetofautomaticrulesinoursystemishelpingthecollectorintakingtheappropriateandstandardizedactiontowardsthedebtor. ThefoundationofthisapproachiscalledtheSTARTrule:

Ournewstate-of-the-artautomatedcollectionprocessissecondtonone.Everycase;everycall;everyletterandeveryactionismonitoredinaglobalsystem.


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>5000¤ 1500to5000¤ 200to1500¤ <200¤

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AustraliaAmicableCollectionAtradiusCollectionsAustraliaconductsallin-housecollectionsinaprofessionalandefficientmanner.From submittingadebttoclosureofthecasethecollectorisinconstantliaisonwiththeclient.ThecollectorisresponsibleforthewholeofAustraliaandalsotheOceaniaregionwithnoneedforalocalagent.Itshouldbenotedthat inAustraliathestaffcontrolthewholeprocess.Therolethatisperformedisafullfunctionrolewherecollections,relationshipmanagement,invoicing/financeandcustomerserviceareallpartofthedaytodayactivity.

Shouldtheneedariseforlegalaction;AC Australiausesasmallboutiqueofexpertswhoprovideapersonalizedservice.ThisisbothontheAustralianmainlandaswellasinourOceaniafootprint.

LegalPhase:ANSWperspectiveTheNewSouthWalesCivilCourtjurisdictionisdividedintheLocal,Districtand SupremeCourtsofNewSouthWales.

TheLocalCourthasjurisdictionwheretheamountinissueis60000AUDorless.LocalCourtmattersfor10000AUDorlessareintheSmallClaimsDivisionoftheLocalCourt,withthebalanceofthematterintheGeneralDivision.

TheDistrictCourthasjurisdictionwheretheamountinissueisbetween60000AUDand750000AUD,thoughitalsohasjurisdictionbelowthat60000AUDincertaincircumstances.

TheSupremeCourthasjurisdictionwheretheamountinissueisgreaterthan750000AUD,thoughitalsohasjurisdictionbelowthatsumincertaincircumstances.

Stage1:InformationExchange

CommencingActionActionsarecommencedbythefilingandservingofastatementofclaimbythePlaintiff.

ThePlaintiffisfreetocommenceproceedingsatanyLocalCourtinNSW,though,assetoutbelow,theDefendant/smaybeabletohavetheproceedingstransferredtoamoreappropriateCourt,whichusuallymeansaCourtthatismoreconvenientfortheDefendant/s.

ThePlaintiffisrequiredtosetoutsufficientfactstoallowtheDefendant/stoknowthecasetobeanswered.AnexceptionarethesocalledshortformpleadingscontainedinRule14.2whereplead-ingscanbeforthingssuchas“goodssoldanddeliveredbythePlaintifftotheDefendant”.TheRuleallowedtheDefendant/stoserveanoticetopleadfactsshouldtheyrequirefurtherinformation.

Themodeofserviceofthestatementofclaimcanbepersonalbutthefollowingserviceisallowed:ServiceofindividualsbyordinarypostbytheCourt–itisdeemedservedfourworkingdaysafterpostageiftheenvelopeisnotreturnedwithin28days.PleasenotethatthePlaintiffcannotservestatementsofclaimonindividualsbypost.

Servicebyordinarymailoncorporations,undertheCorporationsAct,registeredbusinessnames,(undertheRules)andunregisteredbusinessnames(undertheRules).UndertheRules,servicebymailonbusinesses,registeredorunregistered,isdeemedtobeeffectingsevendaysafterpostage.

DefendingActionsADefendantwhowishestodisputetheamountclaimedbythePlaintiff,isrequiredtofileanoticeofgroundsofdefence(Form6)within28daysofserviceofthestatementofclaimor,iflater,beforedefaultjudgementhasbeenappliedfor.Inotherwords,thePlaintiffcannotapplyfordefaultjudge-mentuntil28daysfromthedatetheservicehaselapsed.

Whenpreparingadefence,theDefendantshouldapplytheirmindtowhetherornottheyneedto


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bringacross-claimagainstthePlaintiffinrelationtoacounter-claimorset-offoriftheywishtojoinathirdpartybywayofcross-claim,nolongercalledathirdpartynotice.

ShouldtheDefendantwanttotransferthemattertoamoreappropriateCourtthisisthetimeforthemtofileanoticeofmotion–transferofLocalCourt(Form59).Rule44.1setsoutsomeofthecircum-stancestobetakenintoaccountifsuchamotionisfiled.

ShouldtheDefendantfilesuchamotion,thePlaintiffhas14daysfromserviceofthemotiontorespondbyfilinganoticespecifyingappropriateLocalCourt/opposingtransfer(Form60).

ThereisalsoarighttotransfertheproceedingsunderRule8.2.

Stage2:AdjudicationandJudgement

DefaultJudgementIfaDefendanthasnotpaidtheamountclaimedorfiledadefencewithin28daysofserviceofthestate-mentofclaim,thePlaintiffisentitledtoapplyfordefaultjudgementagainsttheDefendant(Part16).

Therearethreetypesofdefaultjudgement,oneforliquidatedclaims,oneforunliquidatedclaimsandonefordetentionofgoods.

Anapplicationfordefaultjudgementinaliquidatedclaimismadebyfilingnoticeofmotion–defaultjudgementforliquidatedclaim(Form31)whichincludesanaffidavitinsupportbyanofficerofthePlaintiffgoingtotheindebtednessoftheDefendant.

Anapplicationfordefaultjudgementinanunliquidatedclaimismadebyfilingnoticeofmotion–defaultjudgementforunliquidateddamages(Form32)whichincludesanaffidavitinsupportbyanofficerofthePlaintiffgoingtotheamountclaimed,includingevidenceastoquantum.

Anapplicationfordefaultjudgementinaclaimfordetentionofgoodsismadebyfilingnoticeofmotion–defaultjudgementfordetentionofgoods(Form30)whichincludesanaffidavitinsupportbyanofficerofthePlaintiffgoingtothefactthatthematterhasnotbeensettledandtheidentityofthegoodstobedetained.

Inallthreeapplicationstheaffidavitinsupportofthenoticeofmotionmustbefiledwithin14daysofswearing,whichcancauseaproblemintryingtoretrievethemfromtheclientintime.

Ajudgementcanbeenforcedfor12years,withinterestaccruingfromthedayfollowingthedateofjudgement.

Appeal• AppealsfromtheLocalCourtaretotheSupremeCourt.• Appealsmustbelodgedwithin28daysofthedateofthedecision,orsuchothertimeas

allowedbytheCourt.

GarnisheeOrdersAgarnisheeorderisanorderbytheCourt,whichordersaspecifiedperson(ororganization)whoowesmoneytothedebtortopayittothecreditor. Agarnisheeorderisappliedforbyfilinganoticeofmotion–garnisheeorderTheorderisusuallyusedtoreceivepaymentfromabank(ifthedebtorhasanaccountwithacreditbalance)oranemployertogarnisheeaproportionofthedebtor’swages.

Agarnisheeordercanbeusedagainstanyonewhoowesthedebtormoney-includingsolicitorsholdingmoneyintrust,tenants,realestateagentsorpersonswhohaveacontractwiththedebtor.

InsolvencyInsolvencyisawaytoenforceajudgementiftheamountowingis2000AUDormore.Insolvencyistakingstepstoeitherbankruptincasethedebtorisanindividual,orwindupincasethedebtorisacorporation.


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AustriaAmicablePhase

InterestAtradiusCollectionsalwayschargesinteresttodebtorscalculatedfromthebaseratesetbytheAustriannationalbankplus8%onadailybasis(seeEuropeanDirective2000/35/CEEArticle3Section1dinconjunctionwithparagraph1333section2GeneralAustrianCivilCode).

Fromaculturalpointofview, Austriandebtorsareusedtopayinglatepaymentinterests,thoughoftentheactualamountoftheinterestpaymentisconsideredamatterofnegotiationbetweendebtorsandcollectors.

DebtcollectioncostsAustriancasesaredealtwithbyourGermansubsidiary. ThereforeweapplythesamedebtcollectioncoststhatarechargedtoGermandebtors,calculatedonthebasisoftheRVG(Rechtsanwaltsvergütungsgesetz),thestatutorylawyers’fees.Thesecostsdonotequalthefeesandcostsweinvoicetoourclients,whichagainarebasedonthecontractuallyagreedfeesoftheactualDebtCollectionAgreement.Collectioncostsrepresenttheclaimoftheclienttothedebtorbasedonthepaymentdelayofthedebtor,andincludeinterestandcostsresultingfromthelatepayment.

ACGermanyforwardsallrecovereddebtcollectioncoststoourclienttoreducetheclaim,orretainsthecostsinsteadoraddsthemtothesuccessfees.ThisdependsfullyonthecontractualagreementbetweentheclientandAC,theDebtCollectionAgreement.

AcceptedPaymentMethodsThemostcommonpaymentmethodsarebanktransferandcheckpayment.ACalsoacceptdrafts,buttheseareveryrareinAustria.Wedonotofferthedirectbookingofffromdebtoraccounts.

DisputeWearealwaystryingtoreachanamicablesolutionbetweencreditoranddebtor. Toaccomplishthis,wealwaysrequireallunderlyingcontractualdocuments(e.g.signedcontracts,orders,orderconfirmations,invoicesanddeliverynotesaswellasallstandardtermsthathavebeenagreedupon).

Wewillalwayscarryoutanexaminationandanalysisofthecasein-house,supportedbyourlegalteam.

OtherActionsInvestigatingthefinancialsituation

InAustriawecontractedveryexperiencedreportingagenciestoassessthefinancialsituationofdebtors,mostoftenincludingrealestateandotherenforceableassets.Incombinationwithourownphonecontacts,wegetafoundedimpressionofadebtor’sfinancialsituationandweareabletoadviseonthenextstep.

Publicregisters

Itdependsonthelegalformofthedebtor,whetherwearealsoabletorequestinformationfrompublicregisters.Alltradershavetoberegisteredatthemunicipaltradeoffice.Informationfromthisofficetriggersanadministrativefeewhichisusuallyunder10EUR

Allcompanieswithalimitedliabilityhavetoregisterwiththetraderegisteratthecompetentcourtwhichcanberequestedforunder20EUR.Wecanobtainadditionalinformationonshareholders,historicdevelopments,andbalancesheetswhicharequiteoftenpublishedthere.


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InAustria,aprivatecompanywithunlimitedliabilitiescanbecomparedtoprivateperson.AdebtorwithaddressunknowncanbetracedviatheRegistrationofAddressoffice.Privatepersonsarelegallyobligedtoofficiallyun-registerwhenmovingoutofonetownandtore-registerintheothertowntheyaremovingto.Failingtodosoispunishable,butsomedebtorsdonotfollowthisprocedureandvanishuntraceably. ThecostsoftheinformationfromtheRegistrationofAddressofficeareusuallyunder10EUR.

Privateinvestigator

Inordertotraceanon-registereddebtorand/orincaseofpotentialfraud,itisadvisabletomandateaprivateinvestigator.Wecooperatewithanexperiencedagencyandareabletoofferabasicreportfor45,00EUR.

Securingthedebt

Toreclaimtheoutstandingamountasquicklyaspossible,weusuallydonotacceptpaymentplansbeyondsixmonths.Occasionally,whenadebtoriswillingtopaybutbasedonhisfinancialsituation,isunabletocomplywithasixmonthdeadline,wearepreparedtoacceptalongerrunningpaymentplan.However,thenwerequestfromthedebtortosecurethedebtinfavourofourclient.Thiscanbedonebothamicablyandcostefficiently,byprovidinganacknowledgementofdebt,authenticatedbyanotaryandimmediatelyenforceableincaseofnotrespectingtheagreedpaymentterms.Correspondingnotarycosthavetobecarriedbythedebtor,thenotarywillsendtheenforceableengrossmentdirectlytous.Inexceptionalcasesthecostofobtainingsuchatitleisadvancedbyus,e.g.ifthedebtorisnotcapabletodoso.Costsarethenrechargedtotheclient;nevertheless,anapproachlikethishastobeevaluatedonasinglecasebasisandalwaysdependsontheoutstandingprincipalamount.

LegalProcedures

LegalDunningProcedure(Mahnklage)ComparabletotheGermanlegaldunningprocedure,butwiththedifferencethatthisprocedureisaonestepprocedure,whereastheGermanlegaldunningprocedureisa2stepsprocedure(paymentorderandexecutionorder).ForpaymentclaimsuptoK¤75.TheoutcomeisthePaymentOrder(Zahlungsbefehl).ForaclaimuptoK¤10thelocalcourtiscompetent.ForclaimsexceedingK¤10thedistrictcourtisthecompetentone.CourtreleasesalimitedPaymentOrder(“bedingterZahlungsbefehl”).Thisorderwillbeservedtothedebtor.Hecanobjectagainstitwithin4weeksafterdeliveryorpaywithin14daystheprincipalamountandinterest.IfnoobjectionisfiledthelimitedPaymentOrderbecomesvalidasafinalPaymentOrder. Theexe-cutioncanthusbestarted.Iftheobjectionisfiledwithinthedeadlineof4weeksthisprocesswillbetransferredintoanormalcourtprocedure.

CourtprocedureForallclaimsexceedingK¤75andincaseofanobjectionagainstthePaymentOrderanormalcourtproceduretakesplace.ThisiscomparabletotheGermanprocedureunder9.2.2.

EnforcementAfterreleaseofthejudgementtheenforcementphasestarts.TheenforcementiscomparabletotheGermanExecutionprocedureunder9.3.

TimelinesforthelegalproceduresandtheenforcementThetimelineforthePaymentOrderprocessisaround13weeksfromtheapplicationuntilreceivingthePaymentOrderforExecution.Ifthedebtordisputesthenormalcourtproceduretakesplacewhichlastslonger. Thetimelinefortheexecutionphasetoachievearesult(payment,executionfruitlesspp.)isaround15weeks.Thejudgementisenforceablefor30years.


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InsolvencyProcedureTheInsolvencyProceduresinAustriawillchangeasofJanuary2010.ThenewlawwillbecalledInsolvencyCode(“Insolvenzordnung”).Thecentralprocedurewillbestillthe“Zwangsausgleich”,whichwillberephrasedto“reorganisationplan”.Thisisaspecialprocedureinwhichthedebtorhastoofferaminimumdividendtohiscreditorsof30%.Thepaymentofthese30%needtobeperformedwithintwoyears.Morethan50%ofthecreditorsmustagreetothereorganisationplan.Thosecreditors(themajorityofmorethan50%headcount)mustsettleaminimum50%ofthetotaloutstandingamount.Bothconditions(majorityofheadsandmajorityofoutstandingamounts)mustapply.Thecourtfinallydecidesuponit.Theinsolvencyproceduretakes2to12months.Thepaymentondividendstakesuptotwoyears.

TheaveragedividendinAustriain2009was9,7%,comparedtotheaveragedividendinGermanyof3,6%.SotheprospecttocollectmoneyoutofitishigherthantonormalGermaninsolvencyprocedures.

MiscellaneousAninsolvencyprocedurecanbemanagedbyalawyer,thethreeprivilegedentitiesKSV, AKVundCreditreformorthecreditorhimself.AcourtprocedurewithmorethanK¤4canonlybeendeavouredbyalawyerinAustria.

CostsCollectionCosts(“Inkassokosten”)canbechargedaccordingto§1333ABGBasdamagefordelayaccordingtothesocalled“Inkassogebührenverordnung”.ThecollectioncostsinAustriaareatleastashighasthecollectioncostsinGermany.Courtcostsandlawyerscostsarealsochargeabletothedebtorincaseofajudgementinfavourofthecreditor.ComparabletogermanlawthereisacodeforcostsavailableinAustria,too.

RetentionoftitleTheretentionoftitleinAustriaiscomparabletothegermanone.TheAustrianlawknowstheplainretentionoftitleretention.Thetitleprovidesthebasisofcollateralizationofthepurchasingprice,butnotofotheroutstandingdebts.Converseagreementsareineffectively. Theretentionoftitlehastobecontractuallystipulatedasitisnotduetolaw. Thevendorhastoprovethesigningofanagreement.Alinkontheinvoiceisnotsufficient.Ittakesaclientsorderincludinggeneraltermsandconditionswhichreferstotheretentionoftitle.Openingoftheinsolvencyproceedingsdonotaffecttheretentionoftitle.CurrentlyArt11oftheBankruptcyActstatesanexemptionof90daysstartingfromthedayoftheopeningoftheinsolvencyproceedings.Meetingaclaimforwithdrawalisonlypermittedincasethecontinuanceoftheenterpriseisnotjeopardized.


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BelgiumGeneralobservationAlltheinformationisinthischapterisuptodate(September2008).

LDC

4.1.1AmicablephaseACBelgiumisabletoprovideyouwiththedirectcollectionactivitymanagedbyaselectednetworkoflocalagents,whovisitthedebtorsalloverthecountryinordertocollectthemoney. Accordingtoourexperiencethissolutionisparticularlysuccessfulformedium-lowamounts,forspecificdebtorÅfscategories(individualsoletraders,shops,smallcompanies)andforparticulartradesectors(e.g.food,textile,clothes,andshoes).Thelocalagentsnetworkisablealsotoinvestigateinplaceinordertosearchanuntraceabledebtor.

LegalphaseACBelgiumcanprovideyouwithaselectedandprofessionalnetworkoflawyersexperiencedinthejudicialcreditcollectionactivity. ThisnetworkcoversalltheterritoryandisabletomanagethelegalactionsinallCourtsdistricts.

InformationaboutfinancialhealthofthedebtorACBelgiumisabletoevaluatethesolvencyandthefinancialsituationofthedebtor.Inordertoinvestigateinamoreaccurateway,wecanprovidetheclientswithsomeextraservices,suchasbankaccounts,researchonofficiallyregisteredgoods(suchasvehicles,equipment),realestateresearch.AlltheseelementscanhelpinordertohaveaclearpictureofthedebtorÅfssituationinordertoactinthebestwaytocollectthemoney.

Interests&PenaltyClauseInterests

AmicablephaseInterestscanberecoveredfromthedebtorbasedontheagreedtermsandconditionsofsale.Theclaimofinterestsandapossiblereductioncanbetheobjectofnegotiationbetweenthecollectorandthedebtor.

LegalphaseInterestscanberecoveredfromthedebtoraccordingtotheagreedtermsandconditionsofsale.However,theCourtcanreduceorcanceltheinterestsforeseenbythecontract(e.g.becauseofthelackofproofof(written)acceptanceofthetermsandconditionsofsalebythedebtor).Whenthecontractualinterestscannotbecharged,theinterestsatthelegalrateorattherateaccordingtothestatuteof08.08.2002(basedontheEuropeanDirective2000/35/CEE)areclaimed.TherateofthelegalinterestsisfixedeveryyearbythegovernmentandcommunicatedintheOfficialBelgianJournal;therateoftheinterestsbasedonthestatuteof08.08.2002iscommunicatedeach6monthsbyanofficialstatementintheOfficialBelgianJournal).

Penaltyclause

AmicablephaseThepenaltyclauseasforeseenintheagreedtermsandconditionsofsalecanberecoveredfromthedebtor;however,theuseofthepenaltyclauseandapossiblereductioncanbetheobjectofnegotiationbetweenthecollectorandthedebtor.

LegalphaseThepenaltyclauseasforeseenintheagreedtermsandconditionsofsalecanberecovered;however,theCourtcanreduceorcancelthepenaltyclause(forexamplebecauseofthelackofproofof(written)acceptanceofthetermsandconditionsofsalebythedebtor).


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Legalproceedings

ApplicablelawLegalactionstorecoverreceivablesarebasedonthegeneralprinciplesaccordingtotheCivilCode(“CodeCivil”/”BurgerlijkWetboek”),theCommercialCode(“CodedeCommerce”/”WetboekvanKoophandel”)andtheJudicialCode(“CodeJudiciare”/”GerechtelijkWetboek”).Particularrulesoflawcanbeusedinspecialcircumstancesorspecialcases.

Themostcommoninsolvencyprocedures(bankruptcyandcomposition)aregovernedbyspeciallaws,listedintheCommercialCode.

JudicialorganizationFirstDegree

Therearedifferentcourtsaccordingtotheamountoftheclaimandthecapacityofthedebtor:

Court Amountoftheclaim CapacityDebtorJusticeofthePeace <1.860 Merchantornon-MerchantCommercialCourt >1.860 MerchantCourtofFirstDegree >1.860 Non-merchant

Appeal

DecisioninFirstDegree AppealCourt ObservationJusticeofthePeace CourtofFirstDegree Mostlynoncommercialcases.

Noappealifamountis<1.240CourtofFirstDegree CourtofAppeal Noncommercialcases.

Amount>1.860CommercialCourt CourtofAppeal Commercialcases.

Amount>1.860

Accordingtotheprinciplesofthejudicialcode,theactionagainstthedebtorinpaymentoftheclaimisbroughtbeforethecompetentcourtinthedistrictwherethedebtorhashisplaceofresidence(debtorisaperson)orhisregisteredaddress(debtorisacompany).

DocumentsneededforlegalactionDocumentsneeded:• Copyoftheinvoices;• Copyofthetermsandconditionsofsale;• Copyoftheformalnoticesand/orreminderssenttothedebtor

Itishighlyrecommendedtoproducealsoproofoforders,proofofdeliveryofthegoodsandanyotherwrittendocumentsignedbythedebtorinwhichheacknowledgestheclaim(forexamplerequestofpaymentbyinstalments).

Legalproceedings

SummonsbybailiffThenotificationoftheactioninpaymentoftheclaim(“summons”)isnotifiedtothedebtorbythebailiffwhowillsummonthedebtorbeforethecompetentcourtinthedistrictwherethedebtorhashisplaceofresidence(debtorisaperson)orhisregisteredaddress(debtorisacompany).

Introductoryhearing&judgmentThedebtordoesnotappearinCourtorisnotrepresentedbylegalcounselThelawyerinchargeofthecasewillsubmitthepaperfilewithallthenecessarydocumentstotheCourt.IftheCourtisinpossessionoftheelementsitneedsforadecision,theCourtwilltakethecaseinconsideration.Judgmentisusuallyrendered1monthlater(butitcantakemoretime).


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ThedebtordoesappearinCourtorisrepresentedbylegalcounselThepaperfileiscommunicatedofthepaperfiletotheotherparty(andtheotherpartycommuni-catesitspaperfile),acalendarofexchangeofwrittenargumentsandadateonwhichthecasewillbepleadedandheardbytheCourt,areset.IftheCourtisinpossessionoftheelementsitneedsforadecision,theCourtwilltakethecaseinconsideration.Judgmentisusuallypronounced1monthlater(butitcantakemoretime).

AveragedurationofalegalprocedureThetimeframetogetajudgement(enforcementnotincluded)isonaverage4months.Incaseofadisputeand/orincaseofanappeal,itcantakeuptoseveralyears.

CostsoflegalactionCostsofthelegalproceedingsSummonsandinscriptionintheCourt’scalendar+/-250(Textofsummonsisdraftedbyin-houselawyer).IndemnityofProcedure:dependsontheamountoftheclaim;basedonanofficiallegaltariff(withminimumandmaximum).TheCourtcandecidetheexactamountbutcannotgrantanamountbelowtheminimumandnotoverthemaximum.Thesecostsarerechargeabletothedebtor(exceptiftheCourtdecidesotherwise).

CostsandfeesoflegalrepresentationDependontheimportanceofthecase,thecomplexityofit,thedurationandthetasksperformedbythelawyer.Thesecostsarenotrechargeabletothedebtor.

SummaryprocedureInBelgiumexistsalsoasummaryproceduretoobtainpayment.Fortherecoveryofreceivablesthisprocedureisnotusedbecauseofthefollowingdisadvantages:1. Necessityofawrittenandsigneddocumentfromthedebtortoestablishtheexistenceof

theclaim;2. Thewholeclaimcannotexceed1.860,-;3. Theclaimhastobeundisputed;4. Therequesttothecompetentcourthastobesignedbyalawyer.

PowerofattorneyInBelgiumaPowerofAttorneyisneededforeachfileandhastobesignedbythelegalrepresen-tativeofthecreditor.Theproxymustbedraftedinthelanguageofthelegalprocedure(French/Dutch/German).

ExecutionofajudgmentTheenforceablecopyofthejudgmentiscommunicatedtothebailiffwhowillofficiallynotifythejudgmenttothedebtor. Thedebtorhas30daysfromthisnotificationtoappealagainstthejudg-ment.Thejudgmentisdefinitiveassoonasthisperiodoftimehasexpiredwithoutappeal.Thebailiffofficiallynotifiesalegalnoticetopaytothedebtor.Ifthedebtordoesnotcomply,theenforcementofthejudgmentbybailiffcanbegin.Thebailiffcanintheseconditionsproceedwiththeattachmentofdebtor’smovableproperty(andapublicsaleofthesegoodsifthedebtordoesnotpay).

Ifthedebtorownsrealestate,thebailiffcanproceedwithanattachment.Ifthedebtordoesnotpay,therealestatewillbesoldinapublicsalebyapublicnotary.

Collectioncosts(Chargedtodebtor)

CostsofthelegalproceedingsSummonsandinscriptionintheCourtÅfscalendar+/-250.IndemnityofProcedure:dependsontheamountoftheclaim.Thesecostsarerechargeabletothedebtor(exceptiftheCourtdecidesotherwise).


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Costsandfeesoflegalrepresentation dependontheimportanceofthecase,thecomplexityofit,thedurationandthetasksperformedbythelawyer.Thesecostsarenotrechargeabletothedebtor.

CostsoftheenforcementofajudgmentCostsofenforcementofajudgmentbybailiffarealwaysrechargedtothedebtor.

Retentionoftitle

Theuseofretentionoftitlewasmadepossiblebythestatutesof08.08.1997and17.07.1997(art.101).

Theretentionoftitleisopposabletothirdpartiesincaseofbankruptcy,compositionandliquidationoftheassetsofthedebtor.

Theconditionsofopposabilitytothirdpartiesareverystrict:

a) Theclauseofretentionoftitlehastobeestablishedbyawrittendocumentatthelatestatthedeliveryofthegoods;

b) Theclausehastobeacceptedbythebuyer(creditorhastobeabletoproduceproofofitifnecessary).

c) Thegoodshavetobemovableandhavetobestillphysicallyinpossessionofthebuyer.

Incaseofbankruptcytheactiontoactivatetheretentionoftitlehastobeinitiatedbythecreditorbeforethedepositofthefirststatementofverificationoftheclaims.

Ifthecreditoractivatestheretentionoftitleafterthismomentintime,hisactionwillbeforfeited.

Theretentionoftitleisnotsuccessfulbecauseofthestrictconditions.Almosteverytimetheretentionoftitleisused,oneofmoreconditionsisnotsatisfied.

Insolvencyprocedures

BankruptcyInBelgiumonlyadebtorwiththequalityofmerchantcanbedeclaredbankrupt.

AtrusteeisappointedbytheCommercialCourtofthedistrictwherethedebtorhashisplaceofresidence(debtorisaperson)orhisregisteredaddress(debtorisacompany).

Thedocumentsneededtolodgeaclaimare:

• Copyoftheinvoices;• Copyofthetermsandconditionsofsale;• Statementofaccount• Ifrequestedbythetrusteethepowerofattorneydulysigned(seechapter4.3.5).

TheclaimhastobelodgedtotheclerkoftheCommercialCourtwithin1yearaftertheBankruptcy.Oncethisperiodoftimehaselapsed,thecreditorisnolongerentitledtolodgehisclaim.

Afterverification,theclaimsareacceptedordisputedbythetrustee.TheCommercialCourtwilldecideincaseofdispute.Theaveragedurationofthehandlingabankruptcyis1to5years(dependingonseveralfactors).

CompositionInBelgiumonlyadebtorwiththequalityofmerchantcanbegrantedacomposition.

AcompositionrequestispresentedbythedebtortotheCommercialCourtofthedistrictwherethedebtorhashisplaceofresidence(debtorisaperson)orhisregisteredaddress(debtorisacompany).


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TheCommercialCourtrendersajudgmentacceptingorrefusingtherequest.

Iftherequestisaccepted,apractitionerisappointedandthecreditorshavetolodgetheirclaimswithin30days.Oncethisperiodoftimehaselapsed,thecreditorisnolongerentitledtolodgehisclaim.

Duringatemporarystay(called“sursisprovisoire”)of6months(sometimesextendedto9months),thepractitionerdraftsaplanuponwhichcreditorshavetovote.

Ifthepaymentplanisacceptedbythemajorityofthecreditors,itisratifiedbytheCourtandasecondperiodstarts(called“sursisdéfinitif”definitivestay).Duringthisperiodof24months(sometimesextendedto36months)thepaymentplanisexecuted.

IfthepaymentplanisrefusedbythecreditorsorbytheCommercialCourt,thecompositionisrejectedandthedebtorisautomaticallydeclaredbankrupt.

Thisprocedureisveryseldomusedandthenumberofsuccessfulcompositionsisverylimited.Mostofthetimethedebtorcannotkeepupwiththepaymentplan,hisfinancialsituationdeterioratesandfinallyhewillbedeclaredbankrupt.

LawoncontinuityoftheCompanies

Thejudicialcompositionhasbeenreplacedbythelawrelatingtothecontinuityofthecompanies(law31/1/2009).Itconcernsthemerchants,agriculturalcompanies,civilcompanieswithcommercialformthefinancialdifficultiesofwhichcanendangertheircontinuity. Adistinctionshouldbemadebetweenamicableagreement(art.15)andjudicialreorganizationthroughamicableagreement(art43),throughcollectiveagreement(art44to58)andthroughtransferunderCourt’sauthority(art59to70).AmicableAgreement:thedebtorcanproposeto2orseveralcreditorsanamicableagreementwhichundercertaincircumstanceswillbeopposabletothecreditorsandtothetrusteeinBankruptcy.Inordertoobtainajudicialreorganization,thedebtorhastosubmitaRequesttotheCourtwithsomeinformation,listofsecuredandunsecuredcreditors.Ifthereorganizationprocedureisopened,thedurationofthe“moratorium”willbe6monthswithpossibleextensionof6furthermonthsandeven6additionalmonths(art38)CourtfixesthehearingduringwhichitwillbevotedonthePlananditsratification.Maximumplandurationis5yearsfromratification.Planhastobeapprovedbythemajorityofcreditorsrepresentinghalfofallsumsdueinprincipal).

Astojudicialreorganizationthroughamicableagreement(2ormorecreditors),judgeisentrustedwithcontrolAsfarasjudicialreorganizationthroughcollectiveagreementisconcerned,thedebtorhimselfhastoadvisethecreditorswithin14daysfollowingjudgmentAstojudicialreorganizationthroughtransferunderCourt’sauthority,itisrequestedbydebtororbytheKingProsecutoronSummonsorbyeverypersonhavinganinterestDuringthejudicialreorganization,theexecutionmeasuresaresuspended,debtorcannotbedeclaredbankruptaslongasCourthasnotdecidedontherequest.Pursuitsagainstco-debtorsandguarantorscanbestarted.

Typeofcompanies

Typeofcompany ResponsibilityofassociatesSA/NV Jointstockcompany Liabilitylimitedtothecapitalinvested

Atleasttwoassociatesarerequired. inthecompanybyeachassociate.SPRL/BVBA Limitedliabilitycompany Liabilitylimitedtotheirportionof

Atleasttwoassociatesarerequired sharesinthecompany.SPRLU/EBVBA Limitedliabilitycompany Liabilitylimitedtohisportionofshares

Oneassociate inthecompany.SCRI Cooperativecompany Liabilitynonlimited


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BrazilLDCWehaveanexcellentlocaldebtcollectionattorneyinSaoPaulowithcorrespondentsalloverthecountry,alwaystryingtonegotiatewiththedebtorsandtocollectoutofcourtconsequentlyavoidingasmuchaspossiblethecomplexityoftheBrazilianlegalsystem.

Otheractions:a) Ourattorneycanproceed–alsowiththeassistanceofspecializedlocalcompanies–toan

accuratecheckonadebtor’ssolvencyonassets,liabilities,financialandhistoricalstatus,reputationonthemarket,existenceofprotests,existenceoflegalactionsfiledagainstthedebtor.Legalopinionscanbeprovidedbytheattorney,ifneeded.

b) Inordertoavoidpaymentofabillofexchangeandtobeblacklistedalloverthecountry,theBraziliandebtormayfileaWritofPreventionbeforetheprotestofthebillofexchangeiscarriedout.Thedebtorhasthen30daystofiletheprincipalactionaimingatmakingthebillofexchange/promissorynoteoranykindofnegotiableinstrumentnullandvoid.

InterestsContractualinterestsagreedbythepartiesmaybeclaimed.Ifnotagreed,legalinterest,generally6%perannum,isapplied.

Legalphase/DocumentsrequiredCivillawprevailsovercommonlawpractices.AlthoughmostoftheBrazilianlawiscodified,non-codifiedstatutesrepresentanimportantpartofthesystem.Eachstateandmunicipalityhasitsownjudicialsystem.JusticeofPeaceandMagistratesdealwithcommercialandothercivilcasesinfirstinstance.Decisionsfromstateandmunicipalcourtsmaybeappealedtobythefederalcourtsandifnecessary,uptotheSupremeFederalCourt.Nolegalactionisrecommendedwithoutproperdocumentation.

Specificallyanyofthefollowingdocuments:negotiableinstrumentsorexecutioninstruments,promissorynotes,billsofexchange,cheques,contractsdulyexecutedbythepartiesand2witnesses,mortgagesorConfessionofDebtbeforeaNotary. Andnotunusuallystrongevidencesofthedebtsuchasinvoices,purchaseorders,provesofdeliveries,writtenacknowledgmentsofdebt,paymentschedulesproposedbythedebtorortime-barredexecutioninstrumentsthatdonotcomplywiththerequirements.

Ingeneral,theBrazilianlegalsystemoffersmanyremediestothedebtor. Thismakesanylegalactionextremelyuncertainandtime-consuming.Eachcasemustbeanalysedthoroughlybeforeadvancinganylegalaction.

Legalactions(type&costs)TherearebasicallythreedifferentproceedingswithrespecttounpaiddebtsaccordingtoBrazilianlaw. Theproperactiondependsontheavailablesupportingdocuments.

ExecutionproceedingsWhenthecreditorhasnegotiableinstrumentsasindicatedabove,theseinstrumentsshouldnotbetime-barredunderBrazilianlaw.Executionproceedingsaresummaryprocedures.ThedebtorisservedwiththeNoticeandhastopaywithin24hoursortoindicateassetstobeseized.Theopportunitiesofmakingoppositionareextremelylimited.IncaseofAppealtotheJudgement,proceedingsarenotstarteduntilfinaljudgementinAppeal.

MonitoryactionWhenthecreditordoesnothaveexecutoryinstrumentsbutstrongevidencesofthedebtasindi-catedabove,thedebtorisservedwithaNoticetopaywithin15daysortomakeopposition.Ifthereisadefense,theactionisadvancedasifitwereaordinaryproceedinguntiljudgement.Ifnodefenseispresented,executionwillbeimmediatelycarriedout.IncaseofAppealtotheJudgement,proceedingsarehalteduntilfinaljudgementinAppeal.IntheMonitoryaction,the


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creditormayberequiredtodepositasecurityforcostsintheamountof10%-20%oftheclaimincashorviaaBankGuarantee.Thatsecurityisaguaranteetocoveropposingattorney’sfeesandcourtcostsifthecreditorlosesthecase.

BankruptcyWhenthecreditorhasexecutoryinstrumentsthatarenottime-barred.However,thecreditorhastodepositasecurityof10%-20%.Thistypeofactionistimeconsumingandnotparticularlyrecommended.

PowerofAttorneyEachattorneymustbeempoweredtoactonbehalfofthecreditorbyaPowerofAttorneyauthenticatede.g.bytheConsulateofBrazilinthecreditor’scountry.

ExecutionofJudgementEnforcementofanyjudgementwillbemadeonmovableorimmovableassets,andthiscanlastseveralyearsdependingonthecasesandcircumstances.

CollectioncostsThecourtcostsaregenerallychargedtothelosingpartybythejudgewhoalsodetermineswhichamountofattorney’sfeeshastobeawardedtothelawyerofthewinningparty(±10%-20%oftheclaim).Itissensibletoforeseeabudgetof25%-30%oftheclaimifthecreditorwantstogolegal,plusthesecurityforcostsasindicatedabove.Thecourtcostsaredifficulttoestimatesincetheydependonvariablefacts,numberofservicesandnumberofremedies.Inaveragecourtcostsmountuptomorethan10%oftheclaim.

Statuteoflimitation:• Commercialinvoices-10years• Promissorynotes-3years• Billsofexchange-3years• PublicConfessionofDebt-5years• Check-6months

ExpectedTimeFrame8–10yearsinordinaryprocedure.

Severalmonthstoevenafewyearsinexecutionproceedingsandmonitoryactiondependingonthecircumstancesandexecution.

Insolvencyproceedings

PreventivereorganizationRequestedonlybythedebtor. Thedebtor’smotionmustsubstantiatethedebtor’sstateofinsolvency. Thedebtor’sassetsmustbesufficienttosatisfyatleast50%oftheunsecuredclaimsandthedebtormustgiveevidencethatthecompanywillbeabletobecomeaviableentityafterreorganization.

Securedcreditorsarenotsubjecttothereorganization.Theunsecuredcreditorshaveonlybetween10/20dayslefttolodgeproofofdebtafterfirstpublicationintheDiarioOficial.

Duringpreventivereorganization,thedebtormayretainpossessionandcontrolofhisassetsandmaycontinuetooperate.Thecommissioneractsasadeputyofthecourtandoverseesthedebtor’sactions.

Theunsecuredcreditorsnamedbythedebtorinthemotionforpreventivereorganizationaredeemedsubjecttothereorganizationandareautomaticallyincludedintheofficiallistofcreditors.Creditorsnotincludedintheinitiallistsubmittedbythedebtor,mustfiletheirclaimsfor


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verifi-cation.Thepaymentschedulesubmittedbythedebtormustproposetopay50%toallunsecuredcreditorimmediately,or60%oversixmonthsor75%over12monthsandsoforth.

SuspensivereorganizationAvailabletocommercialentitiesthathavebeendeclaredbankruptconcerningavoidanceoftheliquidation.Onlythedebtormayrequestthesuspensivereorganization.Aswiththepreventivereorganization,thedebtorhastoproposeasettlementandpaymentplan.Theplanmustprovidefortheimmediatepaymentofatleast35%oftheunsecureddebtsorof50%overtwoyears.

Ifthelegalrequirementsaresatisfied,thejudgeshallgrantthemotionfiledbythedebtorandthedebtorwillregainpossessionandcontrolofhisassets.Ifthedebtorfailstocomplywiththepaymentscheduleoranyotherobligation,thejudgewillterminatethereorganizationandbankruptcywillresume.

BankruptcyCanbefiledbythedebtor,anunsecuredcreditorortheCourt.

Asecuredcreditormayalsofileabankruptcypetitionifhewaiveshissecurityinterestorifhecanprovethatthesecurityinterestwillnotsatisfythedebt.Thebankruptentitylosestherighttocontrolormanagehisassets.Oncethebankruptcyorderisissued,thetrusteeassumespossessionofthebankruptcyestateandthecreditorsmustfiletheirclaims.Theyhave10to20daysfromthefirstpublicationintheDiarioOficialtodoso.

TypeofcompaniesThemostfrequentlyusedcompanystructuresaretheSociedadeAnônima(SA)andtheSociedadeLimitada(LTDA).Inbothtypestheparticipantshavelimitedliabilities.

RetentionoftitleSimpleretentionoftitleisvalidinBrazil.Ithastobestipulatedinwritingwiththesealingofthecontract.Itshoulddescribetheconcernedgoodsindetailtomakethemidentifiable.Withregardstoitsvalidityagainstthirdparties,likeanacquisitioningoodfaith,thecontractshouldbetranslatedintoPortugueseandregisteredinthecompetentPublicRegister


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CanadaAmicable CollectionProcessAtradiusCollectionsCanadafollowsacollectionprocessthatisprofessionalatalltimeswiththeobjectivetoretainrelationshipsbetweenclientanddebtorwheneverpossible.Ourcombinationofprofessionalcollectionrepresentativesteamedwithleadingtechnology,comprehensivecollectionprogramsandoutstandingcustomersupportisverypowerful.Inordertofacilitateacase,wewillconductathoroughinvestigationandweresearch,whennecessary,publicrecords,consultingcreditratingagencyrecords,andlandregistries.

DisputesACCanadiancollectorsoperatecarefullytounderstandcasesfiled.Whereadisputearises,ACwillcommunicatebetweenclientanddebtorinanamicablemanneractingasanarbitratortoeventuallyresolveanyissuesorconcernsthatmayhavecausedthedebtortostoppaying.Ourapproachistoavoidcostlylitigationandtoactonthebestinterestofourclientsatalltimes.

LDCACCanadawillbeindirectcontactwithalldebtors/clientswheneverpossible,howeverifrequired,wehaveLDCcontactsthroughoutCanadatoassistinyourcollectionneeds.

InterestThecollectionofinterestandcollectioncostsarenotpermissiblebylawinCanada,howeveriftheTermsandConditionofthecontractualagreementwiththeclientanddebtorisprovidedwithaclausethatpermitsthecollectionofsuchinterestandcosts,itmaybeaddedtothecaseamount.NotethatCanada’sCriminalCodemakesitacrimetosetaninterestrateofover60%.

LanguageCanadahastwoofficiallanguages;EnglishandFrenchthelatterisusedmainlyintheprovincesofQuebec,Manitoba,OntarioandNewBrunswick.

LegalPhase

LawyerdebtcollectionACCanadaoffersyouaselectedprofessionalnetworkofthemostexperiencedlawfirmsinCanadawho specializeinthecollectionofdebt.

LegalsystemoverviewUndertheCanadianconstitution,commerciallawisgenerallywithinprovincialjurisdiction.Therearehowever,exceptionssuchasinterest,currencyandbankruptcyandinsolvencywhicharegovernedunderfederallaw.Canadaincludestenprovincesandthree territorieswhichallutilizethecommonlawsystemthatoriginatesinGreatBritain.AnexceptionisQuebecthathasacivillawsystem.TheCivilCodeofQuebec isbased oncodeNapoleon.

JurisdictionofCourtProvinceofBritishColumbia

CaseamountAcaseupto25.000CADishandledintheProvincialCourtofBritishColumbiaSmallClaimsCourtdivision.

Casesexceeding25.000CADarehandledintheSupremeCourtofBritishColumbia.Thereareexceptionswhereacasegreaterthan25.000CADmaywaivetheexcesstoberepresentedinsmallclaimscourt,oracaselessthan25.000CADthatmayberepresentedintheSuperiorcourtwiththeriskofapenaltyofnotbeingawardedcourtcosts.

CourtCostsAllcostsorpartofthecostsareawardedtothewinnerofthetrial.


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Basicrequirementsforfiling• DocumentsmustbeinEnglish• Aclaimmustbesupportedbycertifieddocuments• Theclientneedstoappearincourt–maybeawardedaproxyholderifthedebtorpermits

StatutesoflimitationThelimitationperiodtosueonadebtinBritishColumbiaissixyearsfromthelaterdateofwhenthedebtwasincurred,orwhenthedebtwaslastrecognized

CurrencyCarriedoutinthecurrencyofCanadaunlessitismade,executed,enteredinto,doneorcarriedoutinthecurrencyofadifferentcountry.

Judgement• Judgementwilloftenbegrantedverballyattheconclusionofthetrial,butmaybedelayeda

fewdaystoseveralmonthswithverylittlepowertothepartiestohastentheprocess.• ForeignjudgementsaregenerallyrecognizedinthecourtsofBritishColumbia• Judgementlimitationis10years

Enforcementiscarriedoutviaabankaccount,orwithothermoniesowingtothedebtor,seizingassetsofvaluesuchasmotorvehiclesorequipmentorbytheregistrationofjudgementagainsttitlesofproperty.

JurisdictionofCourtPrairieProvinces–Alberta,Saskatchewan,Manitoba

Caseamount• Acaseupto25.000CADinAlbertaand10.000CADinSaskatchewanandManitobaishandled

intheProvincialSmallclaimscourt• CasesexceedingtheSmallClaimscourtprovisionwillbeappliedforintheCourtoftheQueen’s

BenchineachofthePrairieProvinces.

CourtCostsGeneralruleisthatthesuccessfulpartyattrialisentitledtothecostsagainsttheunsuccessfulparty.

Basicrequirementsforfiling• DocumentsmustbeinFrenchorEnglishandiftheyareinanotherlanguage,theymustbe

translated.PreferredlanguageisEnglish.• Acreditormusthaveoriginalsofalldocumentsrelevanttothedispute.

Statutesoflimitation• SaskatchewanandAlbertathegenerallimitationperiodistwoyears• Manitobathelimitationissixyears

CurrencyCanadiancurrencyexclusivelyconvertedinaccordancewiththerulesofthecourt

JudgementUsefultoconductanexaminationinaidofexecution,orhavethedebtorcompleteastatutorydeclarationsofassets.Enforcementtoolsinclude:garnishment,seizureofassetsorpropertyandappointmentofareceiver.

JurisdictionofCourtProvinceofOntario


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CaseAmount• Casesupto10000CADarepresentedtoSmallClaimsCourt.CreditorsandDebtorscan

representthemselves• Casesover$10.000CADarerepresentedinSuperiorCourt• Casesunder$50.000CAD,summarytrialwithnopre-trialandarethereforelessexpensive• Casesover$50.000CADExtensivepre-trialproceduressuchasexaminationsfordiscoveryare

common.Thereisopportunitytoobtaindamaginginformationaboutthedebtor.ItiscommontonegociatetheSettlement.

CourtCostsThesuccessfulpartyisusuallyawardedaportionoftheirlegalfeestobepaidbytheopposingparty

Basicrequirementforfiling• Jurisdictionisestablishedinthelocationofthedebtor• Documentsthatsupporttheclaim• SecurityforcostsmayberequirediftheplaintiffdoesnotresideinOntariotocovercosts

shouldthedebtorbesuccessful.• Itmayberequiredtohavetranslateddocumentsauthenticatedbyanotarycertificate.

StatuteofLimitationCollectionactionmustbefiledwithintwoyearsofthedateofdefaultorfromthedateofthelastwrittenacknowledgement.

CurrencyJudgementsarecarriedoutinCanadianCurrency.

JudgementCanbeenforcedthroughtheexaminationofthejudgementdebtor

Seizureandsaleofproperty;garnishment;saleofrealestate

RecognitionofForeignJudgementsToenforceaforeignjudgementinOntario,thecourtwillrequirecertifiedcopiesofthejudgement,theclaimandproofofserviceofbothclaimandjudgement.

JurisdictionofCourtProvinceofQuebec

Caseamount• Casesupto$7.000CADcanbetrialledinSmallClaimsCourt• Aplaintiffmustrepresentthemselves• Aplaintiffcannothavemorethan5peopleemployed• Casesupto$70.000CADaretrialledintheQuebecCourt• Casesgreaterthan$70.000CADaretrialledintheSuperiorCourtofCanada

CourtCostsCourtcostsandexpertcostsareusuallyawardedtothesuccessfulpartybutnotthelegalfees.Attorneyfeesandadministrativechargesmaybeclaimedifthecontractmakesacceptableprovision.

Basicrequirementforfiling• Documentstosupporttheclaim• SecurityforcostsmayberequirediftheplaintiffdoesnotresideinQuebectocovercosts

shouldthedebtorbesuccessful• Unlessproceedingsbydefault,witnessesarenecessary. Videoconferencingisavailable• AlthoughFrenchistheofficiallanguage,theuseofEnglishorFrenchisallowed


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StatuteoflimitationStatuteoflimitationforcommercialdocumentsisthreeyearsaftertheduedate.Ifpaymentshavebeenmadeonaccounttheprescriptiveperiodmaybeinterrupted.

CurrencyAllcurrencyisinCanadiandollars.Ifforeigncurrencyisallegedintheproceedings,thecourtwillbegivenevidenceoftheconversionrate.

Judgement• Thedebtororrepresentativeofthedebtormaybesummonedtobeinterrogatedatcourtasto

itsassets.• Allassetscanbeseizedexceptforpersonalassets.Remediescanincludegarnishmentofbank

accountsorotherassetsinthehandsofthirdparties.• ForeignjudgementsarerecognizedandgovernedbytheCivilCodeofQuebec• Statuteoflimitationonaforeignjudgementis10years.• Atanystageoftheproceedingsthepartiesmayrequestasettlementconference• AtlanticProvinces–NewBrunswick,NovaScotia,PrinceEdwardIsland,Newfoundlandand

Labrador

JurisdictionofCourt

CaseamountCasesarehandledinSmallclaimscourt• Upto$25.000CADinNovaScotia• Upto$8.000CADinPrinceEdwardIsland• Upto$6.000CADinNewfoundlandandNewBrunswick• Upto$5.000CADinLabrador

CourtcostsLegalfeescanberecoveredascostsalongwithcourtfees,witnessfees,copyingcostsetc. Travelcostsofthecounseltotheplaceoftrialarenotgenerallyrecoverable,butnecessarytravelcostsofwitnesses,includingparties,arerecoverable

Basicrequirementsforfiling• Documentstosupporttheclaim• DocumentsmustbeinEnglishunlesstheclaimisinNewBrunswickwheretheofficiallanguage

isFrenchandEnglish• Translateddocumentsmustbearanaffidavitbyanexpertinthatforeignlanguage

StatuteoflimitationStatuteoflimitationforcommercialdocumentsissixyearsfromthetimethedebtarose.Thisperiodmayberestartedifthecauseofactionisconfirmedbyeitherawrittenacknowledgementofthecauseofactionorbypartialpayment

CurrencyThejudgementofthecourtwillbeexpressedinCanadiandollars.Ifthedebtisinanothercurrency,itwillbeconvertedtoCanadiandollarswiththeconversionrateasofthedateofenteringjudgement

Judgement• Thecreditormayrequirethejudgementdebtortosubmittoanexaminationregardingthe

natureandextentofthedebtor’sassets.• Allassetscanbeseizedexceptforpersonalassets.Remediescanincludegarnishmentofbank

accountsorotherassetsinthehandsofthirdparties.• Thecourtswillrecognizeandenforceforeignjudgementsifsatisfiedthattheoriginalcourthad

properjurisdiction.


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Insolvencies-CanadaTheinsolvencyprocessisalegalproceedingthatisdealtwithundertheprovisionsoftheBankruptcyandInsolvencyActThisActisadministeredbytheOfficeoftheSuperintendentofBankruptcyatafederallevel.A TrusteeinbankruptcylicensedbytheSuperintendentofBankruptcyishiredtohandletheprocessofproposalsandbankruptcies.OnlylicensedTrusteescanprovidebankruptcyservices.

Therearefourmaininsolvencyoptions:1. Proposal-Anofferismadetocreditorswhoareowedmoneyinanefforttosettlethedebt.

Thisproposalmayormaynotbeformal.2. Bankruptcy-Theassetsofanindividualorcompanyareliquidatedandtheproceedsaregiven

tocreditorswhoareowedmoney.Someassetsareexemptfromliquidation,dependingontheprovince.Securedcreditorsarepaidandonceallsecuritiesarecompleted,unsecuredcreditorsarepaidwiththeremainingfundsandifany,adividend.AproofofclaimsmustbefiledbythecreditorwithintheprescribedtimelinesgivenbytheTrusteeinordertoreceiveanydividend.

3. Receivership–Asecuredcreditor,oftenabankorotherlargecreditorrepresentedbyreceiver,comesinandgenerallytakescontroloftheassetsofthecompany.Onceacompleteauditisperformed,thecompanymayoperateunderthereceivershiporifitisinsolventbeyondsalvation,thereceivercanpetitionthecompanyintobankruptcy.WhenacompanyoperatesunderaReceivershipitmayaskforthedeliveryofgoods.TheseordersareprotectedbytheReceivershipandwillnottakepartofapossiblebankruptcyastheyareguaranteed.

4. CompanyCreditors’ArrangementAct–(CCAA)–Acompromiseoranarrangementisproposedbetweenadebtorcompanyanditsunsecuredcreditorsoranyclassofthem.Thecourtmay,ontheapplicationinasummarywayofthecompany,ofanysuchcreditororoftheTrusteeinbankruptcyorliquidatorofthecompany,orderameetingofthecreditorsorclassofcreditors,and,ifthecourtsodetermines,oftheshareholdersofthecompany,tobesummonedinsuchmannerasthecourtdirects.Thisprocessmaylastseveralmonthsorevenyears.

AdebtorcompanyinrespectofwhichanorderhasbeenmadeunderthisActmaynotsellordisposeofanyofitsassetsoutsidetheordinarycourseofitsbusinessunlessauthorizedtodosobyCourt.

WhenadebtorcompanyisengagedinproceedingsundertheCCAA,itisgrantedastayoutofotherproceedings.Securedcreditorsareunabletoactupontheirsecurityandothercreditorsareunabletoseekredressfromthecourts.Thereformisintendedtoprovidethedebtorcompanywithgreaterflexibilityindealingwithitspropertywhilelimitingthepossibilityofabuse


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CzechRepublicAmicable

GeneralMostbusinessrelationshipsareregulatedbyCzechCommercialCode(Obchodnízakoník). RelationswithconsumersaresubjectedtoaspecialregulationincludedintheCzechCivilCode(Obèansk?zákoník).AveragedelayinpaymentsofinvoicesintheCzechRepublicis11days.

Interestrateshouldbespecifiedinthecontractbetweensupplierandbuyer.Ifitisnotspecified,thebuyercanchargeaninterestratebasedonthelaw. Theinterestrateisthesameforallbusinessrelationsandisprescribedbyaspeciallaw.InAugust2008itwas10,5%;everysixmonthsthisrateisevaluatedandcanchangehence.ACalwaysrechargesadebtorwiththecalculationofinterestsfor9%ondailybasis(seeEuropeanDirective2000/35/CEE).Theinterestsarealwaysrequested,bothinamicableandinjudicialphase.Inajudicialproceedingtheinterestrateisbasedonthelaw,provideditisnotcontractedbyparties;courtsalwaysawardtheinterestthatisrequiredonconditionthebasicclaimisaccepted.Fromaculturalpointofview,itisunfortunatelyratherdifficulttogetthetotalamountsofinterestsfromdebtor.Often,theinterestsareconsideredamatterofnegotiationbetweendebtorsandcollectors.

LocalagentAtradiusCollectionsCzechoffersdirectcollectionactivitymanagedbyaselectednetworkoflocalagents,whovisitthedebtorsalloverthecountryinordertocollectyourmoney. Accordingtoourexperiencethissolutionisparticularlysuccessfulforspecificdebtor’scategorieslikeindividualsoletraders,shopsandsmallcompanies.Thelocalagents’networkcanalsohelpinvestigatefindinganuntraceabledebtor.

LawyerAtradiusCollectionsassistsyouwithaselectedandprofessionalnetworkofthemostexperiencedlawfirmsinthejudicialcreditcollectionindustry. TheirnetworkcoverstheCzechterritoryandmanageslegalactionsinallCourtsdistricts.

CostsCostsforamicablecollectingarespecifiedinyourcollectionscontract.

Legalactions

GeneralCommonly,areminderbeforecourtactionissenttothedebtorbeforethecourtproceedingsarestarted.Iftheclaimisnotcoveredinitsfullheightevenafterthisreminder,legalactionisissued.Thecontractingpartiesareallowedtonegotiateanarbitrationclauseoraparticularcourt’slocalcompetenceclause.Iftheseclausesarenotagreedupon,legalactionsarehandledbytheDistrictCourtofthedebtor.

JurisdictionThefastestwayisaskingthecourtforapaymentwarrant(platebnírozkaz)whichcanbeissuedwithoutacourthearingandcanbeexecutedonconditionthedebtordoesnotfileacomplaint.Whenthedebtorfilesacomplainthowever,theproceedingscontinueasaremedialaction.Incaseofaremedialaction(Ïalobanaplnìní), thepetitionerasksthecourttoissuejudgement.Thecourtusuallycallsahearing,whichmeanstheproceedingtakeslongerthantheproceedingforapaymentwarrant.Bothdecisions,paymentwarrantandremedialactioncanbeappealedagainst.

ArbitrationAneasierformofacourtproceedingishearinginarbitration.Arbitrationarisesunderthecontroloftheparticipantsonthebasisofawrittenagreementinwhichtheparticipantsprovidethattheirdisputewillberesolvedbyadesignatedindependentpartywithanarbitrationclause.Thispartycouldbeeitherafreelancearbiter,anycapableadultwhoiscompetentinlegalmatters,orarbiters


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ofapermanentarbitrationbody.IntheCzechRepublicforexample:RozhodèísoudpøiHospodáøskékomoøeÈRaAgrárníkomoøe. Thisalternativedisputeresolutioncanbeappliedforcivilpropertydisputesonly.Itismainlyintendedforcaseswherepaymenttransfersaright,therightofownershipforapurchaseagreement,oranasset.Itistypicalforarbitrationsthatthedecisionofthearbiterorarbitrationbody(arbitrationaward)isfinalandiscannotbeappealedagainst.ThereislimitedperiodforgoinglegalforinvoicesmorethanfouryearsafterduedateforB2Band3yearsforB2Cissues.

NeededDocumentsImperativedocumentsareusuallyOriginalPowerofAttorneygrantedbeforeaPublicNotaryandApostilaccordingtotheHagueConvention,originalunpaidinvoices,currentstatementofaccount,originaltransportdocumentssignedbythebuyer.

Thesedocumentsarerequiredforsupportingclaimsstemmingfrompurchasecontracts.

Optionaldocumentsareoriginalcreditnotes,originalcontracts,theoriginalcontractofthedebt’stransferifthedebtisclaimedonbehalfofathirdcompanywhoisnottheoriginalselleroftheunpaidgoods.Theparticulardocumentsrequiredforlegalactionsaredesignatedaccordingtothetypeofclaimanditscharacters.

Itishelpfulifthecreditorhassomesecurityasacknowledgementofdebtorbill.Intheamicablewayofcollectionswewillcertainlytrytogetsomesecurityfromthedebtor,whichcanbelaterhelpfulforlegalaction.

PowerofattorneyIntheCzechRepublicitispossibletohaveageneralpowerofattorneyforallkindsoflegalactions.Theproxy,suchasallpetitions,mustbeintheCzechlanguage.ACcanprovidetranslations,buttheoriginaldocumentwiththesignatureneedstobeinCzech.

ExecutionofajudgementoranarbitrationawardLegitimatecourtjudgementsandarbitrationawardsunpaidbydebtorscanbeexecutedbyacourtorbyprivateexecutorsinanexecutionproceeding.Executionproceedingscompriseoutoftwoparts.Thefirstparttakesplaceinacourtthatdeterminesthequestionofformalexecutionandnominatesaparticularexecutor. ThecourtalwaysfollowsthesuggestionoftheentitledpartyInominatinganyparticularexecutor.Secondly,therealexecutioniscarriedoutbyeitheracourtoranominatedprivateexecutor.

Enforcementofdecisionsimposingpaymentofasumofmoneycanbecarriedoutbymeansofattachmentofwages/salaryandotherincome,compulsorydebit,thesaleofmovableandimmovableassets,thesaleofabusiness,andthecreationofajudiciallienonimmovableproperty.Thesemeansarethesameforbothcourtexecutionproceedingsandfortheprivateexecutor.

Inthecaseofasecuredclaim,adecisioncanbeenforcedbythesaleofthesecurity,throughthesaleofmovableandimmovableassets,bulkassets,groupsofassetsandresidentialornon-residentialpremisesunderownershipthathavebeengivenassecurityinaccordancewithspecificlegislation,orbycompulsorydebitingofamoneyclaimgivenassecurityorbyrecoveryagainstotherpropertyrightsgivenassecurity.

Executionproceedingscommenceonthepresentationofamotion.Anexecutioncanbeorderedonlyonamotionbytheentitledpartyorbyanyonewhocanprovethattheentitlementconcernedpassedovertoorwastransferredtohim(§256(1)oftheCodeofCivilProcedure).Theentitledpartymaylodgeamotionforanexecutionwarrantiftheobligatedpartydoesnotvoluntarilycomplywiththerequirementwhichtheexecutiontitleimposesonhim(seeaboveforexecutiontitles).

Theexecutionproceedingsendswhenallclaimsarefullypaid,includingallcharges,partlypaid,orbyameanstestforreasonoftaxreduction.


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CostsCourtfeesaccountfor4%ofthedisputedamount,atleast600CZKandforamaximumofonemillionCzechKoruna(approx.35.000EUR).Incasetheelectronicapplicationisused,oranelectronicwarrantpayment,onlyhalf-fees(2%ofthedisputedamount)aretobepaid.Thefee’sbaseisthebasicclaim,butnotincludinginterests.Arbitrationfeesareestablishedbyaspecialarbitrationrule.Anexecutionproceedingisfreeofcharge.

Lawyerfees(Pravnipoplatky)dependontheformoflegalactionandtheamountofclaimsindisputeandvaryfrom5to15%oftheclaim.TheadditionalCourtClerkfeesthatcanbeaddedarefixedbytheindependentprofessionalswhoseinterventioninanyprocedureismandatorybylaw.Thesefeescandifferforanyproceeding. TheadditionalCourttaxesareadded,andtheamountisdeterminedspecificallyforeverycase,dependingonthekindofproceedingandtheamountclaimed.Ingeneral,thelosingpartyischargedwithallcourtfees,butonlyaminorshareofthewinningparty’slawyers’feeswillbereimbursedbythelosingparty,andthisisdeterminedbythejudge).

Insolvency

GeneralAnInsolvencyproceedingcanstartonlyfollowingaproposalanditisalwaysacourtdecision.Inthefirstphaseofinsolvencyproceedings,thecourthastodecideifdebtorisinsolvent.Adebtorisinsolventwhenhehasmorethanonecreditorandunpaidinvoicesformorethan30daysafterduedayorwhentheraremorecreditorsandtheamountofdebtsishigherthanitsassets.Inthesecondphase,acourtsettleswhichwaytoproceed:bankruptcy,reorganizationordischargefromdebts.

BankruptcyTheassetsofdebtorareusedtodischargeclaimsandthedebtorcloseshisbusiness.Thisprocedureisaccessibleforbothindividualsandlegalentities.

ReorganizationAdebtorcanproposechangesinhisbusinesswhichwillenablehimtopayhisdebtsandrunhisbusiness.Thismeansaprolongationofduedateandcaninvolvepersonnelchanges.Thisprocedureisaccessibleonlytobiggercompanieswithmorethan100employeesandtotalturnoverover100.000000CZK.

DischargefromdebtsThedebtamountisdepressedto30%.Thisproceedingisrestrictedtoindividualswithouttheirownbusiness.Firstwayofproceedingisschedulingpaymentsforupto5years,inthiscasethedebtor’spropertyisnotsold.Thesecondwayaffectssellingthedebtor’sproperty. Thisprocedureresultsinforfeitureofthedebtor’sallobligations.• Imperativedocuments:• copiesofinvoices• statementsofaccount• specialwrittobeaddressedtoMercantileCourt,signedbythecreditor

Optionaldocuments:• cheques• promissorynotes• billsofexchange,ifany

SimpleretentionoftitleclausesarevalidintheCzechRepublic. Theretentionoftitlehastobestipulatedinwritingwiththesigningofthecontract.Proceedsofsaleclausemayalsobeagreedupon,butitslegalefficacyisnotyetclearlydefinedunderCzechlaw.IntheCzechRepublic,retentionoftitleclauseprovidesnoprotectionincaseofanacquisitioningoodfaithbyathirdparty.


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Inconformitywiththeapplicablenationalprovisionsdesignatedbyprivateinternationallaw,thesellerretainstitletogoodsuntiltheyarefullypaidfor,ifaretentionoftitleclausehasbeenagreedbetweenthebuyerandtheseller,beforedeliveryofthegoods.Thisagreementshouldbeformalandcontemplateinpublicdeed.AtradiusCollectionscanprovideyouwithfullsupportwithcasesinstatusofinsolvency.

CostsThecostsofinsolvencyproceedingsarepaidfromdebtor’sassets.Thecourtcanassignaproposaltopayanadvancepaymentforamaximumamountof50.000CZK(approx.2100EUR).

Other

TypeofcompaniesIntheCzechRepublictherearetwolargegroupsofsubjectsoflaw:privatepersons(individuals)andlegalentities.Aprivateperson’sliabilityisunlimited.Legalentitiesaremainlybusinesscompanies.Businesscompanies’liabilitycouldbeaccordingtotheCzechlawlimitedorunlimited(veøejnáobchodníspoleènost). Companieswithlimitedliabilityarecapitalcompanies-Ltd(Spoleènostsruèenímomezen?m;s.r.o.),Inc(akciováspoleènost;a.s.) andafewothertypeslikeastatecompanyofasyndicate.


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DenmarkAmicableAnamicablesolutionisthefastestandcheapestsolutionforourcustomers.Incaseadebtorisnotabletopaythefulldebtimmediately,wetrytomakeapaymentarrangementwiththedebtor.Inthiswaywesavebothtimeandcosts.

Ingeneral,paymentarrangementsareestablishedaswrittenagreementsandasaspecialjuridicaldocument(FrivilligtForlig) whichprovidesusthebasisforgoingdirectlytoaBailiff,incaseadebtordoesnotfulfillshisobligationsaccordingtothepaymentarrangement.Weprefertospendtimeonfindinganamicablesolution,however,ifthedebtorisnotco–operative,wewillstartlegalactionimmediately.

Onthewhole,weacceptadurationforpaymentarrangementsupto10monthsasthisistheperiodmostoftengrantedtodebtorsbytheBailiff,butofcoursewetrytoshortenthisperiodasmuchaspossible.

DisputesIfadisputesisbasedoncommercialgroundslikedelayeddeliveryorproblemswithgoods,weactasanintermediate.Wethinkthatsolvingtheproblemoutofcourtsavestimeandcosts.Especiallybecauseourco-operatinglawyers(external)chargehourlyfeesincaseslikethis.

Disputesbasedonjuridicalgroundsliketheunderstandingofdocuments,orgeneralconditionsofthetradesector,areusuallyhandedovertoourexternallawyers.Nevertheless,wewillalwaysinvestigatingwhetheranamicablesettlementispossiblebeforehandingoverthecasetoanexternallawyer.

Fordisputeddebtswherewecannotfindanamicablesettlement,wehavetoobtainajudgementinordertocontinuecollectingthedebt.

Legalaction

Debtsbelow50000DKK(approx.6700EUR)Fordebtsbelow50000DKKwecangodirectlytotheBailiff’sCourt.Ifthedebtisundisputed,theBailiffwillissueapaymentorder,thisequalsajudgement.Ifpossible,theBailiffwilltrytosecurethedebtbytakinganyfreeassetbelongingtodebtorassecurity.WeoftenseethattheBailiffgrantsdebtorapaymentarrangementwithadurationofupto10months.Ifthedebtissecuredbyrealestate,thisperiodcanexpandto36month.

Thisprocedureisthecheapestwayoflegalaction,thecourtcostsonlyamere700DKK(approx.100EUR)pluslawyers’fee.Itisalsothequickestprocedure,althoughitmighttakeup5to8monthsinaverage.

Ifadebtordisputesthedebt,nomatterthereasonortheseriousnessofthedispute, thefileisassignedforcourthandling.

Debtsabove50.000DKK(approx.6.700EUR)Incaseofadebtofthissize,ourexternallawyerhastofileaclaimformwiththecourt.Ajudgementhastobeobtainedbeforeenforcementproceedingscanbecarriedout.Dependingon

thenatureofthedispute,thisprocedurecanbequitelengthyandcostly,becausethelawyerwillchargeanhourlyfeeforhiswork.

Ifajudgementisobtainedandthedebtordoesnotpayaccordingly,thefilewillbehandedovertotheBailiff’sCourtforfurtherhandling.

Intotal,theperiodfromstartinglegalactiontotheendofenforcementproceedingsatBailiff’sCourtcaneasilygrowtomorethan12months.


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EnforcementproceedingsEnforcementproceedingsarehandledbyaBailiff’sCourtandcanonlytakeplacebasedonajudgementorawrittenacknowledgementoftheduedebtfromadebtor. TheBailiffwilltrytoestablishapaymentarrangementwiththedebtor.IfnotpossibleorifthedebtordoesnotfulfillhisobligationsaccordingtoapaymentarrangementestablishedbytheBailiff,theBailiffwillinvestigateifthedebtorhasanyfreeassets.Iftherearefreeassetsavailable,theywillbetakenasasecurityforthedebtandcanbesoldbycreditorfollowingspecificrules.

WeoftenseedebtorstryingtodelaytheprocessbynotattendingthemeetinginBailiff’s

Court.InsuchcaseswehavetowaituntilthepolicehastracedthedebtorandanewmeetinginBailiff’sCourtisheld.

RetentionOfTitle(ROT)ARetentionoftitleisrarelyusedinDenmark.Althoughitmighthavebeenagreedbetweendebtorandcreditor,itisrarelyenforceableinDenmark.

Thebackgroundisthatthegoodsinquestionhavetobespecifiedindetail,ageneraldescriptionofthegoodsisnotsufficient.ThegoodshavetobespecifiedwithindividualnumbersinordertobehandledbyaRetentionofTitle.

InsolvencyProcedures

EnforcedDissolutionWhenacompanydoesnotprovidefinancialreportsinduetimetopublicauthoritiesordoesnotcomplywiththelegalregulations, thecompanycanbetakenintoanEnforcedDissolutionbytheCentralBusinessRegister(apublicauthority).Itwillbeinvestigatedwhetheranyassetsareavailable.Ifnothingisfoundwhichcanbetothefinancialbenefitofcreditors,thecompanywillbecloseddown.Ifassetsarefoundorinformationwhichneedstobefurtherinvestigated,thecompanywillgointobankruptcy. Thereceiverwillhandlefurtherinvestigationsandpossiblethedistributionofanydividend.

IncaseofanEnforcedDissolutionwewillfollowthedebtorcompanyuntilfinalclosureandtakeactionifneededtoprotectourcustomers’outstandingdebts.

LegalSuspensionofPaymentsWhenacompanyisnotabletopaytheirdebtsastheyfall,itmightturnintoaLegalSuspensionofPayments.Anexecutorwillbeappointedandtakeovertheresponsibilityfortheadministrationofthecompany. Theexecutorisgrantedacertainperiod,usuallythreetosixmonths,tofindasolutionforthefinancialproblemsofthecompany. Thiscanresultin:1. afinalcomposition,amicableorenforced2. atemporaryfinancialarrangementandthecompanygoesbackintoordinarybusiness2. afileforthecompany’sbankruptcy.

BankruptcyWhenacompanydoesnotpayadebtjustifiedbyanacknowledgementofdebtorajudgement,acreditorcanfileapetitionforbankruptcy.

Thecreditorisliableforthecostsofthebankruptcyproceedingsontheoccasionthatthefreeassetsbelongingtodebtordonotcoverthis.Whenfilingapetitionforbankruptcythecreditorwillbeaskedtoprovidesecurityforthecostsofthebankruptcyproceedings.Theestimationofcostsisbasedonthesizeofthebankruptestate.Wewilllodgethedebtonbehalfofthecreditorandfollowuponthebankruptcyproceedingsuntilclosurewithorwithoutdividend.Thatincludesprovidingthereceiverwithfurtherinformation,takingpartinpossiblevoting,decisionsonbehalfofcreditoretc.Ifthecreditor’sinvolvementisneeded,wewillcontacthim.Ususally,bankruptcyproceedingsarelonglastinginDenmark.Itcaneasilytakebetweenonetothreeyearsorevenlongerforlargeestates.


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InterestsWealwaysaddinteresttothedebtwhencollectingdebtsonDanishdebtors.Therearetwoalternatives:• tocalculateinterestrateasagreedbetweencreditoranddebtor.• tocalculateinterestrateaccordingtoDanishregulationbasedonthereferenceratefixedby

CentralBankofDenmark(+7%p.a.).Thisrateisfixedtwiceayearper.1st ofJanuaryand1st ofJuly

Thesecondrulewillalwaysoccuriftheinterestrateisnotagreedbetweenthecreditorandthedebtor.

CostsCostsinacollectioncase:

Costschargedtodebtor:

ACDenmarkalwaysaddscollectioncoststothedebtandtriestocollectthem.ThesecostsarecalculatedaccordingtoatariffsetupbytheDanishauthorities.1. Ifandwhendebtorpaysthecosts, theamountwillberepaidtoourcustomer,partiallyorfully

tocovercostsmentionedbelow.2. Costschargedtoourcustomer:ThesecostsfollowthetariffagreedwithyourlocalAC

representativeinthecontract.

Typeofcompanies• EnkeltmandsvirksomhedSoleproprietorship.Onemanbusiness.Unlimitedliabilitybytheowner.• Interessentskab–I/SGeneralpartnership.Partnershipofindividuals.Unlimitedliabilityby

partners/owners.• Anpartsselskab-ApSPrivatelimitedcompany.Smallerlimitedcompany.Liabilitylimitedtothe

equityofthecompany.• Aktieselskab–A/S Joint-stockcompany.Largerlimitedcompany.Liabilitylimitedtotheequity

ofthe• company.• Kommanditselskab–K/SLimitedpartnership• Andelsselskab–AmbA Cooperativesociety.Partnershipwithlimitedliability

LegislationCollectionbusinessinDenmarkisgovernedby• Lawnumber319of14thMay1997• Ministerialordernumber752of26thSeptember1997• Ministerialordernumber741of4thSeptember2002(interestrates)• Ministerialordernumber601of12.7.2002(collectioncostschargedtodebtor)


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FranceAmicablephaseTherecoveryprocessalwaysbeginswithawrittenreminderbecauseofalegaltendencyregardingtheactivityofrecoveringdebtsforthirdpartiessothatthedebtorknowswhothecreditorisandwhothecollectionagencyis.Ourcollectorsthenstartcollectioneffortsinordertoidentifytheoriginofthedebtandtofindasolutionwiththedebtortopaythewholedebt.

Sometimes,ACFrancedecidestoentrustthefiletoalocalagent,whovisitsthedebtorinordertoputastrongpressureonhimtoobtainthesettlementofthedebtortoprovidethenecessaryinformationabouthissolvency. Thelocalagent’snetworkcan alsoinvestigateinplaceinordertosearchanuntraceabledebtor.Incaseofanunsuccessfulsearch,wecouldalsoaskaspecificagencytofindthenewaddressofthedebtor.

DisputeInmanycases,thedebtortriestoavoidpaymentstatingthatthereisatechnicaldisputeoracommercialone.ACisverypragmaticinthewayofhandlingthatkindoffiles.First,wetrytoclarifytheproblembyaskingevidencestothedebtor,byaskingcommentstothecustomerandoncewehavealltheelementsofthedispute,wetryto(solveitifitispossible)findanamicablesolution.

Ifweconsiderthatthedisputeisunfounded,thecollectionprocesscontinues.Ifitisapartialfound-eddispute,weaskthedebtortopaytheundisputedpartofthedebtinordertomakeagoodwillgestureandwetrytofindanagreementforthebalanceprovidedthatthecustomerisreadytoacceptadeal.Whennodealispossible,wewillmostlydecidetostartalegalprocedure.

LDCACFrancehasselectedthemostexperiencedlawfirmsandattorneysinthejudicialcreditcollectionactivitytoworkwith.ThisvastnetworkcoversalltheterritoryandcanmanagethelegalproceduresinallCourtsdistricts.

OtheractionsACFrancewillevaluatethesolvabilityofadebtorandhiscapacitytopayadebt.Someextraservicescanbeprovidedbyspecificfirmssuchasbankaccountresearch,realestatesresearchandofficiallybookedgoodsresearch.Theseelementscanhelptocreateaclearviewofthefinancialsituationofthedebtorandtoassistsinfindingthemostefficientwaytocollectthemoney.

InterestsWealwayschargethedebtorwiththecalculationofinterestsforthelegalinterestrate.Thisrateisdifferenteachyearanddefinedbythegovernment,multipliedby1.5inaccordancewiththeFrenchlawonthetermsofpayment.ACFranceaddsapenaltyclauseof10%fortherecovery’scosts.

LegalphaseThemaingoalsofalegalactionaretodeterminetheexistenceandtheamountofthedebt,todefinetherelationshipsbetweenthecreditorandthedebtorandtofinallydecideiftheoutstandingamountisdueandifthedebtormustpayitimmediatelyorwithapaymentplan.Wealwaysneedtoobtainajudgementbeforeactingbyenforcement.

Legalactions(typeandcosts)Therearethe3waystoobtainajudicialdecision:

AnInjunctionInjonctiondePayer

ItallowsACFrancetoobtainaninjunctionagainstthedebtorwithoutthepresenceofthedebtorintheCourt.Thejudgedecidetocondemnthedebtorafteranalysingthedocumentsthatareproduced(invoices,purchaseorders,deliverynotes,unpaidcheck,etc.).Afterthis,theinjunctionis


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notifiedtothedebtorbyabailiff. Thedebtorhasamonthfromthenotificationofthedecisionbyabailifftoacceptthisdecisionortodisputeit.Ifhedecidestoacceptit,thenhehastopay.Ifhedecidestodisputeit,thenthejudgeplannedahearingtoanalysethereasonswhythedebtorrefusestopay.Inthiscase,thedebtorandACFranceneedtoberepresentedintheCourt.

Thistypeofprocedureisusedwhentheamountofthedebtisnottoohighandwhenthedebtisnotdisputed.Otherwise,thejudgepreferstohavethecreditorandthedebtorinfrontofhimtosortthingsout.Itisaverysimpleandquickprocedurewhere ACdoesnotneedtoentrustalawyer,exceptwhenthedebtordisputesafterthebailiffnotification.Itisaninexpensiveprocedure.

Refereprovision

Itisanemergencyprocedurewherethecreditorhastodeliverconvocationtothedebtorforahearinginfrontofthejudge.Thedebtshouldnotbedisputedthepaperfilecompletewiththeevidenceofthedebtandthecreditorhastoargueabouttheemergency(oftenbecausetherecoveryiscompromisedbecauseoftheriskofinsolvency).Inmanycases,thedebtorisnotpresentandthejudgepronouncesajudgementduringthefirsthearing.Ifthedebtorispresentandifhedisputes,thenthejudgedecidestoclosethecaseandaskthecreditortostartthecommonprocedurecalledassignationaufond.ItisalsoaveryfastprocedurebutweneedtoentrustalawyertorepresentthecreditorintheCourt.

Assignationaufond

Itisthecommonproceduretoobtainajudgementwhenthecreditorandthedebtordonotwanttofindanamicablesolution.Bothshouldberepresentedbyalawyeranditisoftenaverylongprocedurewithalotofhearings.

Itisalsoanexpensiveprocedureinwhichanexpertisemightbenecessaryespeciallyincaseofatechnicallitigation.

PowerofattorneyACFranceneedstohaveaspecificpowerofattorneyforeachcasewherealegalactionhastobestarted.TheproxymustbeinFrench,signedbythelegalrepresentativeofthecreditorandmustmentionthenameofthedebtor.

ExecutionofjudgementAfterthejudgementisnotifiedtothedebtor,thelatterhasonemonthtoappeal.Afterthisperiod,thejudgementbecomesexecutivewhichmeansthatthebailiffcanstartaforcedexecution.InFrance,onlybailiffshavetheauthoritytohandletheenforcementofajudicialdecision.

Atthisstage,thedebtorhasnochoice:heeitherhastopayorgobankrupt.

CollectioncostsTherearetwokindsofrecoverycosts.

Firsttherechargeablecoststhedebtorhastopay,thesecostsareoftenliquidatedbythejudge.Inmostcases,costsderivedfromthejudicialprocedureandthenotification’scosts.

Secondthosecoststhatcouldnotberechargedtothedebtor,essentiallythelawyerfees.Eachpartyhastobearitsownlawyerfees,butthewinningpartycouldaskthejudgetoobtainanindemnitytocompensateitsexpenses.Inpractice,theamountapprovedbytheCourtconstitutesonlyaminorshareoftheexpenses.Thisindemnityischargedtothedebtor.

ExpectedtimeframeAnon-complexcommercialcasewilltakeapproximatelyeighttotenmonthstobesolved.Thisperiodcanbedoubledincaseofcomplexcommercialortechnicaldisputeorincaseofappeal.


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Thisestimationcanbeslightlyincreasedforsomejurisdictionswherethejudicialsystemhasbeenratedbelowtheaverageperformanceofthecountry.

Miscellaneousinformation/insolvencyproceduresThelegaldefinitionoftheinsolvencyisthatthedebtorisnotabletofaceuphisduedebtsconsideringhisavailableassets.

Thetwomainproceduresare:• Receivershipwhichallowssavingthedebtor’sactivitythankstoacontinuationplan,wherein

creditorscanexpectdividends.• Bankruptcywhichmeanstheliquidationoftheassetswhenthesituationistotallycompromised

andcreditorscannotexpectdividends.

Thedelaytolodgetheclaimis2monthsforFrenchcreditorsand4monthsforforeigneronesfromthedateofpublicationinBODACC(officialjournal).

Thedurationcouldbeimportantasmandatoryhastocheckthedebtofallthecreditorswholodgedtheclaimbeforemakingpropositionofplanofpayment(ingeneralin10yearsbyannualpayment).

ItcouldalsohappenedthatthedebtisdisputedandaconvocationfromtheCourtisplannedtojustifythedebt.

Anotherpointisthatareceivershipcanbeconvertedinbankruptcy.Indeed,almost90%ofthereceivershipendedbyabankruptcy.


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GermanyAmicablePhase

InterestAtradiusCollectionsGermanyalwayschargesinteresttodebtorscalculatedfromthebaseratesetbytheGermannationalbankplus8%onadailybasis(seeEuropeanDirective2000/35/CEEArticle3Section1dinconjunctionwithparagraph288section2GermanCivilCode).

Fromaculturalpointofview,Germandebtorsareusedtopayinglatepaymentinterests,thoughoftentheactualamountoftheinterestpaymentisconsideredamatterofnegotiationbetweendebtorsandcollectors.

DebtcollectioncostsInGermanydebtcollectioncostsarechargedtodebtors,calculatedonthebasisoftheRVG(Rechtsanwaltsvergütungsgesetz),thestatutorylawyers’fees.Thesecostsdonotequalthefeesandcostsweinvoicetoourclients,whichagainarebasedonthecontractuallyagreedfeesoftheactualDebtCollectionAgreement.Collectioncostsrepresenttheclaimoftheclienttothedebtorbasedonthepaymentdelayofthedebtor,andincludeinterestandcostsresultingfromthelatepayment.

Ifthedebtorisnotpayingamicablyandthereforelegalproceduresareinitiated,orinthecourseofthelawsuit,thecollectioncostswillbeenforcedonthedebtor.Nowadaysaprox.60%oftheGermancourtsrewardthisadditionalclaim,butthisusedtobeamatterofdispute.

ACGermanyforwardsallrecovereddebtcollectioncoststoourclienttoreducetheclaim,orretainsthecostsinsteadoraddsthemtothesuccessfees.ThisdepaendsfullyonthecontractualagreementbetweentheclientandAC,theDebtCollectionAgreement.

IfithasbeenagreedthatACGermanyretainsallcollectioncostthen,inlinewith§367BGB(GermanCivilCode)anypaymentfromthedebtorisfirstallocatedtothecollectioncosts,thentotheinterestandfinallytotheprincipalamountoutstanding.Forthetimebeing,andbecauseoflegalreasons,thisallocationmethodcanonlybeofferedtoGermanclients.

AcceptedPaymentMethodsThemostcommonpaymentmethodsarebanktransferandcheckpayment.ACalsoacceptdrafts,buttheseareveryrareinGermanyandAustria.Wedonotofferthedirectbookingofffromdebtoraccounts.

DisputeWearealwaystryingtoreachanamicablesolutionbetweencreditoranddebtor. Toaccomplishthis,wealwaysrequireallunderlyingcontractualdocuments(e.g.signedcontracts,orders,orderconfirmations,invoicesanddeliverynotesaswellasallstandardtermsthathavebeenagreedupon).

Wewillalwayscarryoutanexaminiationandanalysisofthecasein-house,supportedbyourlegalteam.

LDCWecannotcommissionagentstovisitdebtorsinGermany.

InAustriawehaveaveryexperiencedagentnetworkwithastrongmarketposition,sounlikeinGermanywecanofferyouvisitsofagentstodebtors.Thecostsperindividualvisithavetobeevaluatedonasinglecasebasis.


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OtherActionsInvestigatingthefinancialsituation

InGermanyandAustriawecontractedveryexperiencedreportingagenciestoassessthefinancialsituationofdebtors,mostoftenincludingrealestateandotherenforceableassets.Incombinatingwithourownphonecontacts,wegetafoundedimpressionofadebtor’sfinancialsituationandweareabletoadviseonthenextstep.

Publicregisters

Itdependsonthelegalformofthedebtor,whetherwearealsoabletorequestinformationfrompublicregisters.Alltradershavetoberegisteredatthemunicipaltradeoffice.Informationfromthisofficetriggersanadministrativefeewhichmayvaryfromtowntotown.Itisusuallybetween15and30EUR

Allcompanieswithalimitedliabilityhavetoregisterwiththetraderegisteratthecompetentcourtwhichcanbeaccessedonlineataflatfeeof4.50EUR.Wehavedirectaccessandcanobtainadditionalinformationonshareholders,historicdevelopments,andbalancesheetswhicharequiteoftenpublishedthere.

InGermay,aprivatecompanywithunlimitedliabilitiescanbecomparedtoprivateperson.AdebtorwithaddressunknowncanbetracedviatheRegistrationofAddressoffice.Privatepersonsarelegallyobligedtoofficiallyun-registerwhenmovingoutofonetownandtore-registerintheothertowntheyaremovingto.Failingtodosoispunishable,butsomedebtorsdonotfollowthisprocedureandvanishuntraceably. ThecostsoftheinformationfromtheRegistrationofAddressofficemayvaryfromtowntotownbutareusuallybetween8and20EUR.

Privateinvestigator

Inordertotraceanon-registereddebtorand/orincaseofpotentialfraud,itisadvisabletomandateaprivateinvestigator.Wecooperatewithanexperiencedagencyandareabletoofferabasicreportfor39.50EUR.

SecuringthedebtToreclaimtheoutstandingamountasquicklyaspossible,weusuallydonotacceptpaymentplansbeyondsixmonths.Occasionally,whenadebtoriswillingtopaybutbasedonhisfinancialsituation,isunabletocomplywithasixmonthdeadline,wearepreparedtoacceptalongerrunningpaymentplan.However,thenwerequestfromthedebtortosecurethedebtinfavourofourclient.Thiscanbedonebothamicablyandcostefficiently,byprovidinganacknowledgementofdebt,authenticatedbyanotaryandimmediatelyenforceableincaseofnotrespectingtheagreedpaymentterms.Correspondingnotarycosthavetobecarriedbythedebtor,thenotarywillsendtheenforceableengrossmentdirectlytous.Inexceptionalcasesthecostofobtainingsuchatitleisadvancedbyus,e.g.ifthedebtorisnotcapabletodoso.Costsarethenrechargedtotheclient;nevertheless,anapproachlikethishastobeevaluatedonasinglecasebasisandalwaysdependsontheoutstandingprincipalamount.

MiscellaneousInformationGermanyhasverycomprehensiveandsupplier-favourableregulationsonRetentionofTitle.Tousethesetotheadvantageofanysupplier,theymustbeagreeduponexplicitlypriortodelivery.Mostimportantisthatthedebtoracknowledgestheretentionoftitlebeforereceivingthefirstinvoice.

MostcompaniesincludeRetentionofTitleprovisions(ROT)intheirgeneraltradingconditions.Inthiscasethelaterdebtorcaneithersigntheseconditionsinadvance,orourclienthastoadvisethedebtorexplicitlythatthegeneraltradingconditionsapplybeforesendingthefirstinvoice,e.g.withanoteontheorderconfirmation.Itisofutmostimportancetohaveproofthatthetradingconditionshavebeenagreedto,otherwisethefavoursofthemorecomplexversionoftheGermanretentionoftitlecannotbeusedforreducingtheoutstandingamount.


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TherearethreedifferentkindsofRetentionofTitle:• BasicROT*Thegoodssuppliedremainthelegalpropertyofthesupplier;untilfullpayment.

Thesuppliercan/mustgetthegoodsback.• IncreasedROT Openaccountretention• Inthecourseofongoingbusinessrelations,thesuppliedgoodsremainthelegalpropertyofthe

supplieruntilalloutstandingamountsfromtheopenaccountorbusinessrelationshavebeenpaidfully.

• OverallretentionIfanopenaccountrelationshipexists,theretentionremainsinforceevenaftertransferintotheopenaccountorafterthebalancingofaccounts.

• ExtendedROT*Assignedtothesupplierinadvance.Pleasenote:Inaccordancewith§354aoftheCommercialCodeanadvanceassignmentiseffectivedespiteanon-assignmentagreementbetweenthepurchaserandthirdparties.

LegalProceduresIftheamicablecollectionproceduredoesnotleadtothefullpaymentofthedebt,itmaybeadvisabletoenterintoalegalprocedure.Anyofthefollowingproceedingscanbeadequate,followingamicabledebtcollectionactivities.

LegaldunningprocedureThisprocedureisonlyapplicableformoneydebts.Fornon-GermanclientsseekingpaymentfromaGermandebtor,thecompetentcountycourtisBerlin-Wedding.ForGerman/Germancasestherearevariouscompetentlocalcourts,applyinganautomaticprocedureexclusively.

Theclientseeksthecourtorder (Mahnbescheid)whichneedstobeservedtothedebtorafterithasbeenraised.Instandardcases(e.g.debtordoesnotneedtobetraced)thiswilltaketwotofourweeks.Uponreceipt,thedebtorcanappealwithintwoweeks (Widerspruch). Thistransfersthecaseoutofthelegaldunningprocedureintoalegalprocedurebeforethecompetentcourt,whereastan-dardcivillitigationcommences.Ifnoappealisraisedintime,thecreditormayrequestanenforcementorder(Vollstreckungsbescheid)whichwillbeissuedwithintwotofourweeksandwillalsoneedtobevalid-lyservedtothedebtor. Again,thedebtormayfileanobjectionwithintwoweeks(Einspruch). Inthiscasethelegaldunningprocedureendsandthecaseistransferredtothecompetentcourtforstan-dardcivillitigation.

Onlyifthedebtordoesnotfileanobjection,theenforcementorderbecomesafinalandenforceableverdict,tobeenforcedbyabailiff.

Pleasenotethatonlytheenforcementordercanbenotifiedpublicly.Foranycasewherethedebtorisuntraceablefromthebeginning,thelegaldunningprocedureisnottheappropriateaction.Astandardcivillawsuitwouldthenbeadequate,consequentlyapublicserviceofwrit.

Theaveragedurationofalegaldunningprocessisbetween8and12weeks,whereasacourtprocedurecantakeupto12months.Thecostsofthelegaldunningprocedureareonly20%to40%.thanthatofafullcourtprocedure.Effortstobetakenaremuchlower,atleastwhenthedebtorsimplydoesnotreactandsoimplicitlyacceptingtheclaims.

CivilLawsuitYoucanstartacivillawsuitimmediately,afterthedebtor’sprotest/objectioninthecourseofthelegaldunningprocedure.

Thecompetentcourtisdeterminedbytheamountoutstanding:upto5.000EURlocalcourt(Amtsgericht),beyondthedistrictcourt(Landgericht).Thelocalcompetencecanbeagreedinadvance,regularlythisisstatedinthetermsandconditionsofthedelivery.Ifnovalidagreementhasbeenmade,thesafestwayistosueatthecompetentcourtatthecompanyseatofthedebtor.


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Thelegalprocedurecommenceswiththeserviceofthewrittothedebtor,issuedbythecompetentcourtafterwhichthecourtfeesareadvancedbytheplaintiff. Thewritisservedtothedebtoranddeadlinesforthedefencepleaaresetout.Thecompetentcourtcansetupawrittenprocedurewithshortdeadlinesoftwotofourweeksforpleading.Inthiswrittenprocedure,thecourtcanissueajudgementbydefault,ifthedebtormissesdeadlines.Againstthisdefaultjudgementthedebtorcanfileanobjectionwithintwoweeksafterthejudgementbydefaulthasbeenserved.

Ifnojudgementbydefaultappliesthecourtsetsupafirsthearing.Thepartiesareinvitedtothisandoftenitisnecessarytoappearbeforecourttoavoidlegaldisadvantages.Nowadays,thisfirsthearingisaconciliationhearing,butthejudgeingeneralinvitesalsowitnesses,ifavailableandmentionedinthepleadings.

Ifsettlementcannotbereached,thepartiesandwitnessesarebeingheard.Ifexpertevidenceisnecessary,thecourtwillrequestsuchexpertise.Thecostsarequitehigh,dependingonthecomplexityofthetechnicalaspectsofthecase.Sometimesasecondhearingisrequired,afterwhichthejudgementisgiven,includingthedecisionaboutthecostburden.Ingeneral,allcosts,includingthoseoftheprevailingparty,havetobebornebythedefeatedparty.

Thelatterisentitledtofileanappealagainstthejudgement(thresholdis600EUR),triggeringaverdictbythecourtonthenextlevel.(localcourt—>districtcourt;districtcourt—>higherregionalcourt).Inanysecondinstance,thereviewwillberestrictedtoacheckwhetherornotstatuteswereappliedcorrectly;anyamendmentoffactsandproofisnotpossible. Theplaintiffdoesnotrequirerepresentationbyaregisteredattorney,beforealocalcourt,however,infrontofanyothercourtprofessionallegalrepresentationismandatory.

Costsofthecivillawprocedure(courtcostsandlawyer’sfees)aredeterminedbytheprovisionsoftheRVG (Rechtsanwaltsvergütungsgesetz)andtheGKG (Gerichtskostengesetz)andnotsubjecttoanynegotiation.Anyfirstinstancetakesbetween6and12months,dependingonthecomplexityofthecase.Theoutcomeofsuchaprocedureisanenforceablejudgement.

Proceedingsrestrictedtodocumentaryevidence(Urkundsverfahren)Thisprocedurecanbeinitiatedbyeitheralegaldunningoracourtprocedure.Keyforthesuccessofthisprocedureisanoriginaldocumentthatinitselfcanprovethedebtor’sobligationtowardstheclient,e.g.anacknowledgementofdebt,apaymentplan,asettlement,acheckorabillofexchange.Thehearingwillbescheduledatshorternoticethaninthestandardlegalprocedure,normallywithintwotofourweeks.Thejudgeonlycheckswhethertheplaintiff’sclaimresultsfromtheoriginaldocumentprovided(copiesarenotaccepted).Anyobjectioncanonlybebasedontheinvalidityofthedocument,notanyfaultoftheunderlyingbusinesstransaction.Ifsuccessful,thecourtwillgiveaprovisionaljudgementwhichcanbeexecuted.

Thedebtorcanfileanobjectionwithintwoweeksafterserviceofprocess,whichwillbringtheprocedureintothesocalledpost-procedure(Nachverfahren).Thisisthenormalcivillitigationwherethedebtorcanbringforwardobjectionsagainsttheclaimitself,i.e.theunderlyingbusinesstransaction(e.g.badqualityofgoods).Ifthedebtorshouldfailshere,bye.g.grantingsignedcheckstothecreditor,thedebtoralreadyacknowledgesthedebt.Hehastoconcusstheprimafacieevidence.

Thisprocessshouldbechosenifevidenceoftheclaimcanbegivenbyaconclusiveoriginaldocumentasthisprocedureismuchquickerthanthelegalstandardprocedure.

Arrest(inpersonamorinrem)Thisprocedureisanalternativeifthecircumstancescallforimmediateaction,e.g.ifthedebtorintendstoleavethecountry. Theprocedureisrathercomplexandtherequirementsandstandardstoprovethefactualdetailsarehigh.Thisprocedureisrarelyused,butmaysometimesbeanoption.


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EnforcementJudgementscanbeenforcedincollectionbusinessmainlyin3ways• Enforcementindebts• Enforcementinmovablegoods• Enforcementinimmovablegoods

Theenforcementisexclusivelystartedbybailiffsandgenerallyrequirestheparticipationofajudge.

Conditionsforavalidexecutionare:• thejudgement• theclauseofenforcementonthejudgement(permissiontoexecute)• thedeliveryoftheenforceablejudgementtothedebtor.

EnforcementindebtsThecreditorcanblockthebankaccountofthedebtororblockthedebtor’sclaimsagainsttaxoffices,lifeinsurances,thedebtor’semployer,andsharesinabusiness,corporateshares,oranypossibleclaimthedebtormayhaveagainstanythirdparty. Thisusuallyprovesveryeffectiveandoftensurprisesthedebtor.

Thisisaswiftenforcementmethodology,itusuallytakesonlyfourtoeightweeks,obviouslyitrequiresspecificinformationlikebankaccountdetails,nameandaddressoftheemployer,informationaboutcorporatesharesorsharesinbusiness.

EnforcementinmovablegoodsThisisthestandardprocedurewherethebailiffvisitsthedebtortryingtotakeawaymovablegoodshecanliquidateinfavourofthecreditor. Thebailiffcannotseizegoodsnecessaryforthedebtor’sbasicdailylifeorforenablinghimtomaintainhisbusinessactivity.

Ifsuchgoodsarenotavailable,thebailiffwilldemandastatutorydeclarationfromthedebtor.Ifherefusesthisanddoesnotappearbeforethebailifffortheappointmentsetupfortheaffidavit,thecreditorneedstofileforanarrestwarrantbeforecourt.Thiswarrantwillbeexecutedbythebailiff,supportedbythepolice.Thewarrantisusedtoobtainthestatutorydeclarationfromthedebtorandcanonlybeobtainedeverythreeyears.ThisisarelativelyslowproceduresixtoninemonthsinthewesternpartsofGermanyandninetotwelvemonthsintheeasternpartsofGermany,whichisduetoalackofbailiffsandsignificantbacklog.

EnforcementinimmovablegoodsIfthedebtorownsrealestate,itispossibletoreceivearecordingoftheclaiminthelandregisterandtothenforcethesaleoftherealestatebycourtorder. Thisprocessismoreexpensivethantheothersandrequiresalotofpatienceasittakestimetogettherecordingandafterwardshavethelandorrealestatteupforsaleandsold.

SpecialProceduresBesidesthesestandardprocedures,itmayinspecialcasesbeusefultocommencespecificotherprocedurestocollectmoney. Thesearehoweververyrestrictedintheirownscope.

Petitionforwinding-upThewinding-uppetitionisapplicablewithoutpriorverdictandalsoasaspecialenforcementstepwhileenforcingaverdict.Herethecreditorwouldhavetoprovethatthedebtorowesmoneynotonlytohim,butalsotoothercreditorsandthatthenon-paymentiscausedbyseriousfinancialproblems,meaningitrequiresdelayinfilingforinsolvencyondebtor’sside.FilingaWinding-uppetitionfollowingapositiveverdictiseasier,butthecreditorasplaintiffbearsthecostofatleast500EUR.

CriminalcomplaintSuchacomplainttothecriminallawauthoritiesincaseofactualfraudordelayinfilingforinsolvencyetc.isnotinitselfameansofsuccessfulcollection.However,itmaystimulatethedebtor


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toreconsiderapaymenttothecreditor. Thisisararelyusedmeanswithuncertainoutcomeandcostsapprox.250EUR.

StatueofLimitation/PrescriptionThelimitationperiodingeneralisthreeyears,thirtyyearsforjudgements,oneyearinthetransportsector((startingfromthedateofperformanceofthetransport).Ingeneral,limitationstartsatthebeginningoftheyear,whichfollowstheyearinwhichtheclaimwasfounded.

PowerofAttorneyFortheinitiationoflegalproceduresandinsolvencyproceduresapowerofattorneyisrequired.

Forfurtherandadditionalinformation:www.cisg.law.pace.edu/cisg/countries/cntries.htmlwww.ec.Euroa.eu/civiljustice/

InsolvencyProceedingsandPoolofCreditors:GeneralfactsWhereastheenforcementdescribedinSection9.3isenforcementforonlyonecreditor,theinsolvencyproceedingisakindofacollectiveenforcementforallcreditorsofonedebtor.Withthestartofthepreliminaryproceeding,allindividualenforcementsaresuspended.Onlywhentheinsolvencyproceedingwillnotbestarted,individualenforcementswillbecontinued.Theaimoftheinsolvencyproceedingistopayoutallcreditorswiththesamequotabyliquidatingtheassetsofadebtorcompanyorcollectingtheenforceableincomeofanindividualwhoisdeclaredbankrupt.Afterthedebtororacreditorfilesforinsolvencyofthedebtor,apreliminaryliquidatorisappointedtocheckifsufficientassetsareavailabletocoverthecostsoftheproceedings(courtcostsandcostsoftheliquidator).Ifthesecostsaredeemedtobecovered,theinsolvencyproceedingsstartandaliquidatorwillbeappointed,usuallythisisthepreliminaryliquidator. Anyotherway,thecourtwillrejectthedeclarationofbankruptcyduetoinsufficientassets.

Thecreditorscanthenlodgetheirclaimandtakebackanygoodsdeliveredunderretentionoftitle.Forgoodsonstock,theliquidatorcanchoosewhethertopaytheoriginalpricetothecreditorortoreturnthegoods.Fortheextendedretentionoftitle,theinsolvencypractitionerliquidatesthegoodsorclaimsandpaysoutthesecreditorsretainingVATandacommissionof9%oftherevenues.

Aftertheproceedingstarts,aclaim-lodgeispossiblewithinagivendeadline.Allclaimslodgedarecheckedbeforethefirsthearing,usuallywithinthreemonthafterthestartoftheproceeding.Iftheclaim-lodgeisdoneafterthedeadline,theclaimcannotbecheckedbeforethefirsthearingandasecondhearingclosetotheendoftheproceeding(ingeneralaftertwotofouryears)hastobeannounced.Fortheselatelodgesadditionalcostsof15EURariseandtheconfirmationofthedebtwillbedelayed.

Theliquidatorcaneitheracceptthelodgeddebtordisputeit.Iftheclaimisdisputed,thecreditormayonlyfileaclaimincourttoprovethejustificationofhisclaim,iffurtherdocumentationetc.doesnotconvincetheliquidatorintoconfirmingthedebt.Attheendoftheproceedingallcreditorswithconfirmeddebtswillreceiveadividend,onaveragebetween5%and8%oftheoriginalclaim.Inlessthan50%oftheproceedingsadividendhigherthanto2%isdistributed.

LimitedcompaniesLimitedcompanieslike GmbH,AG,GmbH&Co.KG (andunlimitedcompanieswhoseownersarelimitedcompanies)areobligedtofileforinsolvencyformainlythreereasons.Thefirstoneisinabilitytopaywhichdoesnotautomaticallymeanthatbuyer’sassetsdonotcoveralldebts.Underspecialcircumstanceswithabadliquiditymanagementthiscouldbethecase,thatonlytheactualliquiditydoesnotcovertheduedebtsbutingeneralthecompany’sexpectedliquiditywould.

Thesecondreasonisexpectedinabilitytopaywhichmeansthatthemanagementalreadyknowthatwithinacertaintimespanthecompanywillbeunabletopaytheduedebts.

Thethirdreasonisaccountinginsolvencywhichmeansthatbuyer’sassetsdonotcoverthedebts.


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Unlimitedcompanies/individualsForunlimitedcompaniesorindividualdebtors,itisnotobligatorytodeclarebankruptcy.Nevertheless,theycandeclarebankruptcyforthereasonofinabilitytopayortheexpectedinabilitytopay.Costsfortheproceedingwillbecoveredbytheassets,ortheliablepersonsmayrequestforarespiteofthecosts.Iftheinsolvencyproceedingisconfirmed,thedebtorhastherighttoclaimtheannulationsofallpendingdebtsafteraperiodofsixyears.Duringthisperiodallenforceableincomeshavetobepaidtotheappointedliquidatorwhowilldistributefundstoallcreditorsonaproratabasis.

PoolofcreditorsIfabiggercompanygoesbankrupt,theactualinsolvencyproceedingcanbeaccompaniedbyasecondproceedingcalledpoolofcreditors.Inthiscasethecreditorsjoininapoolagreementusuallyfoundedbythecreditinsurancecompaniesorbanks.Theaimofthepoolistoaccumulateallclaimsofcreditorswhodeliveredgoodsundertheretentionoftitleclause.Thecreditorshavetoproofthattheretentionoftitlewasagreed.Theythentransfertheirrightstothepoolarrangementandparticipateintherefundsfromthesaleofallsecuredgoodswithaquotaoftheirconfirmedcredit.

Rescissionpaymentsbythedebtorcarriedoutwithinthreemonthspriortothedeclarationofbankruptcycanbedisputedbytheliquidator. Alongerperiodsispossibleforsomespecialformsofpayment.Iftheliquidatordisputesthesepayments,thecreditorhastorefundthemandcanonlylodgethecorrespondingdebtinstead


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GreeceLDCWehaveseveralattorneysanddebtcollectionspartnersactingforusontheGreekterritoryandcollectingourclaimsoutofCourtorinCourt.Personalvisitstodebtorsarefrequentlyorganized,ourLDC’sprivilegingthedirectcontactwiththedebtorwhichgreatlyhelpsthedebtcollectionprocessinthatcountry. Thereisnobetterwaytoevaluatethedebtcollectionprospects.

OtheractionsAllourattorneys/agentsinGreeceareinapositiontocheckdebtor’ssolvencyexamininginparticulartheCourtRegistries,theLandRegistryandtheRegistryofMortgages.Ourcorrespondentsarealwaystryingtogetimmediatepostdatedchequeswhichrepresentastrongguaranteeforthepaymentbecauseincaseofnonpaymentapublicbodyisnotifiedandthepersonsorcompanyhavingissuedtheunpaidchequeareregisteredwiththebody.Ontheotherhand,anunpaidchequeisanimportantinstrumenttogetaccesstothesimplifiedPaymentOrderprocedure.

InterestsContractualinterestscanbechargedtothedebtor.Ifnot,wegenerallyapplyatthemomentaninterestof12,5%p.a.inaccordancewiththeEuropeanDirective2000/35/CEEwhichhasbecameGreeklawbyPresidentialDecree.

LegalphaseThesourcesofGreeklawaremainlywritten.Legislationiscontainedinseveralcodes:CivilCode,CodeofCivilProcedure,PenalCode,CommercialCode.DoctrineandcaselawarenotconsideredasformalsourcesofGreeklaw.

Civilandcommercialcourtsareorganizedasfollows:• JusticeofPeaceforlowclaims• Courtof1stInstancewith1judgeformedium-sizedclaims• Courtof1stInstancewith3judgesforhighvalueclaims• CourtofAppeal• SupremeCourt(cassation)

ProceedinginCourtinGreececanstillbealongexercisesothatproperdocumentationshouldbeavailablewhich,inparticular,wouldenablethecreditortohaveaccesstotheratherfastandsimplifiedPaymentOrderproceedings.

Legalactions(typeandcosts).

Paymentorder:SummaryprocedurefiledwiththeCourtof1stInstanceorwiththeJusticeofPeaceaccordingtotheamountsclaimed.Thisprocedureisaccessibletocreditorswhoareinapositiontoproveexistenceandamountoftheclaimbypublicorprivatedocuments.

Documentsneeded:NotarizedAcknowledgmentofDebtor-privateacknowledgmentofdebtwithtaxstampsor-originalbillofexchange,promissoryletter,chequeor-copyinvoice+proofofdelivery,possiblyinoriginal,signedbythedebtoronreceiptofthegoods,oranydocumentfromthedebtorortransporterprovingreceiptofthegoods(e.g.saleex-works)

PowerofAttorney:Ingeneral,noPOAisneededunlesstheopponentdisputestheattorney’sauthoritytoactonbehalfofthecreditor.


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Thecreditorfilesarequesttothecompetentcourt.

Afterexaminationofthedocuments,theCourt,beingoftheopinionthatthedebtislegallydueforpayment,willissueaPaymentOrderwithin50/60days(moreorlessdependingontheworkload)whichisimmediatelyenforceablefailingopposition.

Thedebtorhas15daysafternotificationofthePaymentOrdertomakeoppositionwhereaftertheproceedingswillbegovernedbytherulesoftheOrdinaryProcedure.

Costs:Courtcosts(disputedcasesnotincluded):±1/1000oftheclaimforjudicialstamp+limitedaddi-tionalcostsfortheBarAssociationandforservingthelegaldocumenttotheopponent:from250EURto700EUR+amaximumof850EURforexecutionirrespectiveofclaimamountLawyer’sfees:dependingontheagreementswiththelawyers.Wehaveagreedextremelylowtariffswithsomelawyers(nocollection–nofees)

OrdinaryprocedureIfnosufficientdocumentisprovingthedebtasdescribedabove.Acreditor’switnessshouldalwaysbeavailableandpreparedtogoandtestifybeforetheCourt.ThecivilproceedingsstartwithfilingaWritwiththeCourtindicatingfullidentityoftheparties,detailsandlegalbasisoftheclaim.TheCourtfixesafirsthearingdateandaSummonsisservedonthedebtorthroughabailiff.

Documents&PowerofAttorney:

InpracticetheattorneyisnotobligedtoproducebeforetheCourtaPOAsignedbyhisclientinordertojustifythemandatebutmostofthetimeattorneysasktheirclientstoproduceanotarizedPOAwiththestampofthecompany+apostilleoftheHagueConvention.Allavailabledocuments:copyinvoices,orders,transportdocuments,correspondence.

Costs:a) Courtcostsandlawyers’feesbeforetheJusticeofPeaceandtheCourtof1st

Instancewith1judge–(disputedcasesnotincluded)-:seePaymentOrderb) Courtcosts&lawyers’feesbeforetheCourtof1stinstancewith3judges,disputedcasesnot

included:seePaymentOrder+additionalcostofsome800EUR/1000EUR

Recoverabilityofthecosts&fees(alsovalidforPaymentOrder):Therecoverabilityofthesecosts&feesonthedebtorislefttoCourt’sdiscretion.Ingeneral,courtcostsorpartofthemcanbechargedtothedebtorbutitrarelyhappensactually.Thecreditorshouldnotputtoomuchhopeintherecoverabilityoflawyer’sfees.

ExpectedTimeFrame

PaymentOrder:• 50/60daysforissuanceofthePaymentOrder.• 15daysforthedebtortomakeopposition• Ifso‡ordinaryproceedings• Ifnoopposition‡executionwhichcantakeseveralmonths

Ordinaryproceeding:a) BeforeJusticeofPeaceorCourtof1stInstancewithoneJudge:

proceduresomewhatsimplified.Thepartieshavetoproducetheirmeansofdefenceandtheirdocumentsbeforethedateofthehearingwhichisoralandeachpartyhastoproduceawitness.Eachpartyhas3daystomakeoppositiontosubmissionsandevidencesaftertheHearingwhichcantakeplaceseveralmonthsafterfilingtheWrit.


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b) BeforetheCourtof1stInstancewith3Judges:• 1stHearingseveralmonthsaftertheWrit• notificationoftheWrittothedebtor:atleast60daysbeforeHearing• objectionstosubmissions:15daysbeforeHearing• CourtHearingmaybepostponedonlyonetime• 4daysafterhearing,thepartieswillgettheminutesoftheHearingandwillhaveanother

4daystoevaluatethetestimonyofthewitnessandcompletetheirdefencebutarenotallowedtoproduceadditionaldocuments

Attemptforconciliation

Thepartyfilingalawsuitisobligedtoinvitetheopponenttonegotiateanoutofcourtsettlement,failingwhichthecasewillnotenterforhearing.Thelawyersofthe2partieswillmeetatleast35dayspriortheHearing.

Timeframeafterjudgment:• 30daystoappeal• 40/60daysormoretoseizeassets• Publicauction:2monthslaterexceptforrealestatewhichismuchlonger

Executionofthejudgment

Alldiscoveredassetswillbeattachedandsoldbypublicauction,alsorealestatebutthistypeofenforcementtakesaverylongtime.ConcreteresultsinexecutionproceedingsarefarfrombeingsatisfactoryinGreece.

Statuteoflimitation

Forcommercialinvoices:after5yearsfromtheendofthecivilyear.Forcheques,billsofexchange,promissoryletters:3years

ItistobenotedthattheCourtwillnotissueaPaymentOrderifaperiodof6monthshaselapsedfromthedateachequewaspresentedtotheBankunlessthedebtorhasrecognizedthedebtinwritingeitherbeforeorafterpresentationofthecheque,orifthechequerefersinacontractsignedbythedebtor.


BankruptcyABankruptcyPetitioncanbefiledeitherbythedebtororbythecreditor;documentsrequiredfromthepetitioningcreditor:copyofinvoicessignedbythecreditorandauthenticatedbyaNotaryPubliccertifyingthesignatureandconfirmingthatthecopyisatruecopyoftheoriginalremainingunpaidaccordingtocompany’sofficialbooks.ThedocumentshouldbeartheApostilleoftheHagueConvention.FurthermoreawitnessofthecreditorhastotestifybeforetheCourt.

NB:acertifiedcopyoftheinvoiceisnotrequiredifthebuyerhasacceptedabillofexchangeorsignedapromissoryletterdulystamped.‡Lodgingofclaimsandrepresentationusuallythroughlocalattorneysduetolanguagebareerandcomplexity.PowerofAttorneyneeded,ithastobenotarizedandstampedwiththeApostilleoftheHagueConvention.

JudicialRecovery/composition(law1892/90):• Debtorcompanydeepindebtedbutcanberecovered.• Creditorsrepresentingaminimumof60%ofthetotalamountofthecompany’sdebts

(including40%ofthesecuredcreditors)haveagreedtoreducetheamountoftheirclaimsaswellasonhowthebalancewillbepaid.TheAgreementhastoberatifiedbytheCourt.


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• Nolegalactioncanbetakenandpendingactionswillbefrozen• Ifthedebtorisalreadyinbankruptcy,thestateofbankruptcywillberecalledasfromthedate

thepetitionforratificationofthesettlementagreementissubmittedtotheCourt.• Lodgingandrepresentationthroughlocalattorneyduetolanguagebareerandcomplexity.• Aspecialtrusteecanbeappointedtonegotiatewithcreditors.• PowerofattorneynotarizedandstampedwiththeApostilleoftheHagueConvention

Specialliquidation(law1876/90)• Debtorcompanydeepindebted• Activitiessuspended

Inbankruptcyorinliquidation• Debtssurpassing5xthecapital• Basicassetsnotsoldinpublicauction

1sttypeofspecialliquidation:• Creditorsrepresenting20%ofcompany’sdebtshavetoapplytotheCourtforplacingthe

companyunderspecialliquidation• Liquidatorisappointedforaperiodof6months(possibleextensionanother3months.Hewill

administerthecompanyandtrytosellitasawholeortheassetsseparately.• Anylegalactionorexecutionareimpossibleorstoppedasfromthedateofappointmentofthe

liquidatorwhocanalwaysnegotiateajudicialcomposition

2ndtypeofspecialliquidation:• Creditorsrepresentingaminimumof51%ofcompany’sdebtshavetoapplytotheCourtfor

placingthecompanyunderthistypeofspecialliquidation• Liquidatorisappointedfor6months(possibleextensionanother3months.Hewilladminister

thecompanyandtrytosellitasawholethroughpublicbiddingsothatitcancontinueitsactivities.Ifitisnotpossible,thecompany’sassetswillbesoldseparately.

• AnylegalactionorexecutionareimpossibleorsuspendedasfromthedatethepetitionissubmittedtotheCourt

• Theliquidatorcanalwaysnegotiateajudicialcomposition.

Forbothtypesofspecialliquidation:lodgingandrepresentationthroughlocalattorneysduelanguagebareerandcomplexity• PowerofAttorneynotarizedandstampedwiththeApostilleoftheHagueConvention.• Generallynocostandfeestoinitiateinsolvencyproceedingsortofollowuptheinsolvency

procedureifthedebtorisintheareaofAttica(Athens/Piraeus).IntherestofGreece,theremaybeacostofapprox.700EURforlocallawyer

• NEWCODEOFINSOLVENCYLAWasamendedbyLaw3588/2007ThisnewInsolvencyCodereplacesallpreviouslawsBUTtherearetransitoryprovisionsfortheongoinginsolvencycasesstartedbeforeintroductionoftheNewCode.ThosecasesarestillgovernedbythepreviousInsolvencyLaws

ThenewRegulationparticularlyaimsata) ContinuationandReorganizationofthecompaniesb) Counterbalancebetweenliquidationoftheassetsandreorganizationofthedebtorcompanyc) Equaltreatmentofthecreditorsd) PreventionoftheInsolvencye) Limitationofexcessiveuseofinsolvencies

Basicpointsofthenewregulations:a) ChangesintheprocedureandconditionsoffilinganApplicationofInsolvency.Thenew

legistationismakingitmoredifficultthepossibilitytofileanInsolvencyPetitionasameansofpressureonthedebtor


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b) ProcedureofNegotiation:thisistheintroductionofacommonsystemofliquidationandreorganization,bothoccurringundertheprocedureofInsolvency.Asapre-stadiumofapossiblereorganization,aprocedureofnegotiationisintroducedbetweencreditorsanddebtor.

c) SettingupaPlanofReorganization:includingallfinancialinformation,suggestedmeansforsatisfactionofthecreditors,planfortherecoveryofthecompany.Theminimumpercentageforthesatisfactionoftheordinarycreditorsis20%.ThePlanisexaminedbytheCourtwithin20daysfromitssubmission.ThecreditorsdecidefortheacceptanceofthePlanwithamajorityof60%oftheclaims.Inthisamountapercentageof40%representingtheprivilegedclaimsmustbeincluded.

Typesofcompanies(mostfrequent)

1. A.E.: (Jointstockcompany:sociétéanonyme)Shareholdersarenotliableabovetheamountoftheirshares

2. E.P.E.: LimitedliabilitycompanyResponsibilityoftheassociateslimitedtotheircapitalinthecompany

3. O.E.: IncollectivenamePersonal&jointresponsibilityoftheassociatesisillimited

4. E.E.: Limitedpartnership(commanditesimpleorbyshares)Wherethepersonallyliableassociates(commandités)arejointlyresponsiblewithoutlimitationIndividualsfirmsarealsostillveryfrequent:directorispersonnalyliable.

Retentionoftitle

Ifinthesalecontractaclausehasbeenincludedreservingownershipfortheselleruntilfullpaymentoftheprice,itwillbeconsideredthatownershiphaspassedtothepurchaserafterthesuspensiveconditionoffullpaymenthasbeenfulfilled;thesellerisentitledtoclaimpaymentofthepriceortorescindthecontractthroughtheexerciseofhisretentionoftitle.Thebankruptcyofthebuyerwillnotinfluencecreditor’srightofownership.

LDC

WehaveaveryexperiencedlawofficeinIndiaworkinglikeadebtcollectionofficevisitingthedebtorsandnegotiatingpaymentschedulesandinaposition,ifneedsbetorepresentusinCourtinaveryefficientway.

Otheractions

Indepthsolvencyreportondebtorscanbeobtainedfromouragentinordertobetterestimatetherecoveryprospectsandtoavoidneedlesscosts.Ourlawofficecangiveusanylegalopinionwewouldneed.

Interests

TheIndianlegalsystemallowsforcontractualinterestuptomaximum14%dependingoncasetocase.However,inlitigationcaseitisdiscretionoftheCourthowmuchtheyawardinterest.

Legalphase

Localcustomsandconventioncanberecognizedbythecourts.Indiahasoneoftheoldestlegalsystems.ItslawandjurisprudencehandeddownfromtheBritishareformingalivingtradition.


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BroadlytheIndianjudicialorganizationisdividedintoDistrictCourts,HighCourtsandSupremeCourt.SomeoftheDistrictCourtshaveunlimitedpecuniaryjurisdiction.InsomestatestheDistrictsCourtshavealimitedpecuniarycompetence(e.g.inDelhi).ThehighestcourtineachdistrictistheDistrictandSessionjudgeempoweredtorenderanysentence.ThisisthemaincourtofCivilJurisdiction.Therearesome21HighCourtshavingjurisdictionoveroneormorestates.ThebulkoftheworkofmostHighCourtsconsistsofAppealsfromlowercourts,windinguppetitions.BelowtheHighCourtstherearealotofSubordinateCourts(CivilCourts–FamilyCourts…).Legalsystemiscomplexandproceduresaretime-consuming.Inaddition,corruptionisalwaysarealitywhichthecreditorhastotakeintoaccount.Itisnotadvisabletostartlegalactionsifthecreditordoesnothaveastrongcasewithunequivocaldocumentsandevidences.

Legalaction(types&costs)

Summary ActionAsummaryactioncanbestartedifthecreditorhasbillsofexchangeorpromissorynotes.ThedebtorisnotentitledtodefendthesuitbutmustasktheCourtpermissiontodefendwithin10daysfromthedateoftheserviceofthesummonsuponhim.PermissiontodefendwillonlybegrantediftheaffidavitfiledbythedebtordisclosesfactswhichtheCourtmaydeemsufficientforgrantingpermissiontodefend.Theobjectunderlyingthesummaryprocedureistopreventunreasonableobstructionsbyadefendantwhohasnodefence.

Documentsneeded:NotarizedPowerofAttorneyBillsofexchange,promissorynotes,copyinvoices

Courtcosts:applicablecourtcosts–differfromstatetoanotherstate.Somemaycharge7,5%oftheSuitamountbutotherswillonlycharge1%Lawyers’feeshavetobenegotiatepriortostartproceedings:alumpsumorratesonanhourlybasis.

b).OrdinarySuit:

Extremelytime-consumingprocedurewherethecreditorisconfrontedwithalotofobstacles,remedies,adjournments,corruption,…ItisnotrecommendedtostartordinaryactionsinIndiabutthecreditorshouldtrytofindanoutofCourtsettlementbecausemostofthetimeordinaryactionswindupwithnoconcreteresultsattheendofthedayintermsofrecoveries.Whatisthepointinobtainingajudgmentafterseveralyearsifyoucannotenforceitbecausethedebtorisinsolventorhasorganizedhisinsolvency?Anyway,accordingtotheCodeofCivilProceduretheCivilCourtsareentitledtojudgeallsuitsofcivilnatureincludingbreachofcontractetc…Asuitcanbefiledattheplacewherethedebtorisconductingbusiness,wherethecompanyhasitsofficeorwherecauseofactionarose.Mostofthetimethecreditorswillhavetopresentaffidavitssignedbywitnessesanddulynotarized.Atthetimeofadmissionordenialofdocumentsduringcourttrial,creditorswillbeevenrequiredtobepresentintheCourtforcross-examination.

Documentsneeded:NotarizedPowerofAttorneycompletefile:invoices,orders,confirmationsoforder,contract,transportdocumentsandprovesofdelivery,correspondence,technicalreports,etc.

Collectioncosts:Seeabovebutthesecostscanbesignificantlyincreaseddependingonthecomplexityofthecaseandespeciallyattorneys’fees.Thelosingpartyhastoreimbursethelegalcoststothewinningparty. ThisdependshoweveronthedecisionoftheCourtandmoreparticularlyforthelawyers’feesforwhichreimbursementwillgenerallybesymbolic.


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ExpectedTimeFrameSummary Action:1year(withexecution)ormoredependingoncircumstances.OrdinarySuit:4/5yearsormoredependingoncomplexityofthecase.

ExecutionofthejudgmentEnforcementofjudgmentsiscarriedoutonallmovableorimmovableassetsprovidedtheyhavebeenidentified,locatedpreviouslyandtheyarefreeofencumbrances.

StatuteofLimitation3yearsforcommercialinvoicesaswellasforbillsofexchange&promissorynotes.


a) Compulsoryliquidation (windingup):Filedbythedebtor,acreditor,theRegistrarofCompanies,anypersonauthorizedbythecentralgovernmentuponareportofaninspector,officialliquidatorduringavoluntarywindingup.Inourexperienceitisanextremelylongprocessforthecreditortogetdebtor’sliquidation.

b) Voluntaryliquidation(windingup):inavoluntaryliquidation,ifthedebtorcompanyissolvent&thedirectorsaremakingadeclarationofsolvency,thewindingupiscalledamembers’voluntarywindingup.If,however,thedebtorcompanycannotpayitsdebtsandthedirectorscannotmakeadeclarationofsolvencythenthewindingupiscalledacreditors’windingupwherebythecreditorsmayintervenemoreinthewindingupprocess.Claimsarelodgedwherebyalldocumentsevidencingtheclaimhavetobeproduced-andusuallytheliquidatorappointedsellsallpropertiesofthedebtorcompanyforcashoragainstsharesinothercompaniesfordistributiontothecreditorsbutthedividendprospectsforunsecuredcreditorsaregenerallyextremelypoor.Liquidationproceedingsareveryslowandcanlastseveralyears.

c) Receivership: adebentureholdermayappointaReceiver.Onhisappointmenttheassetsarechargedinfavourofthedebentureholderandthecompanycannotusetheseassetsanymoreinthecourseofitsnormalbusiness.Claimsarelodgedbutaimofthisprocedureistosatisfythedebentureholdereitherbycontinuingthecompany’sactivitiesorbysellingassetsandliabilitiestoathirdpartyortorealizethecompany’sassets.Anyremainingdividendaftersatisfactionofthedebentureholderwillbedistributedtotheunsecuredcreditors.Ofcourse,theReceivershipisnotprofitableatallfortheunsecuredcreditors.

d) SickIndustrialCompaniesAct(SICA):enactedinordertodetecttimelysickorpotentialsickcompaniesandtohavepreventivemeasuresdeterminedbyabodyofexperts,theBIFR(BoardforIndustrial&FinancialReconstruction).AlllegalproceedingsagainstSICKcompaniesaresuspendedincludingwindingupproceedings.TheBIFRisdeemedtobeacivilcourtandwilladoptmeasuresaimingatrestructuringcapital,sellingsurplusassets,securingpropermanagement,selling/leasingunitstootherpersons.TheprocessofrevivalthroughBIFRisveryslow(even10yearsormorebutinaverage6/7years).

Thecriteriatodeterminesicknessinanindustrialcompanyare:

a) theaccumulatedlossesinthegivenfinancialyeartobeequaltoormorethanitsnetworthi.e.itspaidupcapital+itsfreereserves.

b) theCompanyshouldhaveincurredcashlossesduring2consecutiveyearsc) theCompanyshouldhavecompleted5yearsafteritsincorporationd) itshouldhave50ormorethan50workersonanydayofthe12monthsprecedingtheendof

thefinancialyear.e) itshouldhaveafactorylicense.


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Typesofcompanies

1) Proprietorship (notincorporated):Oneindividualisownerofthebusiness.Heispersonallyliable.

2) Partnership (notincorporated):Partnerssharewitheachotherprofits&losses.

3) PrivateLimited (incorporated):Limitedliabilityoftheassociates.

4) PublicLimited (incorporated):Notaprivatecompanywithahigherpaid-upcapital.

Retentionoftitle

Suchaclauseshouldbestipulatedinwritingwiththesealingofthecontractbutitdoesnotprovidearealprotectionagainstacquisitioningoodfaithbythirdparties.Itslegalenforcementisverydifficultandcumbersome.


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HungaryCreditsafeguardsAcheckofcreditworthiness

AtradiuscansupplyyouwithrelevantinformationregardingthecreditworthinessonyourHungarianbusinesspartnerbeforesealingacontractandwhentradingonopenaccountisstronglyrecommended.

RetentionoftitleInHungaryonlysimpleretentionoftitleclausesarevalid.Theclauseshavetobestipulatedinwritingwiththesigningofthecontract.Unfortunatelyyoureceivenoprotectionincaseofacquisitioningoodfaithbyathirdparty.Itisinsolvencyresistantasthereisanoptiononseparationofthegoodsincaseofbuyer’sinsolvency.

PledgesandmortgagesThesesecurityinterestsarewidelyused,especiallymortgagesandliensonfinancialassets.PledgeshavetobestipulatedandregisteredwitharegistermaintainedbytheHungarianNationalChamberofNotariesPublic,whilemortgageshavetoberegisteredwiththeLandRegister.Incaseofadebtor’sdefault,creditorsmayforecloseandenforce,throughajudicialproceeding,thesaleofthemortgagedproperty/pledgedgoodsinapublicauction.Incaseofadebtor’sinsolvency,debtssecuredbypledgesandmortgagesenjoyahigherpriority. Thisincreasesthechancestogetpaidatleastapartialamountoftheoutstandingdebt.

OthersafeguardingmeasuresGuaranteesCommonbetweenparentcompaniesandsubsidiaries

BankGuaranteesBankGuaranteesarefairlycommoninHungary,inmostcasestheyareratherexpensiveforthedebtor.

PaymentPracticeInHungary,mostpaymenttransactionsarebanktransfers.Chequesandbillsofexchangearerarelyused.Theaveragepaymenttermsagreedonvarybetween30and90days.About80%ofthepaymentsaredeliberatelydelayedbydebtors,asinmanycasesHungariancompaniesfinancetheirownproductionactivitiesontheexpenseofcreditorsbyextendingpaymentobligations.Ifnodefaultinterestratewasagreedbefore,thebasisforcalculationistheHungarianNationalBank’sbasicrateplus7%.Thecontractingpartiesarefreetoagreeonahigherinterestrate.

OutofcourtcollectionCollectioncallsandpaymentremindersinwrittenformarerecommended.Itisadvisedtosendaremindersignedbyanexternalcollectionagencystronglydemandingsettlementatacertaindateandannouncinglegalmeasuresincaseofnon-payment.Itisstronglyadvisedthatcreditorsshouldfirstseekanoutofcourtsolution.ThelawsuittermsinHungaryareonaverageverylong,lastingsometimesforseveralyears.AtradiusCollectionsHungarycanassistyouwiththedirectoutofcourtcollectionactivity. ACHungaryissupportedbyaselectednetworkoflocalagents.Theyvisitthedebtorsalloverthecountryinordertocollectthereceivables.Thelocalagents’networkcanalsotoinvestigateinplaceinordertosearchanuntraceabledebtor.

LegalproceedingsAtradiusCollectionsHungarycanserveyouwithaprofessionalnetworkofthemostexperiencedlawfirmsinHungaryinthejudicialcreditcollectionactivity. ThisnetworkcoversalltheterritoryandiscanmanagethelegalactionsinallCourtsdistricts.SummaryproceedingsAnapplicationisdonewithastandardisedform.Inchargearetherespectivecountycourts(ortheMetropolitanCourt).Legalcostsare3%oftheclaimamount,maximum450.000HUF(approx.


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1.600EUR).Incaseanobjectionisfiledbythedebtor,theproceedingturnsintoanordinarycourtproceeding.Objectionsbythedebtormayoftenleadtoaconsiderablyextensionofthelawsuitterms.

Statuteoflimitations

InHungary,thestatuteoflimitationsexpiresoncethedebtismorethanfiveyearsold,startingfromthedaythedebtbecomesdue.Outstandingreceivablesoriginatingfromfreightforwardingservicesprescribeafterevenoneyear.

Expectedbudget

Courtfeesarefixedbystatute:• Firstinstancecourtcases:6%oftheamountindispute.• Summaryproceedings:3%oftheamountindispute.• Compulsoryenforcement:1%oftheamountindispute.

LawyerfeesHavetobefixedonanindividualbasis.Somelawyersaskforfeesbasedonhourlyrates(between50EURand300EUR,dependingonexpertiseandlanguageskills).Itisalsopossibletoagreeonapercentileshareoftheamountindispute(upto5%).Ingeneral,thelosingpartyischargedwithallcourtfees,butonlyashareofthewinningparty’slawyers’feeswillbereimbursedbythelosingparty,althoughitisdeterminedbythecourt.

Documentsrequired(original,duplicatesorauthorisedcopies)Imperative:originals,orduplicates(copywithastamp‘sameasoriginal’withsignature/stampofissuer)ofinvoices,proofofdelivery,confirmationoforders,relevantcorrespondence,mandateforthelawyer(POA).

Optional:companyextractsoftheparties,billsofexchange,promissorynotes.

Averagedurationtogetafinaljudgementistwo–fouryears.

ThedurationoflawsuitsisusuallylongeratthedistrictcourtBudapestthanatothercountrycourts.

InsolvencyproceedingsTheHungarianinsolvencylegislationhasbeenamendedmorethan30timesinthelastdecade,andstillithasproventobeinsufficientinmanykeyareas.Atpresent,thereisstillnolawthatgovernsrestructuringandreorganisation.Thecurrentlegislationonlyencompassestheproceduresofliquidation,voluntarydissolutionandbankruptcypursuanttowhichadebtorrequestsarespiteofpaymentorpaymentmoratoriuminordertoconcludeacompositionagreement.Butthisregulationisinsufficienttoallowfinanciallytroubledcompaniestoreorganiseproperly:underthecurrentscheme,virtuallynoongoingfinancingduringreorganisationwillbeavailable.

Proceedingsaretime-consumingandisunsufficientlyfacilitated.Additionally,thecreditors´involvementandparticipationhasbeenpoorlyregulatedanditlacksefficiencytoenforceinterests.Thetreatmentofsecuredcreditorsincaseofthedebtor’sinsolvency,hasbeenhighlyunsatisfacto-ry.Bythetimeadebtorhasbeenformerlydeclaredinsolvent;allassetshaveoftenbeencompletelydissipated.Consequently,unsecuredcreditorshavereceivedlittleornorecoveryatall.Inpractice,over90%ofallbankruptestateshavenotcontainedthesufficientassetstoevenfundthecostsofliquidation.Asfortheremaining10%,theassetshaveoftenbeenconsumedsolelybycourtandprocedurecostsorhavebeenlostonaccountofpoormanagementdecisionsorfraud.ToovercomethoseweaknessesoftheHungarianinsolvencyregulationsandtomakethemfinallycoherentandconclusiveaswellascompliantwithinternational(EU)standards,thegovernmenthasdecidedtoamendthecurrentregulationsasafirststepandtothenfinaliseanewinsolvencyactatalaterstage.


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AmendmentstotheBankruptcyActasof1.July2006ans1.September20091. Measuresontheopeningofliquidationproceedingshavebeensimplified.Courtscandetermine

adebtor’sinsolvencyifitfailstosettleanearlierundisputedandacknowledgeddebtordoesnotcontestitinawrittenandreasonedstatementwithin15daysafterthereceiptofadunningletter/requestforpaymentsentbyacreditorfollowingduedateofthedebt.Thisrequestforpaymentshouldcontainacreditor’swarningtothedebtorthathewillfileapetitiontocommenceliquidation.Therefore,creditorsarenomorerequiredtowaitouttheearlier60daysperiodafterduedatetoopenliquidationproceedingsagainstadefaultingdebtor. Additionally,adebtorshallbedeemedinsolvent,ifhefailstopayhisdebtwithinadeadlineestablishedbyafinalandbindingcourtorder.

2. Temporaryadministrators´powershavebeenbroadened.Creditorsmayfileapetitionforappointmentofatemporaryreceiverbeforeorafterthecommencementofaliquidationproceduretosupervisethedebtor’smanagementandassets.Thereceiver’sproxieshavebeenextendedtoprotectthecreditors’interests,e.g.heisentitledtoinspectanyassetofthedebtorandmayinterveneifassetsareremoved.

3. Expansionofthedirector’sliability:theexecutivesaredirectlyliabletocreditorsif,incaseofthreatenedbankruptcy,theydonotprimarilyactaccordingtothecreditors´interestsandbydoingsotheassetsofthecompanyhavedecreased.Duringaliquidationproceduretheliquidatororanycreditorisentitledtoestablishtheliabilityofexecutiveshavingmanagedtheinsolvententerprisewithinthreeyearspriortothecommencementoftheinsolvencyproceeding.Insuchaway,previouscompanyownersmaybeheldliableeveniftheysoldacompanythatwasmakinglossesorexistedonlyonpaperbeforethetimeofopeningaliquidationprocedure.Inpractice,thismightbecomeproblematicasitcannotalwaysmadesureinwhichcasetherewasa“threatenedbankruptcy”,inotherwords,fromwhichdatethedirectorsshouldhaveactedprimarilyaccordingtothecreditor’sinterest.

4. Securedcreditors’rightshavebeenstrengthened:Pledges(mortgagesorliens)arefullyrecognisedeveniftheyhavebeenconcludedjustonedaybeforethecommencementofliquidationproceeding.Allclaimsofcreditorssecuredbysuchcollateralaresatisfiedcloseto100%(lesscostsofsaleandliquidator’sfee).Inthepast,therecoverableamountwasonlyabout50%inadvancetoliquidationexpenses.

Expectedbudget

Courtfeesarefixedbystatute:• Initiationofinsolvency(liquidation):75.000HUF(approx.300EUR).• Lodgingtheclaim:1%ofclaimamount,maximum200.000HUF(approx.800EUR).

Lawyerfeeshavetobefixedonanindividualbasis.Somelawyersaskforfeesbasedonhourlyrates(between50and300EUR,dependingonexpertiseandlanguageskills).Itisalsopossibletoagreeonapercentalshareoftheclaimamount(upto5%).AtradiusCollectionsHungarycanlodgeyourclaim/representyouintheinsolvencyprocedurewithfavourabletariffs.

Documentsrequired(originals,duplicates,orauthorisedcopies)Imperative: originals,orduplicates(copywithastamp‘sameasoriginal’withsignature/stampofissuer)copiesofinvoicesmandateforthelawyer(POA).

Optional:proofofdelivery,confirmationoforders,relevantcorrespondencecompanyextractsoftheparties,billsofexchange,promissorynotes.

Averagedurationistwo–fouryears.

ThedurationoflawsuitsisusuallylongeratthedistrictcourtBudapestthanatothercountrycourts.


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IndiaLDCACIndiamakesuseofaveryexperiencedlawofficeinIndiaworkinglikeadebtcollectionofficevisitingthedebtorsandnegotiatingpaymentschedulesandinaposition,ifneedsbetorepresentusinCourtinaveryefficientway.

OtheractionsIndepthsolvencyreportondebtorscanbeobtainedfromouragentinordertobetterestimatetherecoveryprospectsandtoavoidneedlesscosts.Ourlawofficecansupplyuswithanylegalservicesweshouldneed.

InterestsTheIndianlegalsystemallowsforcontractualinterestuptomaximum14%dependingoncasetocase.However,inlitigationcaseitisdiscretionoftheCourthowmuchtheyawardinterest.

LegalphaseLocalcustomsandconventioncanberecognizedbythecourts.Indiahasoneoftheoldestlegalsystems.ItslawandjurisprudencehandeddownfromtheBritishareformingalivingtradition.Schematically,theIndianjudicialorganizationisdividedintoDistrictCourts,HighCourtsandSupremeCourt.SomeoftheDistrictCourtshaveunlimitedpecuniaryjurisdiction.InsomestatestheDistrictsCourtshavealimitedpecuniarycompetence(e.g.inDelhi).ThehighestcourtineachdistrictistheDistrictandSessionjudgeempoweredtorenderanysentence.ThisisthemaincourtofCivilJurisdiction.Therearesome21HighCourtshavingjurisdictionoveroneormorestates.ThebulkoftheworkofmostHighCourtsconsistsofAppealsfromlowercourts,windinguppetitions.BelowtheHighCourtstherearealotofSubordinateCourts(CivilCourts–FamilyCourts).TheLegalsystemiscomplexandproceduresaretimeconsuming.Inaddition,corruptionisalwaysarealitywhichthecreditorhastotakeintoaccount.Itisnotadvisabletostartlegalactionsifthecreditordoesnothaveastrongcasewithunequivocaldocumentsandevidences.

Legalaction(types&costs)

Summary ActionAsummaryactioncanbestarted,ifthecreditorhasbillsofexchangeorpromissorynotes.Thedebtorisnotentitledtodefendthesuit,butmustasktheCourtpermissiontodefendwithin10daysfromthedateoftheserviceofthesummonsuponhim.PermissiontodefendwillonlybegrantediftheaffidavitfiledbythedebtordisclosesfactswhichtheCourtmaydeemsufficientforgrantingpermissiontodefend.Theobjectunderlyingthesummaryprocedureistopreventunreasonableobstructionsbyadefendantwhohasnodefence.

Documentsneeded:• NotarizedPowerofAttorney• Billsofexchange,promissorynotes,copyinvoices• Courtcosts:applicablecourtcosts–differfromstatetoanotherstate.Somemaycharge7,5%

oftheSuitamountbutotherswillchargeonly1%.Lawyers’feeshavetobenegotiatedpriortostartproceedings:alumpsumorratesonanhourlybasis.

b).OrdinarySuit:Extremelytime-consumingprocedurewherethecreditorisconfrontedwithalotofobstacleslikeremedies,adjournments,corruption.ItisnotrecommendedtostartordinaryactionsinIndia,thecreditorshouldtrytofindanoutofCourtsettlementbecausemostofthetimeordinaryactionswindupwithnoconcreteresultsattheendofthedayintermsofrecoveries.Whatisthepointinobtainingajudgementafterseveralyearsifyoucannotenforceitbecausethedebtorisinsolventorhasorganizedhisinsolvency?Anyway,accordingtotheCodeofCivilProceduretheCivilCourtsareentitledtojudgeallsuitsofcivilnatureincludingbreachofcontractetc. Asuitcanbefiledattheplacewherethedebtorisconductingbusiness,wherethecompanyhasitsofficeorwherecauseofactionarose.Mostofthetimethecreditorswillhavetopresentaffidavitssignedbywitnessesand


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dulynotarized.Atthetimeofadmissionordenialofdocumentsduringcourttrial,creditorswillbeevenrequiredtobepresentintheCourtforcross-examination.

Documentsneeded:• NotarizedPowerofAttorneycompletefile:invoices,orders,confirmationsoforder,contract,

transportdocumentsandprovesofdelivery,correspondence,technicalreports,etc.

Collectioncosts:Seeabove,butthesecostscanbesignificantlyincreaseddependingonthecomplexityofthecaseandespeciallyattorneys’fees.

Thelosingpartyhastoreimbursethelegalcoststothewinningparty. ThisdependshoweveronthedecisionoftheCourtandmoreparticularlyforthelawyers’feesforwhichreimbursementwillgenerallybesymbolic

ExpectedTimeFrameSummary Action:1year(withexecution)ormoredependingoncircumstances.

OrdinarySuit:4/5yearsormoredependingoncomplexityofthecase.

ExecutionofthejudgementEnforcementofjudgementsiscarriedoutonallmovableorimmovableassetsprovidedtheyhavebeenidentified,locatedpreviouslyandtheyarefreeofencumbrances.

StatuteofLimitationThreeyearsforcommercialinvoicesaswellasforbillsofexchangeandpromissorynotes.

Insolvencyproceedingsa) Compulsoryliquidation(windingup):

Filedbythedebtor,acreditor,theRegistrarofCompanies,anypersonauthorizedbythecentralgovernmentuponareportofaninspector,officialliquidatorduringavoluntarywindingup.Inourexperienceitisanextremelylongprocessforthecreditortogetdebtor’sliquidation.

b) Voluntaryliquidation(windingup):inavoluntaryliquidation,ifthedebtorcompanyissolventandthedirectorsaremakingadeclarationofsolvency,thewindingupiscalledamembers’voluntarywindingup.If,however,thedebtorcompanycannotpayitsdebtsandthedirectorscannotmakeadeclarationofsolvency,thenthewindingupiscalledacreditors’windingupwherebythecreditorsmayintervenemoreinthewindingupprocess.Claimsarelodgedwherebyalldocumentsevidencingtheclaimhavetobeproduced-andusuallytheliquidatorappointedsellsallpropertiesofthedebtorcompanyforcashoragainstsharesinothercompaniesfordistributiontothecreditorsbutthedividendprospectsforunsecuredcreditorsaregenerallyextremelypoor.Liquidationproceedingsareveryslowandcanlastseveralyears.

c) Receivership:adebentureholdermayappointaReceiver.Onhisappointmenttheassetsarechargedinfavourofthedebentureholderandthecompanycannotusetheseassetsanymoreinthecourseofitsnormalbusiness.Claimsarelodgedbutaimofthisprocedureistosatisfythedebentureholdereitherbycontinuingthecompany’sactivitiesorbysellingassetsandliabilitiestoathirdpartyortorealizethecompany’sassets.Anyremainingdividendaftersatisfactionofthedebentureholderwillbedistributedtotheunsecuredcreditors.Ofcourse,theReceivershipisnotprofitableatallfortheunsecuredcreditors.

d) SickIndustrialCompaniesAct(SICA):Enactedinordertodetecttimelysickorpotentialsickcompaniesandtohavepreventivemeasuresdeterminedbyabodyofexperts,theBIFR(BoardforIndustrial&FinancialReconstruction).AlllegalproceedingsagainstSICKcompaniesaresuspendedincludingwindingupproceedings.TheBIFRisdeemedtobeacivilcourtandwilladoptmeasuresaimingatrestructuringcapital,sellingsurplusassets,securingpropermanagement,selling/leasingunitstootherpersons.TheprocessofrevivalthroughBIFRisveryslow(even10yearsormorebutinaverage6/7years).


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Thecriteriatodeterminesicknessinanindustrialcompanyare:a) theaccumulatedlossesinthegivenfinancialyeartobeequaltoormorethanitsnetworthi.e.

itspaidupcapitalanditsfreereserves.b) theCompanyshouldhaveincurredcashlossesduring2consecutiveyearsc) theCompanyshouldhavecompleted5yearsafteritsincorporationd) itshouldhave50ormorethan50workersonanydayofthe12monthsprecedingtheendof

thefinancialyear.e) itshouldhaveafactorylicense.

Typesofcompanies1) Proprietorship(notincorporated):Oneindividualisownerofthebusiness.

Heispersonallyliable.2) Partnership(notincorporated):Partnerssharewitheachotherprofitsandlosses.3) PrivateLimited(incorporated):Limitedliabilityoftheassociates.4) PublicLimited(incorporated):Notaprivatecompanywithahigherpaid-upcapital.

RetentionoftitleSuchaclauseshouldbestipulatedinwritingwiththesealingofthecontractbutitdoesnotprovidearealprotectionagainstacquisitioningoodfaithbythirdparties.Itslegalenforcementisverydifficultandcumbersome.


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IrelandLatePaymentsinCommercialTransactionsRegulations2002

AnEUwidelawcameintoeffecton7August2002tocombatlatepaymentincommercialtransactions.ThislawwasimplementedinIrelandbyRegulationswhichprovidethatpenaltyinterestwillbecomepayableifpaymentsforcommercialtransactionsarenotmetwithin30days,unlessotherwisespecifiedinacontractoragreement.

ThenewRegulationsprovidethatunlessotherwisespecifiedinanagreedcontract,theinterestratewillbetheEuropeanCentralBankmainrefinancingrateplus7percentagepoints.TheECBratesinforceon1Januaryand1Julyapplyforthefollowingsixmonthsineachyear.Onlyoneratewillapplytoalatepayment–thatistherateinforceonthepaymentdate.Fromthe1stJanuary2009,thelatepaymentinterestrateis9.50%perannum(thatisbasedontheECBrateof2.50%plusthemarginof7%).Thatrateequatestoadailyrateof0.026%.Penaltyinterestdueforlatepaymentsshouldbecalculatedonadailybasis.TheECBratehasfallento1.25%inApril2009.However,theLatepaymentinterestratewillnotchangeuntil1stJuly.

PleasenotethatsolicitorsinIrelanddonotautomaticallyaddthisinteresttothedebt.Ifyouwishforthistobedoneyoumustadvisethemoftheamountyouwishtobeaddedinaccordancewiththeregulations

StatuteofLimitiations1957Outlinesthetimelimitwithinwhichacreditorcanchaseadebtorforoutstandingdebts.Creditorsaregivenafixedperiodoftimetochasetheirdebtors,whichisoutlinedinStatutwhichis6years.Afterthistimeitisnolongerpossibletopursuetheirdebt.

LegalActions

TheprocessforlitigationintheRepublicofIrelandisverysimilartothatoftheUK,howeveritissometimesmorelengthyandcostlytotakeactioninIreland.

Theprocessbeginswiththeissueoftwo7dayletters,eachseekingpaymentfromthedebtorpriortoformallitigation

Thereare3levelsofcourtdependinguponthevalueofthedebt

DistrictCourt–uptoEUR6,350

CircuitCourt–uptoEUR38,093

HighCourt–overEUR38,093

Shouldthedebtorfailtorespondtothe7dayletter,thenthesolicitorwillissueaCivilBilltotheCourtforserviceonthedebtor–thisprocesscantakeupto6–8weeksdependingonthelocationofthecourtinproximitytothesolicitor,andthevolumeofCourtcases

Thedebtorisallowedaperiodof21daystorespondtotheBill.IfthereisnoresponsetotheBill,thenanaffidavitofdebtisissuedtotheclient.

AffidavitofDebtThisisacompulsorydocumentinIrelandandmustbesignedbyanofficialoftheclientwhohassufficientawarenessofthedebt.Atthistimeitisalsonecessarytoconfirmtheexactamountofthedebt.

TheswornaffidavitisreturnedtothecourtbythesolicitorsandareturndatesetbytheCourt–


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thiscouldbeupto3monthsfromthesubmissionoftheaffidavit.ThesolicitorswillthenseekJudgmentandtheenforcementprocedurebeingsoncethisisissued.

EnforcementOnceajudgementisobtained,thenenforcementactioncanbetaken.Ajudgementdoesnotnecessarilyleadtoasuccessfulcollection.Theenforcementofficerwillvisitthepremisestotryandcollectthemonies.ThenormalenforcementprocedureisviacollectionbytheSheriff,buttheJudgmentitselfisalsopublishedinStubbs,apublicationwhichisreadilyavailabletoallandcontainsdetailsofalljudgmentsissued.

ItisworthnotingthattheSheriffcoverageinIrelandislimitedandenforcementisoftenaveryprolongedproceduretakingaslongas6to12months.

OncetheCivilBillhasbeenservedonthedebtor,theycanofcourse,returnaNoticeofIntentiontoDefend.ThismeansthatthesolicitorswillseekdetailsofthedefenceandthecasewillbereferredtotheMasterforahearing.Theexactroute,asintheUKdependsuponthenatureandseverityofthedefence.

LegalCostsThesewilldiffergreatlydependinguponthetypeoflegalactionnecessaryInanycase,ourexperiencedcollectorswillhaveafulldiscussionwithyouregardingcostsandtimescalesbeforelegalactioniscommenced.Certainlegalcostscanbechargedtothedebtor,e.g.somecourtcosts.Thedecisiontoallocatecostslieswiththejudgebutinmostcasesapproximately60–70%ofallcostsareforthedebtor’saccountaftersuccessfuljudgement

InsolvencyIfweestablishthatyourdebtorhasbecomeinsolventwewilladviseyouwhetherthereisanyhopeofapaymentfromyourdebtor.Wewillalsoregisteryourdebtwiththeinsolvencypractitioner.Ifitisjudgedthattherewillbedividendsatsomepointinthefuture,wecanmonitorthedebtorto

claimthedividendswhenappropriate.HoweverthereisaprocedurewhichisoperatingsoleywithinIrelandcalledanExaminership.TheExaminershiprunsforaperiodof100daysundertheprotectionoftheCourt.AnInsolvencyPractitionerorLiquidatorisappointedtoreviewthefailingbusinessandmakeproposalsforconsid-erationbycreditors.Anyproposalsagreedbythecreditorsmustthenberatifiedbythecourtandthecourtwillissueareportagreeingthesameanddetailingtheamountofanydividendpayable.


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ItalyLDCAtradiusCollectionItalycansupplyyouwithaselectedandprofessionalnetworkofthemostexperiencedlawfirmsinItalyinthejudicialcreditcollectionactivity. ThisnetworkcoversalltheterritoryandisabletomanagethelegalactionsinallCourtsdistricts.

Furtherthan merelegalassistance,ACItalycanalsoassistwithdirectcollectionactivity. Thesearemanagedbyaselectednetworkoflocalagents,whovisitthedebtorsalloverthecountryinordertocollectyourmoney. Accordingtoourexperience,thissolutionisparticularlysuccessfulformedium-lowamounts,forspecificdebtor’scategories(individualsoletraders,shops,smallcompanies)andforparticulartradesectors(e.g.food,textile,clothes,andshoes).Thelocalagents’networkcanalsoinvestigatelocallyinordertosearchanuntraceabledebtor.

OtheractionsACItalycanevaluatethesolvabilityofadebtorandthefinancialsituationofthecompanies.Toinvestigateinamoreaccurateway,wecanaddsomeextraservicesforourclientssuchasbankaccountresearch,officiallybookedgoodsresearchsuchasvehicles,crafts,estatesresearchandestimationinthepublicregisters.Alltheseelementscanhelptocreateaclearpictureofthedebtor’ssituationandwillassistinfindingthebestwaytocollectyourmoney.

InterestsWealwaysrechargedebtorwiththecalculationofinterestsfor9%ondailybasis(seeEuropeanDirective2000/35/CEE).Theinterestsarealwaysrequested,bothinanamicableandinajudicialphase.Underaculturalpointofview,unfortunately,itisratherdifficulttogetthefullamountofinterestsfromadebtor.ItisabsolutelynotpartofthementalityoftheItaliandebtors,alsobecausemostpartoftheItaliancompaniesthatcollectthemoneybythemselveshaveneverrechargedadebtorwithinterests.Oftentheytoleratesomedelaysinthepaymentoftheinvoices(seeparticularsectors,suchasclothes,shoes,andfood).Interestsareoftenconsideredamatterofnegotiationbetweendebtorsandcollectors.

LegalphaseTheItalianjuridicalsystemisatypicalexampleofacivillawsystem.ForcreditcollectionswerefertotheItalianCivilCode(CodiceCivile)whichcontainsandimplementsalsoalltherulesaboutcommerciallawandCivilActionCode(CodicediproceduraCivile)whichdisciplinestheciviltrialinItaly.Furthermore,thecorpusofthelawsconcerningtheinsolvencyproceduresisrelevant.Thejudicialorganizationforeseesseveralkindsofjudges,accordingtotheamountsofcredit(JusticeofthePeace,One-Judge-Tribunal,Tribunal).Traditionally,anylegalactionstartsontheCourtdistrictofthedebtor.

TheordinaryCivilActionisrarelyusedtocollectacreditfoundedonawrittendocument,suchasaninvoice.Theproceedingistoolong,whileitcanlastforsomeyears,anditistooexpensive,alsobecauseofthethefeesofthelawyerthatisengagedinaseveralhearingsanddifferentactivitiessuchaswitnessexaminations,evidenceanalyses,etc..

ThemainpurposeoftheordinaryCivilActionisprimarilytodeterminetheexistenceofthecreditthatisdueandtherelationsbetweenparties.Incasetheduecreditisbasedondocuments,thelawallowustouseafasterandcheaperprocedure:thesummaryjudgement(decretoingiuntivo).Thisrequiresonlylimitedinterventionfromajudge,exceptwhenthedebtoropposestothepetition.ThesearethemostcommonstepstocollectcreditinCourt.

Legalactions(typeandcosts)First,thelawyersendsaremindertothedebtor,aregisteredletter,sothereisproofofdelivery.Withineighttotendaysfromthereceiptofthereminder,thedebtormustpay.Ifhedoesnotpayorhedoesnotreply(e.g.disputingthedebt)thejudicialphaseisstartedwiththedecretoingiuntivo.


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Documentsneeded:• Copyofunpaidinvoices• Copyoftransportdocumentssignedbydebtor• AbstractfromAccountancyBookcertifiedbyapublicnotary(ifwedonothavethese

documents)

secondlythelawyerwritesthePetitionofInjunctiondecree,whichhastobesignedbycreditorontherightside,inthebottom,aspowerofattorneydocument.Furthermore,thepetitionhastobefiledinChancerywithallencloseddocumentsasevidence.Thejudgeexaminesthequestionandifheagreestoitscorrectness,heissuesanInjunctiondecree.Thisprocessmaytakeuptotwomonths.

TheoriginaldocumentsaretakenintotheChanceryandanauthorisedcopytonotifythedebtor.Forthisreasonisitofutmostimportancetoknowtheexactaddressofthedebtor. Thelawyermustdeliverthedecreewithin60daysfromtheissuingofdecree.Whendebtorreceivesthedecree,hehas40daystomakeanopposition.Ifthedebtorfilesforopposition,theciviltrialstarts.Itisaverylongprocess,regardingallthephasesforeseenbytheItalianCode.

Whenthereisnooppositionraised,thedecreebecomesexecutiveandthecreditorcanclaimfortheattachmentofgoodsofthedebtor. TheexecutivesealisaddedtothedecreeandtheChancerywillissueaWritofexecution(precetto). Bothdocumentshavetobenotifiedtothedebtor.Within90daysthecreditorhastostartforcedexecution,inItalianpignorament.Ifthedebtordoesnotpayordoesnotmakeoppositionwithinfivedaysfromreceivingthedecree,thelawyerbringsintheexecutiveInjunctiondecree,theorderofinjunctiontopayandproofofnotifiestoabailiff.

Ifthecreditorpossesseschequesorpromissorynotes,whichareunpaidnorrejected,hecanstartdirectlywiththeWritofExecution,becausethesenotesareexecutivetitles.IfadebtormakesanoppositiontotheInjunctiondecreeortotheWritofexecution,thesummaryjudgementissuspendedandanordinarycivilactiontakesplace.Thecreditorhastoanswertotheoppositionwithaproperstatementofdefence(comparsadicostituzioneerisposta.)

Duringthefirsthearing,thejudgewillevaluatethestatementsofbothpartiesandthedocuments.Hecandecidetodeclarethetemporaryexecutionoftheinjunctionopposed(provvisoriaesecuzione).Inthiscase,thesummaryjudgementprocesswillstartagainwiththenextsteps(writofexecution,attachment,etc.)whilethecivilactiontakesplaceinparallel.Whenthecreditorgetsthetemporaryexecutionfromthejudge,hehasalmostwonthelegalactionalready,andtheordinarycivilactionwillendshortlythereafter. Thecostofeachlegalactionstrictlydependsontheamountofthecredit,followingaverycomplexsystemoftariffswithmanyrangesanddifferentactions.

PowerofattorneyAgenericpowerofattorneycannotbeusedforallkindsoflegalactionsinItaly.Itmeansthatforeachactionthepetitionhastobesignedbythelegalrepresentativeofthecreditor. TheproxymustbeinItalian.ACItalycanprovidetranslations,butheoriginaldocumentwiththesignaturemustbealwaystheItalianversion.

ExecutionofajudgementACItalycanproceedwiththeattachmentofordinarygoods,suchasestatesandproperties,ifitisknownwheretheyare.Theattachmentofestatesisareallyexpensivemeasureanditcantakeseveralyearsbeforethisprocessisended.Thisprocedureissolelyusedforhighamounts,above100000EUR.Isitalsopossibletoattachthesalaryoraretirementpensionofadebtorfor16%eachmonthuntilthepaymentofthecredit,involvingtheNationalRetirementInstituteortheemployer.


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Collectioncosts(Chargedtodebtor)Adebtorisalwayschargedwiththecostspaidforthelegalaction.Inparticularcases,thecreditorhastopayasmallamount.Itiscommonthatthepaymentsofthelegalcostsarematterofagreementtostopthelegalprocedurewiththeimmediatepaymentofprincipalandinterests.Ingeneral,ACItalycollectsoncustomersinvoicesonlyintheamicablephase.Duetocontractlaws,thecollectionconventionissignedbetweenACandthecreditors,soanotherpersoncannotbelinkedtothetariff. Thelawgenericallyallowsustorequestitbutwithoutspecifyingtheamount,itmentionsthecriteriaoftransparencyandproportionalityandthelegaltariffoflawyers,itisnotvalidanymore.Therearestrongculturalroadblockstopayforthecollectioncosts,andtheyarestrongerthanthedislikeofinterestsforlate-paying.WecannotclaimtheamicablecostsinCourt,thereisnojurisprudenceinit.

InsolvencyproceduresThemostdiffusedinsolvencyproceduresinItalyare:bankruptcy(fallimento) andjudicialcompositionwithcreditors (concordatopreventivo)

BankruptcyInItaly,notalldebtorscanbedeclaredbankrupt.AccordingtoItalianlaw,smalldebtorslikeindividualshopsandthesmallscalefarmerscannotbedeclaredbankrupt.Thiscountsalsoforsmallfirmsinwhichtheownerisalsothemanagerandinwhichthepersonalworkweighsheavierthanthevalueofthegoodsinvolved.Furthermoreyoucanaskforbankruptcyofadebtorifyourcreditisabove30.000EURandthedebtorhasaturnoverofmin.200.000EUR.LastrequisiteisthatthedebtorshouldnothavebeencancelledfromtheChamberofCommerceformorethan1year.Theproceduretakesalongtime,someyears.Thejudgeandtheinsolvencypractitionerscheduleahearingtoreceivealltheclaimpetitionsforlodging.Afterthishearing,thepetitionsarelaidandyouhavetowaitforalongtimefortheiracceptance,whichmakesthecostshigher.Finally,thedebtsituationisfixedwithajudge’ssentenceandtheverylongprocedureoftheliquidationofthebankrupt’sassetscantakeplace.

CompositionwithcreditorsJusttoavoidbankruptcy,thedebtorcanaskdirectlytotheCourttobeadmittedtothisinsolvencyprocedure.Thedebtor’spetitionmustincludehowmuchtheycanpaytothecreditorsinpercent-age.Thisofferhastobebeapprovedbythemajorityofthecreditors(consideringtheamountofeachcredit)andshouldthenbevalidatedbythecourt.Afterthat,theinsolvencypractitionerstartstoliquidatetheassetreferringtothepaymentplan.

TypeofcompaniesInItaly,therearetwomaintypes:

Personcompanies,unlimited:SS,SNCorSAS

InaSSorSNC,thepartnersareunlimitedresponsible,foraSASonlythedeclaredunlimitedpartner.

Capitalcompanies,whicharelimited:SRL,SPA,SAPA

Inthisgroupthepartnerscannotbelinkedtothecompany’ssituation


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LuxemburgLDC

AmicablephaseAtradiusCollectionsLuxemburgcansupportyouwith collectionofyourdebts.Thecollectionprocessis managedbyaselectednetworkoflocalagents,whovisitthedebtorsalloverthecountryinordertocollectyourmoney. Accordingtoourexperience,thissolutionisparticularlysuccessfulformedium-lowamounts,andforspecificdebtor’scategorieslikeindividualsoletraders,shops,smallcompaniesandforparticulartradesectorse.g.food,textile,clothes,andshoes.Thelocalagentsnetworkcanofferlocalinvestigativeresearchtofindanuntraceabledebtor.

LegalphaseAChasanetworkof selectedandprofessional lawyersexperiencedinthejudicialcreditcollectionactivity. ThisnetworkcoversalltheterritoryandisabletomanagethelegalactionsinallCourtsdistricts.

InformationaboutfinancialhealthofthedebtorACcanalsoevaluatethesolvencyandthefinancialsituationofthedebtor.Forinvestigationsinaaccurateway,wedeliverextraservicestoourclientslikeresearchonbankaccounts,oronofficiallyregisteredgoods,suchasvehicles,equipmentorrealestate.Alltheseelementscanhelptogainaclearpictureofthedebtor’ssituationandadaptthebestwaytoacttocollectyourmoney.

Interests&PenaltyClause

Interests:AmicablephaseInterestscanberecoveredfromthedebtorbasedontheagreedtermsandconditionsofthesale.Theclaimofinterestsandapossiblereductioncanbetheobjectofnegotiationbetweenthecollec-torandthedebtor.

LegalphaseAgain,interestscanberecoveredaccordingtotheagreedtermsandconditionsofthesale.Iftheinterestsaredisputed,theCourtwilldetermineifthedebtorhasapprovedtheagreedtermsandconditionsofsale.Whentheinterestsforeseenbytheagreedtermsandconditionsofsalecannotbecharged,itispossibletorecoverfromthedebtortheinterestsatthelegalrateorattherateaccordingtothestatuteof18.04.2004(basedontheEuroeanDirective2000/35/CEE).Therateofthelegalinterestsisfixedeveryyearbythegovernment(acommunicationintheOfficialJournalofLuxemburg);therateoftheinterestsbasedonthestatuteof10.08.2004iscommunicatedevery6monthsbyacommunicationintheOfficialJournalofLuxemburg.

Penaltyclause

AmicablephaseThepenaltyclauseasforeseenintheagreedtermsandconditionsofasalecanberecoveredfromthedebtor;however,theuseofthepenaltyclauseandapossiblereductioncanbetheobjectofnegotiationbetweenthecollectorandthedebtor.

LegalphaseThepenaltyclauseasforeseenintheagreementofthesale,canberecovered;however,theCourtcanreduceorcancelthepenaltyclauseifthecreditordoesnotprovethe(written)acceptanceofthetermsandconditionsofsalebythedebtor.

Legalphase

ApplicablelawLegalactionstorecoverreceivablesarebasedonthegeneralprinciplesaccordingtotheCivilCode(CodeCivil),theCommercialCode(CodedeCommerce) andtheJudicialCode(CodedeProcédure


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civile). Particularrulesoflawcanbeusedinspecialcircumstancesorspecialcases.Themostcommoninsolvencyprocedures,bankruptcy,composition,controlledadministration,aregovernedbyspeciallaws,listedintheCommercialCode.

JudicialorganizationTherearedifferentcourtsaccordingtotheamountoftheclaimandthecapacityofthedebtor:

CourtCapacityDebtorJusticeofthePeaceMerchantornon-Merchant

DistrictCourt(CommercialChamber)Merchant

DistrictCourt(CivilChamber)Non-merchant

AccordingtotheprinciplesoftheJudicialCode,theactionagainstthedebtorinpaymentoftheclaimisbroughtbeforethecompetentcourtinthedistrictwherethedebtorhashisplaceofresidenceorhisregisteredaddressincasethedebtorisacompany.

DocumentsneededforlegalactionDocumentsneededforlegalaction:• Copyoftheinvoices• Copyofthetermsandconditionsofsale• Copyoftheformalnoticesand/orreminderssenttothedebtor

Itishighlyrecommendedtoproducealsoproofoforders,proofofdeliveryofthegoodsandotherwrittendocumentsignedbythedebtorinwhichheacknowledgestheclaim,e.g.therequestofpaymentbyinstalments.

Legalproceedings

RemindersenttodebtorbylawyerThefileissenttothelawyer,whousuallysendsaremindertothedebtor. Thedebtorhas15daystopay.Ifhedoesnotcomplyorifhedoesnotreact(e.g.dispute),thelawyerwillstartlegalproceedings.HewilldraftthetextoftheSummonsandwillcommunicateittothecompetentbailiff.

SummonsbybailiffTheannouncementoftheactioninpaymentoftheclaim(Summons) isnotifiedtothedebtorbythebailiffwhowillsummonthedebtorforthecompetentcourtinthedistrictwherethedebtorhashisplaceofresidenceincasethedebtorisapersonorhisregisteredaddresswhenthedebtorisacompany.

Introductoryhearing&judgementThecaseispresentedtotheCourtusingtheprocedureofSummaryJudgement.TheCourtevaluatestheevidenceandexamineswhethertheclaimisnotseriouslydisputed.

IftheCourtacceptstheclaim,itrendersasummaryorder (ordonnancederéféré),thisordercanbesubjecttoanappeal.

IftheCourtpartiallyacceptstheclaim,itrendersasummaryprovisionalorder

Evenifthisprocedureiscalledsummary, itcantakeseveralmonthsbeforetheCourtrendersitsjudgement,becauseitwillonlyhandlethecaseinduecoursewhenalltheoldcasesandthecaseswithpriorityhavebeendealtwith.


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IftheCourtrefusestheclaim,theclaimhastobeintroducedtotheCourtbyanordinarylegalprocedureafteraSummonsbybailiff. Thejudgementinthiscasecanbesubjecttoanappealandthereforeacaselikethiscantakealotoftime,itcanlastevenseveralyears.

AveragedurationofalegalprocedureThetimeframetogetajudgement,withoutenforcement,is4monthsonaverage.Ifthecaseisdisputedorincaseofappeal,itcantakeuptoseveralyears.

CostsoflegalactionCostsofthelegalproceedings

SummonsandinscriptionintheCourt’scalendarapprox250EUR.Thetextofthesummonsisdraftedbyanin-houselawyer.Indemnityofprocedure:theamountisdecidedbytheCourt.Thesecostsarerechargeabletothedebtor,exceptiftheCourtdecidesotherwise.

Costsandfeesoflegalrepresentation

Thecostsdependontheimportanceofthecase,thecomplexityofit,thedurationandthetasksperformedbythelawyer. Thesecostsarenotrechargeabletothedebtor.

SummaryprocedureThereisalsoasummaryprocedurebeforetheJusticeofthePeacetoobtainpaymentinLuxemburg.Fortherecoveryofreceivablesthisprocedureisnotappropriatebecauseofthefollow-ingdisadvantages:• Theclaimmustbeundisputed• Thewholeclaimcannotexceed10.000EUR

Particularformalconditionsabouttherequestformyouhavetofillin,proofofthecapacityofthepersonsigningforthecreditor,documentstoproduce.

Ifthecreditor’sclaimisrejectedbytheJusticeofthePeaceorifthedebtorhaslodgedanappealagainsttheinitialdecisionoftheJusticeofthePeace,thecreditorhastouseoneoftheproceduresmentionedabove.

PowerofattorneyInLuxemburg,youneedaPowerofAttorneyforeachfileandithastobesignedbythelegalrepresentativeofthecreditor. Theproxymustbedraftedinthelanguageofthelegalprocedure(French).

ExecutionofajudgementTheenforceablecopyofthejudgementiscommunicatedtothebailiffwhowillofficiallynotifythejudgementtothedebtor.

Thedebtorhas40daysfromthisnotificationtolodgeanappealagainstthejudgement.

Assoonthisperiodoftimeisexpiredwithourappeal,thejudgementisdefinitive.

Thebailiffsendsalegalnoticetopaytothedebtor.Ifthedebtordoesnotcomply,theenforcementofthejudgementbybailiffcanbegin.Intheseconditions,thebailiffcanproceedwiththeattachmentofdebtor’smovablepropertyandapublicsaleofthesegoods.Ifthedebtorownsrealestate,thebailiffcanproceedwithanattachment.Ifthedebtorstillrefusestocomply,therealestatewillbesoldinapublicsalebyapublicnotary.

Collectioncosts(Chargedtodebtor)

CostsofthelegalproceedingsCostsofthelegalproceedings


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SummonsandinscriptionintheCourt’scalendarcostapprox.250EUR.Thetextofthesummonsisdraftedbyanin-houselawyer.

Indemnityofprocedure:theamountisdecidedbytheCourt.Thesecostsarerechargeabletothedebtor,exceptiftheCourtdecidesotherwise.

Costsandfeesoflegalrepresentation

Dependontheimportanceofthecase,thecomplexityofit,thedurationandthetasks

performedbythelawyer. Thesecostsarenotrechargeabletothedebtor.

CostsofenforcementofajudgementCostsofenforcementofajudgementbybailiffarealwaysrechargedtothedebtor.

RetentionoftitleThestatuteof31.03.2000hasintroducedthepossibilityinLuxemburgtoapplytheretentionoftitle.

Theretentionoftitleisopposabletothirdpartiesincaseofbankruptcyandcompositionafterbankruptcybutnotinthecaseofcontrolledadministration).

Theconditionsofopposabilitytothirdpartiesareverystrict:• Theclauseofretentionoftitlehastobeestablishedbyawrittendocumentatthelatestatthe

deliveryofthegoods.• Theclausehastobeacceptedbythebuyer,thecreditorhastobeabletoproduceproofofitif

necessary.• Thegoodshavetobemovableandhavetobephysicallystillinpossessionofthebuyer

Incaseofbankruptcy,theactionbythecreditortoactivatetheretentionoftitlehastobeinitiatedtothetrusteewithin3monthsafterthejudgementthatdeclaredthedebtorbankrupt.Ifthecreditoractivatestheretentionoftitleafterthis3monthperiod,hisactionwillbeforfeited.Theretentionoftitleisnotasuccessfulprocedure:manytimestheretentionoftitleprocedureisused,atleastoneconditionisnotsatisfied.

Insolvencyprocedures

BankruptcyOnlyadebtorwiththequalityofamerchantcanbedeclaredbankruptinLuxemburgAtrusteeisdesignedbytheCommercialChamberoftheDistrictCourtofthedistrictwherethedebtorhashisplaceofresidence(debtorisaperson)orhisregisteredaddress(debtorisacompany).

Thedocumentsneededtolodgeaclaimare:1. Copyoftheinvoices2. Copyofthetermsandconditionsofsale3. Statementofaccount4. Ifrequestedbythetrusteethepowerofattorneydulysigned(seechapter4.9.5).

TheclaimhastobelodgedtotheClerkoftheCommercialChamberoftheDistrictCourtwithinthetimeframementionedbytheCourtinthejudgementpronouncingthebankruptcyandnotlaterthantheinventoryofverificationoftheclaims.

Afterverification,theclaimsareacceptedordisputedbythetrustee.TheCommercialChamberoftheDistrictCourtwillsetahearinganddecideincaseofdispute.Theaveragedurationofthehandlingabankruptcyisonetofiveyears,dependingonseveralfactors.


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CompositionOnlyadebtorwiththequalityofamerchantcanbegrantedacompositioninLuxemburg.AcompositionrequestispresentedbythedebtorsimultaneouslyattheCommercialChamberoftheDistrictCourtinthedistrictwherethedebtorhashisplaceofresidence(debtorisaperson)orhisregisteredaddress(debtorisacompany)andattheHighCourtofJustice.Therequestincludesalistwithallthecreditors.

Afterreviewingthecase,theCourtwillacceptorrejectthetemporarystay.Iftherequestisaccepted,apractitionerisappointedbytheCourt.

ThecreditorsarecalledtoahearinginCourttogivetheiropinionabouttherequest.Adetailedreportisdrafted.TheCourtwilljustifyitsdecisioninadetailedmanner.

ThewholecaseisthensentovertotheHighCourtofJustice.Itcanonlygrantthedefinitivestaytothedebtorifamajorityofthecreditorshaveagreed.TheHighCourtofJusticedeterminesthedurationofthedefinitivestay.Thisprocedureisrarelyused.

ControlledAdministrationAnymerchant,whosecreditisweakened,canasktheCourttogranthimtheControlledAdministrationtoreorganizehisbusinessortohelpliquidatehisassets.AmotivatedrequestispresentedtotheCommercialChamberoftheDistrictCourtinthedistrictwherethedebtorhashisplaceofresidencewhenthedebtorisapersonorhisregisteredaddresswhenthedebtorisacompany.Iftherequestisaccepted,ajudgeisappointedtodraftareportwithinatimeframefixedbytheCourt.Afterthesubmissionofthereportbythisjudge,theCourthearsthemerchantandrejectsoracceptstherequest.IftheCourtgrantstheControlledAdministrationtothedebtor,alltheassetsofthemerchantareputunderthecontrolofajudgespecificallyappointedbytheCourtandwhohastodraftinatimeframefixedbytheCourtadetailedplanofreorganizationorliquidationoftheassetsofthedebtor. Thisplaniscommunicatedtoallcreditorswhohavetonotifywithin15daysiftheyagreeordisagree.Ifamajorityofcreditorsagree,theCourtwillapprovetheplan;otherwisetheplanisrefused.

Typeofcompanies

SNCSociétéennomcollectif

PartnershipUnlimited

SCSSociétéencommanditesimple

Oneormoreassociatescommanditésandoneormorecommanditaires

Associatescommandités

Unlimited

Associatescommanditaires

Limitedtotheamountoftheinvestment

SASociétéanonyme

JointStockCompanyLiabilitylimitedtocapitalinvestedintothecompany

SARLSociétéàresponsabilitélimitée

Limitedliabilitycompany,liabilityislimitedtotheportionofthecapitalinvested


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MexicoAmicablephasePaymentremindersinwrittenformandcollectioncallsarerecommendedtostartcollectionefforts.Inthisstagetheobjectiveis tofindoutwhetheradebtorisinterestedinanamicablepaymentagreement.Visitstothedebtordomicilearerequiredinmanycases,tomakeastrongerdemandforasettlementatacertaindate. Itallowsthedebtortonoticethatlegalactions willbetakenincaseofnon-payment.ACadvisesoutofcourtsolutionsasfirstandbestsollution, duetothe averagelawsuittermsinMéxico,whichisonetothreeyears.AtradiusCollectionsMexicocansupportwiththedirectoutofcourtcollectionactivityincludingthevisitstothedebtordomicile.WithinMexicoCityvisitscanbedonebyanexperimentedAtradiusCollector,visitstodebtorsinsomeotherstatesofMéxico,CentralandSouthAmericaarecarriedoutby agentswithin ournetwork.

DisputeItisverycommoninMexicothatadebtordisputesadebt,inmanycasesthedisputesarenotjustifiedanddebtorstakethatargumenttoavoidpayment.ACMexcicorecommendstocreateapaymentagreement,makingareductiononthedebtamountifpossible.Itisadvisedtofollowthissolutioninsteadofstartingalegalprocedure.Beforestartingalegalproceduretocollectadisputeddebt,itisnecessarytomakeanexhaustivereviewofallthedebtdocumentswhichthecreditorhas,toallowACMexicotomakearecommendationregardingthesuccessrateofthecollectionandifalegalprocedurecouldbecosteffective.

LDCACMexicomakesuseofaselectedandprofessionalnetworkofthemostexperiencedlawfirmsandattorneysinthejudicialcreditcollectionactivity. ThisnetworkcoversthemainstatesinMexico,MéxicoCityandisabletomanagethelegalactionsinallCourtsdistricts.Lawfirmsandattorneyscanprovidelegalassistanceanddirectcollectionactivity,visitdebtors inordertocollectyourmoney. Thelocalagents’networkisable toinvestigatelocallytofindanuntraceabledebtor.

InterestsInamicablephaseweonlychargethedebtorwiththecalculationofinterestsifthecreditorisrequestingthis.Inthejudicialphasetheinterestsarealwayscharged.Thepercentageofinterestthatcanberequesteddependsonthearrangementsthecreditorandthehavemade.Ifnodefaultinterestratewere agreedupon,thebasisforcalculationisMexico’sCommercialCodewhichstatesa6%annualinterestrate.Unfortunately,itis common practicebeacuaseofbusinessculturenottopayintrestandthereforedifficulttogetinterestspaymentfromadebtor,particularlyonthecollectionamicablephase.Mexicandebtorsknowthatinanoutofcourtcollectionactivityitisnotcompulsorytopayinterest.Frequently,theinterestratesareconsideredamatterofnegotiationbetweendebtorsandcollectors.

LegalphaseLegalactionsThereareseveraloptionstopursueacollectionincourt,mainlydependingonhowthecommercialtransactionwasconductedanddocumented.Youcaneitherfileacomplaintforanordinaryproceedingoroptforanexecutiveproceeding.Ifanexecutiveproceedingisnotavailable,thereisapreliminaryproceedingavailablethatcanfurtherenabletheexecutiveproceeding.

Ordinaryproceeding.

Itmainlyworksforcaseswherethecreditorhasnotgotacreditinstrument(promissorynotes,checks,billsofexchangedulysigned)oraspecialtitledocumentandtherefore,isnotallowedtoconductforimmediateinterimmeasurestosecureproperexecutionofafinaljudgement.Someofthemostimportantfeaturesoftheordinaryproceedingsincludethefactthatitisarelativelylongerprocesswithmoretimeandopportunityforthepreparation.Thisalsoappliestotheadmissionof


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evidenceincourt,furthermore,itprovideswideropportunitiestocounterclaim.Executiveproceeding

Manycreditorfinditmorereliableandcomfortabletosuewithanexecutiveactionratherthanthroughanordinaryproceeding.Firstofall,thespecialtitleonwhichtheproceedingisbased,createsthepresumptionthattheclaimexistsandthatitislegallyvalid.Thecreditorturnstheburdenofprooftothedebtor.

Secondly,thesametitlegivesapreliminarycertitudeoftheplaintiff’sclaims,thusallowinganimmediateexparteprejudgementattachmentorderwithoutplacingbond.Thirdly,itisratherasummaryproceedinginwhichevidenceadmissionandproposalsarelimitedtotheinitialstagesthroughcomplaintandanswer’sbriefs.Therefore,thisisashorterandfasterproceedinginwhichafinalresolutionisusuallyrenderedinlesstime.Thedrawbackcanbethatthisproceedingisnotalwaysavailabletoallcreditorssincetheymustaccountwithaspecialtitledocument,e.g.acreditinstrument,ajudgement,orajudicialacknowledgmentofdebt.

Preliminaryproceedings

Themainpurposeofapreliminaryproceedingwithinthecollectionprocessistoobtainajudicialacknowledgmentofdebtthatwillenableanexecutiveactioninsteadoffollowinganordinaryproceeding.Itusuallystartswithaformalpetitionfromthecreditorinwhichfactsrelatingtothedebtarestatedandasubpoenaorcitationforthedebtorisrequested.Thecourtwillsetupahearingdateinwhichthedebtorwillhavetorespondastowhetherheowesthecreditorornot.Ifthedebtorfailstoshowupatthetimeofthehearing,thejudgewillconsiderthestatedclaimaslegallyacknowledgedbythedebtor. Thesupportingdocumentstotheacknowledgeddebtwillconstituteacreditinstrumentthatcanbeenforcedthroughanexecutiveproceeding.

Legalphase(Process)TopursuelegalactionsinMexico,thefollowingdocumentsarerequired:• originalunpaidinvoices• ifexisting,originalofpromissorynoteorunpaidcheck(s)• statementofaccountcertifiedbytheCreditor’sCompanyFinanceMangeroraccountant.• originalpurchaseorders• originalBillsoflanding• commercialContract,ifexisting• originaldocumentsoftransportonwhichthedebtorhassignedforthemerchandisereception• powersofattorney

NotethatifthedocumentsarenotwritteninSpanish,aproperandcertifiedtranslationofalldocumentsneedstobeprovided.

Thegeneralprocessofcommerciallitigationiscomprisedoffivemainstagesforexecutiveproceedingsandordinaryproceedings.Themaindifferenceinthesetwotypesofproceedings,istheshorterorlongerperiodsoftimeavailabletoparties.

Mainfeaturesofeachstageorphasearethefollowingconsideringacontestedlawsuit:

Exhibitionstage

Fileaformalcomplaintandproperserviceofprocessupondefendant.

Probatorystage

InMexico,anypieceofevidencethatmightsupportthecauseofaction(documents,witnesses,experts,etc.),mustbefirstproposedtothecourt(askedforitsadmission)foritslaterrendering.ItisimportanttoconsiderthatinMexicothereisnopre-trialdiscoveryphaseorproceeding,apartycommencingalawsuitwillneedtohaveeverythingreadyuponfilingitsclaim.


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Conclusionstage

Afterallevidencehasbeenrenderedandtheprobatorystagehasended,partiesaregivenaperiodtomakeallegations.Aftertheallegationperiod,thejudgewillhavetodecideitscase.

Objectionstage

Afterajudgementhasbeenrendered,thecredotirhastimetofileapetitionforanappealprocess;bywhichtheproceedingsorthejudgementitselfcanbereviewedbyaCourtofAppeal.

Executivestage

Thefinalstepinanyproceedingisexecutingthejudgement.Thisisonlypossiblewhenthereso-lutionisfinal(noappealpending).Generallythedebtorisgrantedaperiodoftimetovoluntarilycomplywiththejudgement.Aftertheexperationofthisperiod,theexecutionprocesswillbegin,startingwiththeseizureofdefendant’spropertyandsalebyjudicialaction.

PowerofattorneyTopursuelegalactionsinMexico,yourrepresentativemustbelegallyappointedtoactonyourbehalfthroughaformalpowerofattorney.PowersofattorneyinMexicomustbecarefullydraftedandwillhavetostrictlycomplywithMexicanlawsonissuanceofpowersofattorney.

Someofthebasicrequirementsinclude:• ThecertificationandattestsbyaNotaryPublic. Twomainpurposes,thecompanygranting

powerofattorneywasdulyformedandislegallyexisting;thattheindividualactingonbehalfofthecompanyhasproperrepresentationandauthoritytodelegatespecialandgeneralpowersofattorney.

• Thepurposeandextentofthepowerofattorney.Itmustdeterminedinprecisemode,especiallyforlawsuitsandcollections

• LanguageApowerofattorneyistobeexecutedinSpanish,orprovidepropertranslationofalldocumentspertainingtothesame

• Authenticationandlegalizationofpowerofattorney.Notary’ssignatureandcertificationmustbevalidisedbyaGovernmentofficial,withanApostilleforsuchanofficialcertification

• FilingItisrecommendedthatgeneralpowersofattorneyarefiledinthePublicRegistryofCommerce,inthecityorstatewherethepowerofattorneyisgoingtobeused.

ExecutionofajudgementACMexicocanproceedwiththeseizureofordinarygoods,suchasestatesandproperties(ifthereareany),incasethelegalresolutionisfinal.Weadvisetotoconductasearchregardingthedebtor’spropertiesbeforestartingalegalprocedure.ThisallowsACandthecreditortohaveanideaofcollectionpossibilitiesandwhetherthecasecouldbecosteffective.

Collectioncosts(Chargedtodebtor)Tofilea case costsmoney, courtproceedingswillgenerateevenmoreexpenses.Thesecostsrelatefirstlytoobtainingandexecutinganattachmentorder,includingalltasksnecessaryforproperseizureofadebtor’sproperty;andsecondlytopreparealldocumentationandevidenceingeneralforcourt.Otherconsiderableexpensesincludetravellingtoothernearbycities’CourtsofAppealsandDistrictCourtsincaseofparallelproceedingsLegalcostswithinaLegalProcedurecanalwaysbeclaimedtothedebtor,unfortunatelytheyareusuallynotapprovedbythejudge.Itoftenbecomesmatterofnegociationswhowillpaythelegalcoststohaltthelegalprocedurewiththeimmediatepaymentofprincipalandinterests.AmicablecostscannotbereclaimedinCourt.

StatueoflimitationThestatuteoflimitationsforenforcementofcommercialtransactionsinMexicoisoneyearforretailsalesandtenyearsforwholesale.Oninternationalorcrossbordersales,thestatuteofLimitationsisfouryearsaccordingtotheViennaConvention.


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ForenforcingcheckstheStatuteofLimitationsissixmonthsafterthedebtor’sbankrejectionduetoinsufficiencyoffunds,consideringthatsuchcheckswerepresentedwithinthelegalperiodofuptothreemonthswhenthedrawerisinMexicoandthedraweroutofthecountry;onemonthwhenbothpartiesarewithinthecountrybutindifferentcities;andfifteendaysonoperationsmadelocally.

ForpromissorynotesandbillsofexchangetheStatuteofLimitationsisgenerallythreeyearsaftertheaccountisoverdue,andfouryearsunderthesameconditionsforinternationalpromissorynotesandbillsofexchangeexecutedinaccordancetotheUnitedNationsConventiononInternationalPromissoryNotesandInternationalBillsofExchange.Besideslegalconstraints,collectabilityhasmuchtodowithhowfastouractionsare,andhowfasttheclaimispursuedwhencomparedwithothercreditors.UndercapitalizedbusinessesarecommoninMexico,sothefewassetsacompanyhastopayitsdebtswith,willbeallocatedtothosewhoseizeassetsfirst,andexecuteuponthem.Inaddition,itiscustomarythatdebtorsinMexicoveryeasilytransferthecompany’sassetstoanotherbusinesswithoutaproperliquidationprocess.

ExpectedtimeframeAnon-complexcontestedcommercialcasewilltakeapproximatelyonetotwoyeartoresolve,withoutaddinganyappealprocesswhichcouldadupanotherninetotwelvemonths.Thistimecaneasilydoubleinacomplexcommercialdisputeoracollectioncaseinvolvingalargeamountofmoney. Thetimepointedoutfornon-complexcasescouldalsobeslightlyincreasedincertainjurisdictionswherethejudicialsystemhasbeenratedbelowthecountry’saverageperformance.

MiscellaneousinformationAlthoughawrittenagreementisnotnecessaryinMexicotoconsideracommercialtransactionorarelatedcontractasvalidandenforceableincourt,documentedevidenceisgoingtohelpyoubringastrongercaseuponcollection.

Weadvisestronglytoaccompanyyoursalewithaformalwrittencontract,oratleasttotrytosupporteverydetailaboutthetransactionwiththeuseofrelevantdocuments,detailssuchas:• thedebtor’sidentity• termsofsale• fulfilmentoftheparties’obligations

Suchconditionscanbeachievedbyimplementingthefollowing:

Creditapplication

Thisrepresentsthemostessentialdocumenttosupportourclaim.Itwillbeimportanttoincludethetermsofsale,consideringConventiononContractsfortheInternationalSaleofGoods(CISG)aswellasMexicanlaw;anddebtor’sidentity,includinginformationonauthorizedpersonneltomakepurchaseorders,andpersonalguaranteesbykeyshareholders.Anoriginalsignedcopyofsuchanapplicationmustberequestedatsomepointduringtheinitialstagesofthetransaction.

Purchaseorders(PO’s)

Equallyimportantistohavedocumentsthatprovethatcertaingoodswhererequested,thoroughlyspecified,thatbuyerhaspromisedtopayoncertainterms,andlatterreceivedsuchgoodsonaspecificlocation.SuchPO’sareconsideredifsubmittedandsignedbyappropriatepersonnelasauthorizedinthecreditapplication,andmustberequestedbyfaxormail.ThecarriercanalsohelprequesttheoriginalsignedPO.

Receiptofgoodssold


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Thisrequirementisfulfilledbyhandlingandrequestingaproperbillofladingbythecarrier.Itisimportanttoinstructthecarriertospecifythedateofdelivery,andtoobtainthefullnameofthepersonreceivingthegoods,besideshissignature.Ifthereisnocarrierinthepicturebecausebuyeristakingcareoffreightortransportation,areceiptforsuchgoodsmuststillbeconsidered.Promissorynotes

Itisagoodideatohavedebtorssignpromissorynotes(pagarés) forpastdueaccounts.Thishelpsbylimitingdefensiveargumentsandexcusesadebtormayhaveinrespondingtoaclaimincourt.Thisalsoenablesacreditortoobtainanimmediatewritofattachmentuponfilinghiscomplaint.PromissoryNotesareoftensignedorgrantedbycompanies,butonlyguaranteedbothbyindivi-dualsandcompaniesasanunconditionalguaranteeendorsement.Thegrantorofthislastdeviceisjointlyandseverallyliableforthedebt,andcanbesueddirectlyregardlessoftheactionagainsttheoriginaldebtorbeingexhaustedornot.


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NetherlandsAmicableAtradiusCollectionsfirstaimiscollectingoutstandingdebtsinthefastestandmostefficientamicablemannerAtradiusCollectionsprovidescustomerswithwellmanaged,goodskilledanddedicatedteamsofcollectors.Eachcustomerwillbeservicedbyasolededicatedcollector. Thecollectorswillbeontopofeachhandledfileandarewelleducatedandtrainedtoputtheutmostpressureondebtorsinordertomakethempaytheoutstandingamounts.Ifnecessary,thecollec-torscanbeinformedandadvisedbytheDutchLegalteam,whichconsistsofwellexperiencedlegalcollectorsandeachofthemhaveamasterdegreeinLaw. Thededicatedcollectorscontactdebtorsinwriting,byphoneandifindicatedbypersonalvisitsinordertocollecttheoutstandingamountsonashortterm.Ifnecessaryandinconsultationwithourcustomer,collectorscanagreeonpaymentplansandgiveaclosefollowup.Eachdevelopmentandreceivedinformationwillbecommunicatedwithcustomersimmediately.

DisputesIneachhandedoverfileitmightbethatcollectorsareconfrontedwithdisputes.Bearinginmindthatlegalproceedingstakealotoftime,havehighcourtcostsandlegalfeesarecharged,thecollector’sfirstaimistocometoasolutioninrespectofwhichtheywillstartnegotiationswiththedebtor,ofcourseinclosecommunicationwiththecustomer.InregardofdisputestheDutchLegalteamcanbeofassistanceaswelltowardsthecollectorsastocustomers,whereasalegalcollectormighttakeoverthecaseifthedisputeismainlyrelatedtolegalaspects.

Intheeventthatmediationbylegalcollectorsmightnotleadtoanagreementandlegalproceedingsareindicated,thefilewillalwaysbedealtwithbytheDutchLegalteam,becausetheyarewellskilledtoeitherhandlelegalproceduresthemselvesormonitorourLDC’s.

LDCACtheNetherlandscanprovidecustomerswithan,onqualityselectedandprofessional,networkofexperiencedlawyersand/orlawfirmsintheNetherlands,withwhomwenegotiatedandagreedverycompetitivetariffs.WemightsaythelowestintheNetherlands.OurLDCnetworkcoversthewholeDutchterritoryandlawyersareabletocarryoutalllegalactionsrequiredinallDistrictCourts.

FurtherACtheNetherlandscanoffercustomerstheservicesofan,alsoonquality,selectednetworkofprofessionalandexperiencedbailiffswhoareappointedbyLawandarethesolecompetentpartytocarryouttheexecutionofverdicts/judgements.Thecooperationwithbailiffsisofakindthatwemightgetallinformationastowardsthewhereaboutsofthedebtorssuchasincome,assetsetc.

OtheractionsACtheNetherlandsisinclosecooperationwithinformationagenciesanditsnetworkwithbailiffsabletoevaluatethesolvabilityofdebtorsandabletogatherinformationaboutthefinancialsitua-tionofdebtors.Amongstothers,ACtheNetherlandscandoresearchforofficiallybookedgoods,estatesandotherassets.Investigatingthedebtor’sfinancialsituationishelpfulindeterminingwhichlegalactionmightbefruitfulandmoreovertodecidewhetherlegalactionmightleadtoanyresultintheend.

InterestACtheNetherlandsalwayschargesthedebtorwiththecalculationofinterestsfor12%perannumonadailybasis.ThispercentageissomewhathigherthanaccordingtheEuropeanDirectiveconcerninglegalbusinessinterest,butinaccordancewithclausesinthemajorityofpurchaseconditionsand/orotherbusinessconditions.Interestwillalwaysbeclaimedboth,inamicableandinjudicialphases.IntheNetherlandsitiscommonusetoreceiveinterestoveroverdueinvoicesandinfactthereare rarelydiscussionsastotheliabilityofthedebtortopayinterests. InCourtinterestisconsideredasajustifieddemandincaseofoverdueinvoices.Ifthecreditorisabletoproofthatbusinessconditionsareapplicable,interestsaredueaccordingaclausedealingwithinterestsbywhichitisquitecommontocalculate12%perannum.Intheeventthatnospecificconditionswere


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agreed,itisalwayspossibletorequesttheinterestaccordingthelitigateEuropeanDirective,intheNetherlandsthesocalledlegalbusinessinterest,whichisvariable.

LegalPhaseAllrulesconcerningcommercialprivatelawarecodifiedintheDutchCivilCode(BurgerlijkWetboek), whereasrulesconcerningprocedures/courts/competenciesandsoonaredealtwithintheCivilProcessCode(WetboekvanBurgerlijkeRechtsvordering).

ThejudicialorganizationknowsseveralkindsofCourts,whereascompetenciesareincommonrelatedtotheamountsoftheclaim.WeknowaonejudgetribunalorCountyCourt(Kantongerecht),TribunalorDistrictsCourt (Rechtbank), CourtofAppeal(Gerechtshof) andfinallytheSupremeCourt (HogeRaad).

ForCollections,itshouldbenotedthatforcivilclaimstoanamountuptoEuro5.000,expectedtobeaugmentedtoEuro25.000innearfuture,theDutchlegalcollectorscanhandlethelegalproceduresbeforetheCountyCourtthemselves.Beyondthisamount,theDistrictCourtiscompetentandheretheLawprescribesanobligatorylegalrepresentative,orlawyer.WemanagetheseproceduresthroughourLDCnetworkwhereastheLegalteamwillmonitorthelawyersinvolved.

Somebranches,forinstancecontracting,building,graphicalindustry,metalindustryusegeneralpurchase/businessconditionsinwhichthereisstipulatedthatincaseofdisputesanArbitrationCommitteewillbecompetent.Ifso,theciviljudgewillnotbecompetentandthereisnomandatorylegalrepresentation.Inthesefilesthelegalcollectorscanhandlethearbitrationprocedureswithnolimitastotheamountinvolved.

Civilaction,i.e.legalproceedingswilltakequitealongtime,onetotwoyears,whereastheyarealsoexpensivebecauseofalllegalassistancerequired.TheremightbeseveralappearancesinCourt,hearingofwitnesses,analysisofevidence,topleathecase,personalhearings.Indisputedmatters,theonlywayto collecttheoutstandingdebtistogothroughlegalproceedingsasdescribed.However,ifthedebtisundisputedwehavethepossibilityintheNetherlandstouseaveryspecificlegalactioninordertopressthedebtortopaymentonashortterm.Thisinfactmosteffectiveandlesscostingprocedureisfilingapetitionforbankruptcy.Forthisprocedure,weneedtohandoverthefiletooneofourLDC’s,sincefilingsuchapetitionhastobedonebyalawyer. Thepetitionputs pressureonthedebtorthatifthereareanymonies,itwillbepaidwithpreferencetothecreditoronwhoserequestthepetitionwasfiled.Alsoitmightbepossibletocometoapaymentplan.Inpractice,itisaveryefficientactionandwithinaperiodofaboutonemonththerewillbeclaritywhethertheclaimcanbecollectedornot.

LegalActionsWenotethatlegalproceedingsaccordingthejuridicalsystemintheNetherlandsareinfactalwaysrelatedtodisputedmatters.Beforestartinglegalactioncollectorsareinvestigatingthefinancialsituationofthedebtor.Ifthereareconsideredenoughassetsinordertoeffectuateexecutiononceaverdicthasbeenreceivedthefilewillbehandedovertothelegalcollectors.AccordingDutchLawitis,beforestartingalegalprocedure,possibletofileapetitionwiththeDistrictCourtinordertobeallowedtoseizeassetsfromthedebtor. Thisseizurehasapreservativecharacter.Ifsuchaseizureissuccessfulthecreditorisobligedtoreallystartthelegalproceedingswithinafortnightaftertheseizure.Ifthisperiodelapseswithoutanotifiedsummonstothedebtortheseizurewillbeconsideredasexpired.Seizuresofthiskindalsoexpireifthedebtorgoesbankrupt.

Oncethecreditorhasbecomeaverdicttheassetsseizedcanbeexecuted.Duringtheprocedurethedebtorisnotallowedtodoanythingwiththeseizedassets.Preservativeseizuremightalsobeconsideredifthereisknownthatforinstanceathirdpartyhastopayanamounttothedebtor.Inthisrespectitmightbepossibletogoovertoaseizureunderthisthirdparty,whothancannotpayanymoretothedebtor.Asstated,beforegoinglegal,thefilewillbehandedovertooneofthelegalcollectors.Thislegalcollectorwillstudythecase.Iftherearejuridicaltermstotrytocometoanagreementthelegal


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collectorwillcontacttheclientandgiveadvicehowtoactfurtherfromalegalpointofview.Ifdocumentsaremissingoradditionalevidenceneedstobesupplied,thelegalcollectorwillaskthecustomertosupplyoneandanother. Thelegalcollectormighthandletheprocedure,orsendthefullydocumentedfiletooneofourLDC’s.SincealleffortshavebeendonebyACtheNetherlandstogetpaymenttheLDCdoesnotwriteagaintothedebtorbutimmediatelystartsmakingthesummons.WiththesummonsallrelevantinformationhastobesuppliedtotheCourt,suchascopyof:• writtenagreement• orderconfirmation• purchaseconditions• invoices• proofofdelivery• correspondence• otherrelevantinformation/evidencetorebutthedispute• informationaboutwitnesses,names,surnames,residences)• descriptionofthedispute• counterargumentsfromthecreditorastowardsthedispute

Oncethesummonsiscompleted,itwillbenotifiedtothedebtorbyabailiff(obligatory)andimmediatelythereafterpresentedtotheCourt.Thereisminimumtermof7daysbetweennotifyingthesummonstothedebtorandthedatethattheCourtwilldealwiththecasethefirsttime.InproceduresbeforetheCountyCourt,thedebtormightdefendhimself,whereasinproceduresbeforetheDistrictCourtthedebtorisobligedtohavealegalrepresentativei.e.alawyer.ItiscommontoasktheCourtforsuspensioninordertosubmitthewrittendefence.Normallythisisgrantedtoamaximumperiodofabout3months.OncethewritofdefencehasbeenpresenteditiscommonpracticethattheCourtordersapersonalappearanceofpartieswiththeirlawyers.Oftenthiswillbeusedtoreceivefurtherinformationaboutthesisandfactsandalsototrytocometoanagreementbetweenparties.Oftenadditionaltermsare giventobothpartiestoworkoutawrittenpointofview,firstonbehalfofthecreditorandthenthelastwordonbehalfofthedebtor. Timescheduleisabout6months.TheCourtwillalsohaveatermtocometoadecision(oftentoamaximumof3months).Ifthecaseisclearafinalverdictmightbegiven.However,it’spossiblethatoneorbothpartieswillhavetobringupevidenceforinstancethroughwitnesses.Ifsuchtheprocedurewilltakeafurtherlongtime,commonlyaboutafurther6months,beforeafinalverdictcanbeexpected

ThecostsforlegalproceedingsarefirstlyrelatedtotheamountoftheoutstandingdebtandaredeterminedbytheCourtfollowingacomplexlegislativetarifftablewithalotofrangesandcalculationsinlegalhandlings.ThelosingpartywillbecondemnedintheCourtcostsaswellasalegislativefeeforproceduralassistanceaccordingtothetarifftablementionedbefore.Itshouldbenotedthatafeeisrelatedtolegalhandlingsintheproceduresandthereforedoesnottakethereallegalfeesintoaccount.ThedifferencebetweenlegislativefeesdeterminedbytheCourtandthelegalfeesforLDC’sandorourlegalcollectorswillbefortheexpensesofthecustomerandcannotberecoveredfromthedebtor.

InundisputedmattersitisadvisabletostartlegalactionbyfilingapetitionforbankruptcythroughoneofourLDC’s.Thetimeinvolvedwillbeabout4weekstoamaximumof6weeksandthecostsriskfortheclientisaboutEuro750.

PowerofAttorneyForlegalproceedingsweneedawrittenapprovalfromtheclient.Thiswillbesufficienttostartthedescribedlegalactions.Thereareinotherwordsnoformalpowersofattorneynecessaryforstartinglegalaction,butonspecialrequestfromtheCourtitmightsometimesbenecessarytopresentaformalapprovalfromthemanagingdirectorofthecreditor’scompany.

ExecutionofaJudgementAbailiffappointedbylawisthesolepartywhocantakecareforexecutionofajudgement.Allassetsbelongingtoadebtormightbeseizedtocometoexecution,howevertherehavetobetakenlegislativepreferencesintoaccount.Aclaimfromgovernmentaloriginsuchastaxeswillalwayshave


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preference,thesameasthemortgageholder.Itisalsopossibletoseizeincomefromthedebtororpaymentsfromthegovernmenttoacertainextent.Mostofthetime,executionwillleadtopaymentplansandthereforethefinalsettlementmighttakealongtime.Onceinpossessionofajudgement,itmightalsoberecommendedtofileapetitionforbankruptcysincefromthatmomenton,theclaimcannotbedisputedanylonger.

CollectionCostsCostsoflegalactionliquidatedbytheCourtcanberecoveredfromthedebtor.Intheamicablephase,wegenerallyareabletocollectthecustomer’sinvoices,interestandtoalargeextentcollectioncosts.

Fromalegalpointofview,however,thecollectioncostscanonlyberecoveredfromthedebtortoacertainamountrelatedtotheprincipalamountwhichhasbeenhandedoverforcollection.

Ifcollectionsactivitiesweresuccessfulinrecoveringtheprincipalamount,itispossibletorecoveracertainamountofcollectioncostsfromthedebtorthroughlegalproceedings.ItiscommonthattheCourtusesatarifftablewhichisrelatedtothetarifftableinlegalproceedingsinordertoconcludewhatamountofcollectioncostscanreasonablyberecoveredfromthedebtor.Itstillisacomplicatedissueinjurisprudence,butitisquiteclearthatinmostcasesthereisjustasmallamountgranted,despiteclausesinawrittenagreementand/orpurchaseconditions.Infactthejudgeisfreetocondemnthedebtortopaycollectioncostsaslongastheyarereasonable,butthegrantedcostsarenormallyapartoftheprovisionweusetoagreewithcustomers.Sincelegalproceedingsconcerningcollectioncostswilltakealotoftimeandcosts,wearequitesuccessfulinreachingagreementswiththedebtors.

StateofLimitation(prescriptionofthedebt)DutchLawhasseveraltermsonprescriptionofthedebt.Themostcommononeistheonerelatedtocommercial(business)claims(purchase,renderingservices,contractingetc.)forthesetransactionsageneraltermisvalidfrom5years,calculatedfromtheduedateoftheinvoice.Prescriptioncanbeopposedbyregisteredmailand/orawrittenannouncementthroughabailiff,withtheeffectthatanewtermof5yearswillcommence.Ithastobenotedthatthecreditorhastobringupevidencethattheannouncementwasinfactreceivedbythedebtor.Exeptionsarepossible,forexamplethe transportbranchwhereshorterterms ofprescriptionofthedebtareused,accordingtotheCMR-Treaty.

ExpectedTimeFrameLegalproceedingstaketime.Generallyindisputedcasesaproceduremighttake1to1,5yearsbeforethereisajudgement.Ifthereisanappealitcantakeaboutanotheryear. Thetimeinvolvedwiththeexecutionofasentencecanhardlybeforecasted,sinceitisgovernedbythefinancialpositionofthedebtor. Theprocedureforfilingapetitionforbankruptcywilltakeaboutfourtosixweeks.

IntheamicablephaseACNLtriestocometoasettlementofcasesimmediatelyafterstartingworkingonthespecificcase.IncludingpaymentplansACNetherlandsurgesthemtocometoafullrecoveryutterly6monthsafterstartingtheiractivities.

TypeofcompaniesLikealotofothercountries,theNetherlandshastwomajorgroupsofcompanieswhicharebusinessrelated.

Thefirstgroupisthesocalledpersonscompanies(onemanbusiness/partnership)inwhichweknowcompanieswithasoleowner(eenmanszaak) andcompanieswithseveralnatural(private)personsinvolved(vennootschaponderfirmashort VOF).

Forthepersons(private)companiesthenatural(private)personsarefullyliable(alsointheirprivateassets)fordebts.


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Thesecondgroupisthelimitedcompany’s:legalperson/legalentity,commonlyBVandNV.Forthesecompaniesthepartnerscannotbeholdresponsibleforcompany’sdebts.

InsolvencyproceduresIntheNetherlandstherearethreetypesofinsolvencyprocedures:

bankruptcy(faillissement)

suspensionofpayment(surséancevanbetaling);

lawenforcedcompositionwithcreditorsfornaturalpersons debts(WSNP).

BankruptcyAlldebtors(naturalpersonsincluded)canbedeclaredbankruptontherequestofjustonecreditor,providedthatevidenceissuppliedtotheCourtthatmorethanonedebtisleftunpaidbythedebtor. Theprocedureoffilingapetitionforbankruptcyisdescribedhereabove.Ifthedebtordoesnottakecareofpaymentoftheclaimofthecreditor(s)whofiledthepetitionandthereisanotherdebtleftunpaid,theCourtwilldeclarethedebtorbankruptandwillatthesametimeappointanofficialreceiver,aswellasamemberfromtheCourtwhowillmonitortheofficialreceiver.Infacttherearenorulesprescribingadebthastobeofacertainamount,butofcoursethedebtshavetobeofareasonableamount(aboutEuro1.000).

Theofficialreceiverwillactonbehalfofthecreditorsandcandoseveral(business)actionswithapprovalofthememberoftheCourttoliquidatetheassetsinfavourofthecreditors.Iftherearemoniesreservedbytheofficialreceiver,itmightcometoacompositionwithcreditorsespeciallyincaseofnaturalpersonswithconsentoftheCourt.Iflimitedcompaniesaredeclaredbankruptafinaldividendmightbereceivedbythecreditors.Inmostbankruptcieshowevertheunsecuredcreditorswillnotreceiveanydividend.Withacompositionandordividend,aswellasinthecasethatnomoniescouldbereserved,thebankruptcyproceedingwillend.Dependingontheassetstobeliquidatedthesettlementofbankruptcyproceedingsmighttake1to5years.

SuspensionofpaymentCompaniesandornaturalpersonswhocometemporarilyinapositionthattheyarenotabletopaytheirdebtsmightfileapetitionforsuspensionofpayment.TheCourtoftenallowssuchasuspensionprovisionalforacertainperiod(2–6months),afterwhichthedebtorhastosubmitallrecordsaboutthefinancialsituation,aswellasaplantowardsthefutureandthewaytomeetobligationstowardscreditors.Ifitisjudgedthattherearepossibilitiestocometopositiveresultsinfuture,includingapaymentplanforthedebts,thesuspensionwillbecomedefinitive.Alsoitispossibletocometoacompositionwithcreditors,whichthanhastobeapprovedbythemajorityofcreditorsinrelationwiththeamountofeachdebtandtheCourt.WithapaymentplanapprovedbytheCourtoracompositionthesuspensionwillend.Ingeneralhoweveralotofsuspensionswillturnintheendinabankruptcy.

Lawenforcedcompositionwithcreditorsfornaturalpersons’debts(WSNP)Thisinsolvencyprocedureisrelatedtonaturalpersons(ownersofsmallshops,thefarmeretc.)whoarepersonallyliablefordebts.DutchLawprovidessuchdebtorsthepossibilitytorequesttheCourttobeallowedtotheWSNP.Fulfillingcertainobligationsastowardsgoodfaith,theCourtcanallowsuchdebtorstotheWSNPbyappointingakindofofficialreceiver,monitoredbyamemberoftheCourt.Theofficialreceiverhastodeterminewhichcapacitythedebtorhastopayinstalmentsforaperiodofthreeyears.Afterthisperiodandprovided

thatthedebtordidmeethisobligationsasagreedwiththeofficialreceiver,thetotalreservedamountwillbedividedamongstcreditorsinfullandfinalsettlement.Itshouldbenotedthatifanaturalpersonhasbeendeclaredbankruptitoftencomes–onrequestfromthedebtor-toatransfertotheWSNP.Mostofthetimethecreditorswillreceivejustasmallpercentageoftheirdebts(varyingfrom3to10%).


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PolandDisputeTherearethreemethodsofoutofcourtdebtcollectioninPoland:mediation,settlementandarbitration.

MediationMediationisaformofnegotiatingwithdebtorsandaprofessionalmediator. Thisisanimpartialpersonwithproperqualificationsthatseekstoadjustthecontentiouspositionsofthepartiesandthattriestofindacompromisesatisfyingbothparties,resultinginanagreement.Thetaskofamediatoristodeterminetheessenceofthedispute,pointoutitsmostimportantaspectsandthepossibilitiesforamicablesettlement.Eitherpartycanterminatetheprocessofmediationatanymomentwithoutanynegativeconsequences.Mediationproceedingsareconfidentialandnonegotiations,proposals,promises,behaviourorstatementsmadeorperformedduringmediationcanbeusedincourtorarbitrationproceedingsconcerningthedisputeundermediation.Themediatorcannotbeaskedtobeawitnessincourteither. Althoughitcanshortenthedurationofdisputesbeforecourt,mediationisnotverypopularinPoland.ItisveryimportantthattheagreementresultingfrommediationproceedingsisapprovedbyCourtsothattheagreementcouldbetreatedastheenforcementtitle.

SettlementAccordingtothePolishcivilprocedure,itispossibletocallthedebtortoenterintoasettlement.Thesettlementcanbeenteredintopriortofilinganactiontocourt.Theapplicationforcallinguponthepartiestoenterintoasettlement,irrespectiveofthedisputesubject,maybefiledwithalocalcourtcompetentfortheopponent.Theapplicationshouldbrieflydescribethecase.

ArbitrationThethirdsolutionisarbitrationconductedonthebasisofthearbitrationclause.Unlessanyspecialregulationprovidesotherwise,thepartiesmaysubmitanydisputesforsettlementinarbitration,exceptforinalimonycases.Submissionofadisputeforarbitrationrequiresanagreementofthepartiesspecifyingthesubjectofthedisputeorlegalrelationshiptriggeringthedispute.Thesettlementconcludedbeforearbitrationcourtcanbeapprovedbycourtandthenaftergrantinganenforcementclause,canbetreatedastheenforcementtitle.

DocumentsrequiredAmicableprocess:• statementofaccountwithallrequestedinvoicesandpartiallymadepayments.InPolandthere

isnothinglikea“globalizedinvoice”.Thisinformationisnotvalideitherfrombusinessnorlegalpointofview

• nameofactualsupplier,iftheclientisafactoring/financialcompany• aPOAhastobedeliveredonlyifdebtorsrequestit• originalsofinvoices(notscannedcopies)ifthedebtorhasnotreceivedthem.Scannedcopies

cannotbeprintedanddelivered-ithavetobetheoriginaldocuments

Legalprocesses:invoicessignedbythedebtorwithproofofthedeliveryofthegoods,(Regardingtosaletransactionsinvoicesmustnotbeenolderthan2yearfrominvoicerequirementdate)• confirmationofthedebtsignedbythedebtor(ifwas);• contractsbetweenpartieswithtermsandconditionofcontracts• ordermadebythedebtorinwritten• confirmationoforderbythecreditor• documentconfirmsdisputes• correspondencebetweenparties• fulfilledandsignedPOA(alwaysinattachment)signedbytheperson(s)whoisentitledtorep

resentscompany• current(maximum2monthsold)extractfromcreditortraderegistrywhichstatueperson(s)

whohastherighttorepresentscompanyandwhosignedpowerofattorney


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• transportsdocuments(CMR,WZ)• extractsfromcreditorbankaccountthatconfirmspaymentsmadebydebtor(ifwasany)In

Polanditispossibletoproceedinlegalprocesseswithcopies(lawallowsthatlawyerwhorunsthiscasewillsigncopies).CrucialpointisthatsignatureonPOAisthesameasmentionedinExtractfromClientTradeRegistry-withoutthislawyerandcourtwillrejectoursue.

LDCACPolandcooperateswithprofessionallawfirmsinPolandthatemploylawyersexperiencedinjudicialcreditcollectionprocedures.ConsequentlyACPolandensuresprofessionallegalserviceonanyleveloflegalproceedingsbeforeanyCourtinPoland.

OtherActionsACPolandisabletoevaluatethedebtor’sfinancialsituationandthepossibilityofliabilitiesrevin-dication.Itallowsustomakeaclearandcompleteviewofthedebtor’sfinancialsituation.Accordingly,wecanstartthemostsuitabledebtcollectionactivitytomaximizetheresultofthedebtrecovery. Theinvestigationofthedebtor’sassetsincludespublicregistersresearch,financialreportresearch,realestatesandresearchonotherfixedassets.

InterestACPolandrechargesdebtorswiththeaccruedinterestresultingfromtherulesofPolishCivilCode(currently,therateis13%peryear).Theinterestisalwaysclaimed,bothinamicableandinjudicialphase.Nevertheless,thereisroomfornegotiationbetweendebtorsandcollectors.ACPolandalwaysrequeststheclient’sapprovalconcerningtheinterestcollection.Itiscustomarynottoaskforinterestaftertheprincipalamounthasbeenpaidinfull.

MiscellaneousInformationTheoutofcourtactionsarelessexpensiveandfasterthanthelegalactionscommencedincourt.

LegalActions(TypeandCosts)

GeneralProcedureBeforeBusinessCourtItisobligatorytosendacallofpaymenttothedebtorbeforestartinglegalactionincourt.Itisnotobligatorytosendthecallofpaymentbyalawyer. Thereisaseparateprocedureforthecasesinwhichbothpartiesofthedisputeareentrepreneurs(companiesornaturalpersonsconductingbusinessactivity).Thesetypesofcasesarereviewedbyspecialdepartmentsofcourt,i.e.businesscourt.BusinessCourtsworkfasterthanordinarycivilcourts,yetthepartiesstillhavetowaitsometimebeforethejudgementisgranted.However,eventhoughthewaitingtimeforajudgementinbusinesscourtsisshorterthanincivilcourts,itcanstilltakeafewmonths,inbigcities(bigcourts)evenafewyears.

CrucialRequirementsConcerningEvidenceThemostimportantissueinproceedingsbeforethebusinesscourtisthatthecreditorisobligedtospecify,inhis/heraction,anyandallclaimsandsupportingevidence,otherwisetheclaimantmaybedeprivedoftherighttorefertosuchclaimsandevidenceduringtheproceedingsunlessitisproventhatthespecificationinthestatementofactionwasnotpossibleorthataneedtorefertocertainclaimsandevidencearoseatalaterstage,i.e.,afterfilingtheaction.Theclaimantshouldattachacopyofthecomplaintorarequestofvoluntaryperformance,andastatementonthepositionofthedefendantinthecase,aswellasinformationorcopiesofletterscertifyingtheattemptstosettledisputableaspectsthroughnegotiations.Ingeneral,theclaimantbringinganactiontocourthastosubmitalldocumentsandotherproofconcerningitsliability.

WritofpaymentProcedureAccordingtotheCodeofCivilProcedure,thecreditorcanfiletheactionintheproceedingsforwritofpayment.Courtcanissuethewritofpaymentonlyonthebasisofthedocumentsattachedtothestatementofactionwithoutofanycourtsitting.Thedocumentswhichshouldbeattachedtotheactioninclude,butarenotlimitedto,e.g.theagreement,theinvoicesacceptedbythedebtor,thecallforpayment,etc. TheCourtcanalsograntthewritofpaymentwithanattachedagree-


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ment,proofoffulfilmentandproofofdeliverytothedebtorofaninvoiceorreceipt.Thisproceduremakesthedebtcollectioneasierforthecreditorsanditisfaster-Courtshouldissuethewritofpaymentwithinonetothreemonthsbutifthedebtorlodgesanobjection,thecasewillbeexaminedintheordinaryprocedure.

SummaryProceedingIfthevalueofthesubjectofthelitigationislessthan10.000PLN(approx2.400EUR)oriftheactionconcernsresidentalrent,thecasewillbeadjudicateinthesummaryproceeding.Thispro-ceedingismoreformalthanGeneralProcedureBeforeBusinessCourt,theactionhastobebroughtontheofficialform.

CourtFeeThecostofbringingtheactionbeforecourtdependsonthevalueofprincipalclaimwithoutinterestwhichamountsupto5%ofthisvalue.Thesecostscanbecollectedfromthedebtoriftheclaimantwinsthecase.Ifthecaseisconsideredinthesummaryproceeding,thereisaflatratefeedependingonthevalueofprincipalclaim

PowerofAttorneyAccordingtoPolishlaw,itispossibletograntapowerofattorneytorepresentthecreditorbeforeCourt.Itmeansthatforeachactionthepetitionhastobesignedbytheauthorisedplenipotentiary(agent)ofthecreditor. Theauthorisedplenipotentiarycanonlybetheattorney-at-laworthelegaladvisor.

ItispossibletograntthegeneralPowerofAttorneywithfullpowerofsubstitutionforthepurposeofrepresentingthecreditorbeforeCourt.Thegeneralpowerofattorneyentitlestheagenttorepresentthecreditorinallkindsoflegalactions.Itisalsopossibletograntthespecific,limited,powerofattorneytothespecificlegalcase.

ThepowerofattorneyforrepresentingthecreditorbeforeCourtentitlestheauthorisedplenipotentiarye.g.totakealllegalactionsconnectedwiththecase,includinglodgingtheappeal,concludingthecourtsettlementandtakingallactionsintheexecutionprocedureexceptreceivingtheamountenforcedbythecourtdebtcollector.Itisnecessarytoobtainthespecificpowerofattorneytoreceivethedebtinthecollectionprocedure.

ExecutionofJudgementAccordingtoPolishlaw,acollectionprocedure,carriedoutbyacourtdebtcollector,requirestheso-calledenforcementtitle.TheCourtgrantsanenforcementclausetothecollectiontitle.AcollectiontitlewiththeenforcementclauseisreferredtoastheEnforcementTitle.

Itshouldbenotedthatthereisalongwaybetweenobtaininganenforcementtitleandpracticalcollectionofthedebt.Itisnecessarytofindacourtdebtcollector,tofileanapplicationtothecourtdebtcollectorforcommencementofcollectionandtospecifyassetsofthedebtor,ifpossible.Thecollectionprocedurecanbecarriedoutindifferentmanners.Quiteaneasywaytocollectthedebtiscollectionfromdebtor’sbankaccounts.Itisalsopossibletocollectthedebtfromthedebtor’sremunerationortheliabilitiesofthedebtor.Inthecaseoftheexecutionfromtheremu-nerationthereisthelimitationofthemaximumamountwhichcanbecollectedfromthemonthlyremuneration.Thecourtdebtcollectorcancollectonlytheamountabovetheminimummonthlyremunerationi.e.1126PLN(approx275EUR)gross.Inthecaseofcollectingthedebtfromthelia-bilitiesthereisnolimitationoftheamount.Itisalsopossibletocollectthedebtfromthepersonalproperty,butthisisalongerwayofcollectingdebts.Thecourtdebtcollectorcanalsocarryouttheexecutionfromthedebtor’srealestates.Itisthelongestandmostexpensivewayofexecution.Thecourtdebtcollectormaychargethecreditorwiththecostsoftheactionswhichthedebtcollectorisgoingtotakeduringtheenforcementprocedure.Finally,thedebtorisrechargedwithallcostsofthecollectionprocedure.


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CollectionCosts(ChargedtoDB)AcreditorfilinganactiontoCourtisobligedtopayacourtfee.Therearethreemaintypesofcourtfees:flatratefees,proportionalfeesandbasicfees.Thetypeoffeedependsontheobjectofaction.Inthecaseofactionsforpayment,thecreditorhastopaytheproportionalfee.

Fees-GeneralProcedureBeforeBusinessCourtTheproportionalfeeis5%withrespecttomonetarysuits(notlessthanPLN30andnomorethan100.000PLN(approx.7to24.000EUR).Thecourtfeemustbepaidbeforefilinganactiontocourtandtheproofofpaymentmustbeattachedtothestatementofaction.Iftheactionisfiledbyaprofessionalproxy(anattorneyoralegaladvisor)orinthecasebetweenentrepreneursbytheentrepreneurselfwithouttherequiredcourtfee,theactionwillberejectedbycourt.

Fees–WritofPaymentIfthecaseisconsideredintheproceedingsforthewritofpayment,thefeeis25%ofthepropor-tionalfeementionedabove(notlessthanPLN30).

Fees–SummaryProceedingIfthecaseisconsideredinthesummaryproceeding(ifthevalueofthesubjectofthelitigationislessthan10000PLN (approx2.400EUR)thereisaflatratefeeandtheamountofthefeedependsonthevalueofthesubjectofthelitigation:1) uptoPLN2.000–30(aprox7EUR)2) fromPLN2.000toPLN5.000-PLN100 (approx25EURO)3) fromPLN5.000doPLN7.500–PLN250(approx60EURO)4) abovePLN7.500–PLN300.(approx75EURO)

Finally,thedebtorisrechargedwithallthecourtprocedurecostsinthesentence.

StatuteofLimitation(PrescriptionoftheDebt)Ingeneral,acreditorordebtcollectorgivesuphisrighttofilesuittocollectadebtafteraperiodofthreeyearsfromtheduedateofthedebt.Thistermconcernsthedebtoftheentrepreneurs.Butdebtsunderthesalescontractsbecomeprescribedwithintwoyears.PolishCivilCodedefinesthespecifictermsofthestatuteoflimitationofdebtdependingonthetypeofthecontracts.Aftertheexpirationofthestatuteoflimitationthecreditorcanfileagainstthedebtor.However,ifacreditorordebtcollectordoesfilesuit,thedebtorcanaskthejudgetodismissthesuitonthegroundsthatthestatuteoflimitationhasexpired.

AccordingtoPolishlaw,itispossibletosuspensethelimitationperiod,ifthecreditorcannottaketheactiontocollectthedebtasaresultofforcemajeureandinterruptthelimitationperiodbyanyactionofthecreditorbeforeCourtorinthecaseoftheacknowledgementofthedebtbythedebtor.

ExpectedTimeFrame(1–10years)Altogether,thecourtproceedingslastfrom1monthtoabout1year.Itdependsontheobjectofaction.Asindicatedabove,itispossibletofilethesuitinthesimplifiedprocedureifthecreditorhasthespecificdocumentsastheevidenceoftheclaim.Forexample,itisnecessarytodisclosetheagreementbetweenthepartiesofthecourtdispute,theorders,thesignedinvoices,theproofofsupplythegoodsorservices,thecorrespondencebetweenthepartiesofthecourtdisputecon-cerningtheclaim,etc.

MiscellaneousInformation

TheCollateralProceedingItisworthmentioningthat,irrespectivelyofthecharacteroftheclaim,thecourtcanestablishthecollateralforthebenefitofeveryparticipantoftheproceedingsapplyingforit.Themovershouldconvincecourtthattheclaimtobesecuredmaybejustifiedandmustindicatethelegalinterestinsettingupthecollateral.Theapplicationforestablishingacollateralshouldbeexaminedimmediately,notlaterthanwithinaweek,whichshouldpreventobstructingtheenforcementandmustfacilitatepaymentofthereceivablesmore.


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TheInsolvencyProceedingTherearetwotypesofbankruptcy:insolvencydesignedtoliquidatethedebtor’sassetsandinsolvencywithapossibilityofanarrangement.Bankruptcycanbeannouncedwhenthedebtorfailstopaydebtsastheyfalldueorwhenthetotalamountofthedebtsexceedsthevalueofthedebtor’sassets,eveniftheentitystillpaysallofitsliabilities.Creditorsorthedebtormayfileforbankruptcyofthedebtor.

Everycreditorofaninsolvententrepreneur(company)shouldfiletheclaimtohis/herreceivableinwriting.Itisunnecessarytoattachtotheclaimthedocumentsconfirmingthereceivable,e.g.theagreement,theinvoicesetc.

Uponcompletingthelistofliabilities,aplanisdrawnupforthedistributionofdebtor’sassets.Itspecifiesthesumtobedistributed,thelistofallliabilitiesandtheamountduetoeverycreditor.Liabilitiesarepaidinthespecificorder.Forexample:taxandotherpublicdutiesarepaidfirst.Thedurationofthebankruptcyproceedingsdependsonmanyfactors:theamountofthecreditors,thedebtor’sassets,etc.Ittakesatleastoneyear. Therearenofeesforclaimingtheliabilityintheinsolvencyproceeding.Insteadofliquidation,thebankruptcyproceedingsmaybefinalisedbyanarrangementbetweenthedebtoranditscreditors.

Thedebtor,supervisedbycourt,isentitledtorestructurehis/herdebtifthereisreasonabledoubtthatinthenearfuturethedebtorwillbeunabletopayallhis/herfinancialobligations,despitecurrentlybeingabletopayhis/herdebts.Underthismechanism,thedebtorhastopreparearestructuringplanregardinghis/herdebt,assetsandemployees.Iftherestructuringplanisapprovedbythemeetingofcreditors,thedebtorwillbeexemptedfromtheobligationtopayitsdebtsforaperiodoftimeinordertoimproveitsfinancialsituationandtoavoidliquidation.


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PortugalLDCOncewehavetriedalltheamicablerecoveryactionsandamicablerecoveryisnotpossibleweanalyzeifitispossibletofilealawsuitandifsowesendthecasetoanLDC.CurrentlywearestillusingourexternallawyersinPortugal(andnotCyC).Toestablishwhetheritiswisestartaprocedure,weevaluateifitisworthwhileregardingtheamountofdebtinrelationwiththeamountofcostsandtime.Wealsostarttovaluethedebtor’ssolvencyandthedebtor’sactivity.Ifadebtorisnottradingnorhasanyassets, ithasnosensetoprepareforapossiblelegalaction.Requireddocuments:1) Powerofattorney2) Invoicescopies3) CMRorB/LorAWB4) Originalchequesorbillsofexchangeissuedbythedebtor5) Anydocumentsignedbythedebtorinwhichheacknowledgesthedebt,e.g.apayment

agreement).

OtheractionsInterests

InPortugalintheamicablephase,interestsarenotclaimed,onlyafterlegalproceedings.Legalactions(typeandcosts):

Oncewehavedecidedtogolegal,wedeterminewhichkindoflegalprocedurewouldbebesttoclaimthedebt.Therearetwotypes:

Injunção(simpleclaim):

wenormallyusethiskindoflegalprocedurefornondisputeddebts.Itisfasterandlessexpensive.AcçãoOrdinária(claim):

Wenormallyusethislegalprocedurewhenweexpectstrongoppositionfromthedebtor.IftheCourtissuesafavourablejudgement,wecanexecute.

Collectioncosts

PowerofAttorneyInordertostartthelegalactions,weprepareadraftofPowerofattorneythattheclienthastosign.APublicNotary’sinvolvementisnotrequestedinPortugal,soitjustneedstobesignedbytheclientandprintedontheirpaper.

ExecutionofthejudgementIfthedebtordoesnotpayvoluntarilyafterjudgementfromtheCourthasbeenannounced,wehavetofileanewlegalprocedure:theExecutionProceeding.Thiskindofprocedurecarriedbyanexecutionagentandisneededforattachingthedebtor’sassets.Unfortunately,wecannotcalculatebeforehandwhatthecostsare,asthefeesofanexecutionagentdependontheamountofworkhehastocarryout.

ExpectedTimeFrameAminimumof6months(just3monthstogivingsummons),fortheprocedure,dependingfromwhetherornotthedebtorisrapidlyserved.

StatuteofLimitationAccordingtoPortugueselaw,therearetwoprescriptionperiodsregardingtheinvoicescoveringthesupplyofgoods:


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Theordinarydelay,whichisof20years(article309oftheCivilCode)and

Thedelayof2years,whichisonlyappliedtothetraders’creditsresultingfromgoodssoldtonon-traders(article317oftheCivilCode).

Insolvencyprocedures.Assoonasweareinformedthatdebtorhasappliedforinsolvencyandonceweknowtheinsol-vencyprocedure’sdata,weusuallypreparethedraftofthewritthatourclientmustfill,signandsendtoCourt.Wesendthiswritbymailtotheclientwiththeinstructionstolodgethecredit.Sometimes,wealsoentrustourexternallawyertodoso.WecannotlodgecreditsonbehalfofourclientsasaspecificpowerisrequiredInPortugaltoactonbehalfofotherpersonorcompanyandinInsolvencyProceduresthereisnotimeforgettingthisPower.

TypesofcompaniesThecommontypesofcompanieswecanfindinPortugalare:

SociedadeporQuotas orLDA(LimitedSociety)–theminimumcorporatecapitalforsettingupitis5.000EUR.

SociedadeAnónimaorSA(Businesscorporation)-theminimumcorporatecapitalforsettingupitis.50.000EUR.


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SingaporeAmicablephaseUponreceiptofcollectioncasesfromclient,areminderissenttothedebtorandtelephonecallswillbemadetoseeifthedebtorwanttosettlethedebtamicably,orifthereisagenuinereasonforthedelayornon-payment.Visitstothedebtor’spremisesmaybenecessaryinsomecasesinordertomakeastrongerdemandforasettlementatacertaindate.Itclarifiesthedebtortonoticethatlegalactionswillbetakenincaseofnon-payment.

FordebtsthataretobecollectedinACSingapore’sfootprintcountries,thestandardprocessistoattemptcollectionsfromSingaporeuntileffortshavebeenexhausted.Afterwhich,casesmaybeforwardedtolocalLDCsfortheirassistance.

DisputeAdisputeisoftenoneofthemainreasonswhyaninvoiceremainsunpaid.Weadvisecreditorstomaketheirdebtorsprovidetheprooftosupportthedispute.Togetherwiththeclientwecanthenanalyseitandplanthenextcourseofactionaccordingly.

Itisnecessarytomakeanexhaustivereviewofalldebtdocumentsthattheclienthasprovidedbeforemakingrecommendationonwhethertoproceedwithlegalactionagainstthedebtor.

LDCSingaporeisthehostcountryforcollectionsinmostpartsofSoutheastAsia,includingBrunei,Cambodia,Indonesia,Laos,Malaysia,Myanmar,PhilippinesandThailand.ACSingaporehastheengagementofexperiencedanddedicatedlocalagentsandlawfirmsinthejudicialcreditcollectionactivity.

Thelocalagentswillvisitthedebtorswhenevernecessaryintheirattemptstocollectyourmoney.Theywillalsomakerecommendationsonthenextcourseofactionthatisappropriateforthecase,e.g.toconductasearchontheuntraceabledebtors,litigation,etc.

InterestsIntheamicablephase,interestisnotcollectableunlessitiscontractuallyagreeduponthattherateofinterestisapplicableontheoverdueinvoice(s).

TypesofcompaniesThetypesofbusinessorganizationsthatcanberegisteredinSingaporeare:

Soleproprietorship&Partnership

AnyindividualcanstarthisownbusinessbyregisteringwiththeRegistrarundertheBusinessRegistrationAct.Uptoamaximumoftwentypersonscanoperateabusinessasapart-nership.ApartnershipmustalsoberegisteredwiththeRegistrar.

CompaniesAnytwoormorepersonscanformanincorporatedcompanybyregisteringundertheCompaniesAct.Acompanycanbelimitedbyshares,limitedbyguaranteeorcanbeunlimited.ThethreemaintypesofcompaniesinSingaporeare:• Privatelimitedcompanies• Thenumberofshareholdersislimitedtofiftyorless.• Publiccompanies

Thenumberofshareholdersismorethanfiftyandthecompanycanraisecapitalbyofferingsharesanddebenturestothepublic. ApubliccompanymustregisteraprospectuswiththeRegistrarbeforemakinganypublicofferofsharesanddebentures.

Foreigncompanies


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CompaniesincorporatedoutsideSingaporeandthatwishtosetupabranchinSingapore,mustberegisteredasforeigncompaniesundertheCompaniesAct.

LegalphaseLegalsystemThelegalsysteminSingaporeisalegacyoftheBritishColonialrulers.TheCourtsinSingaporeusestatuteswhichwereadoptedfromtheUnitedKingdomandmodifiedtosuitthelocalcircumstances.Veryoften,casesreportedintheCourtsintheUnitedKingdomarealsorelieduponbytheSingaporeCourts.

Courtstructureandjurisdiction

ThebasicCourtstructurecomprisestheSupremeCourtandtheSubordinateCourts.

Thesupremecourt

TheSupremeCourtconsistsoftheHighCourtandtheCourtofAppeal.Incivilmatters,theHighCourtshasjurisdictionwheretheDefendantisservedwithaWritorotheroriginatingprocessinoroutsideSingaporeinthemannerprescribedbytheRulesandtheDefendantsubmitstojurisdiction.Allcivilclaimsinexcessof250.000SGDmustbebroughtintheHighCourt.ThereisnoupperlimitonthequantumoftheclaimsthatcanbebroughtintheHighCourt.

TheCourtofAppealhearsappealsfromdecisionsmadeintheHighCourt.TherearenofurtherappealsfromthedecisionsoftheCourtofAppeal.

Thesubordinatecourts• TheSubordinateCourtscomprisesthefollowingCourts:• DistrictCourt• Magistrates’Court• SmallClaimsTribunal

Claimsabovethesumof60.000SGDuptothesumof50.000SGDareheardbyDistrictCourt.Claimsofthesumof60.000SGDandbelowaredealtwithbyMagistrates’Court.

SmallClaimsTribunal

TheSmallClaimsTribunalissetuptosimplifythecollectionofsmalldebtsinaninformalatmosphere.AdvocatesandsolicitorsarenotallowedtoappearbeforetheSmallClaimsTribunalsandthepartiesmustrepresentthemselves.

Itmayhandleclaimsnotexceeding10.000SGDor,subjecttowrittenagreementbytheparties,claimsnotexceeding20.000SGD.However,theSmallClaimsTribunalcanonlyhearanddetermineanyclaimifitismadewithinoneyearfromthedateonwhichthecauseofactionaccruedandtheclaimrelatestoadisputearisingfromanycontractforthesaleofgoodsortheprovisionofservices;orisaclaimarisingfromanycontractrelatingtoaleaseofresidentialpremisesnotexceeding2years;orisaclaimintortinrespectofdamagecausedtoanyproperty,exceptdamageinconnectionwithamotorvehicleaccident,oraclaimwhichtheSubordinateCourtshavenojurisdictiontohear.

ProcessAcivilactioncanbecommencedbyWritofSummonsorOriginatingSummons.Wheretherearesubstantialdisputesonfact,WritofSummonsisthemoreappropriatemethod.

OriginatingSummonsisusuallyemployedwheretheactionmerelyinvolvestheconstructionofastatutoryprovisionortheeffectofalegalinstrument,e.g.adeed,will,contract,orotherdocument.ThemostcommonmodeoforiginatingprocessistheWritofSummonssincemostdisputesinvolvesdisputesoffact.


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WritofsummonsThePlaintiff(Claimant)bringsanactionbyissuingaWritofSummonscontainingdetailsofthepartiesandabriefEndorsementofClaim,orafullstatementoftheclaim.AnEndorsementofClaimsetsoutonlyaconcisestatementofthecauseofactionandthereliefsclaimedbythePlaintiff.

MemorandumofappearanceOncetheWritofSummonsisfiledinCourtandservedontheDefendant,heisrequiredtoenteranAppearancewithin8daysoftheserviceoftheWritofSummons.TheAppearanceisadocumentfiledtoindicatethattheDefendantintendstocontestthePlaintiff’sclaim.

IftheWritofSummonscontainsonlyanEndorsementofClaim,thePlaintiffmustfileandserveaproperStatementofClaimwithin14daysfromthedateonwhichtheDefendantfilesandservesanAppearanceonhim.

TheDefendanthas14daysfromthedateonwhichtheStatementofClaimwasservedonhimtofileandservehisDefence.IfheintendstomakeacounterclaimagainstthePlaintiff,hewouldthenfileaDefenceandCounterclaim.

FailuretoenteranAppearancewillallowthePlaintifftoenterJudgementinDefaultofAppearanceagainsttheDefendant.

SummaryjudgementWhereaPlaintiffhassuchastrongcasethattherearenorealissuesoffacttobedeterminedatthetrial,itwouldbeunfairtocompelthePlaintifftogothroughtheentireprocessuptotrialtoobtainjudgementonhisclaim.HecaninsuchcircumstancesapplytoCourtforSummaryJudgementonthegroundsthatthedefendantdoesnothaveavaliddefencetohisclaim.

AnapplicationforSummaryJudgementshouldbetakenupafterthedebtorhasfiledandservedhisAppearanceandpreferablybeforethedefendantfilesandserveshisdefenceontheclaim.TheapplicationshouldbeaccompaniedbyanAffidavitbythePlaintiffsettingoutthefactswhichformthebasisofthePlaintiff’sclaim.Thedebtorhas21daysfromthedateofserviceofthePlaintiff’sAffidavittoshowcausebywayofanAffidavitwhyjudgementshouldnotbegrantedagainsthim.ThePlaintiffcanfileanAffidavitinreplytothedefendant’s Affidavitwithin14daysoftheserviceofthedefendant’s Affidavit.

Atthehearing,theregistrarwillgiveJudgementtothePlaintiffifthedefendantisunabletoshowthattherearetriableissues,i.e.issuesoffactorlawwhichoughttobedeterminedbyajudgeattrial.Iftheregistrardeterminesthattherearetriableissues,thenthedebtorwillbegivenuncondi-tionalleavetodefendtheclaimandthematterwillberemittedtotrial.

PowerofattorneyIfaclientintendstopursuelegalactionsinSingapore,arepresentativemustbelegallyappointedtoactonitsbehalfthroughaformalpowerofattorney.SomeofthebasicrequirementsofaPowerofAttorneyinclude:CertificationandattestationbyaNotaryPublic,fortwomainpurposes:• thatthecompanygrantingpowerofattorneyisdulyformedandlegallyexisting• individualactingonbehalfofthecompanyhasproperrepresentationandauthoritytodelegate

specialandgeneralpowersofattorney)

Purposeandextentofthepowerofattorney.Itmustbedeterminedinprecisemodethatitisissuedforlawsuitsandcollections.

Languagerestrictions:aPowerofattorneycanonlybeexecutedinEnglish

Authenticationandlegalizationofpowerofattorney(Notary’ssignatureandcertificationmustbeassertedbyaGovernmentofficialasvalid.


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ExecutionofjudgementAjudgementtakeseffectfromthetimeitispronounced.InterestrunsontheamountoftheJudgementfromthedateofjudgement.Iftherateofinterestisnotcontractuallyagreedupon,thestatutoryrateapplies.Thecurrentstatutoryrateis6%perannum,whichmaychangeinduetime.

FollowingarethedifferentmodesofenforcementallowedbytheRulesofCourt:• IssueWritofSeizureandSale–directingtheBailiff,anofficeroftheCourt,toseizeandsell

theDefendant’sgoodstosatisfytheJudgementDebt.• ExaminationofJudgementDebtor–byoralcross-examinationonoathbeforeanAssistant

orDeputyRegistraraboutdebtsowingandwhatotherpropertyormeanscanbeseizedtosatisfythejudgement.

• GarnisheeProceedings–wheredebtsduetotheDefendantfromathirdpartymaybeorderedtobepaiddirectlytothePlaintifftosatisfytheJudgement(thelawdoesnotpermittheJudgementDebtor’ssalariesand/orwagestobegarnished)

• WindingUpacompanydefendantordeclareanindividualdefendantbankrupt.

Collectioncosts(chargedtodebtor)ThePlaintiffmayclaimsuchcostsifitiscontractuallyagreeduponthatanycoststobeincurredinthecourseofrecoveryofanyoutstandingamountwillbechargedtothedebtor.TheCourthasthediscretiontoorderreimbursementofcostsandtheamountofsuchcosts.Theunsuccessfulpartyinproceedingsisalmostinvariablyorderedtopaythecostsofthesuccessfulparty. Theamountallowedisusuallyassessedonasocalledstandardbasis,thatis,area-sonableamountforallcostsreasonablyincurred,anydoubtsastoreasonablenessbeingresolvedinfavourofthepayingparty. Thesuccessfulpartyrarelyobtainsfullreimbursementforallhiscosts.

StatuteoflimitationSubjecttotheLimitationAct,thefollowingactionsshallnotbebroughtaftertheexpirationof6yearsfromthedateonwhichthecauseofactionaccrued:• actionsfoundedonacontractorontort• actionstoenforcearecognizance• actionstoenforceanaward• actionstorecoveranysumrecoverablebyvirtueofanywrittenlawotherthanapenaltyor

forfeitureorsumbywayofpenaltyorforfeiture.

Anactionforanaccountshallnotbebroughtinrespectofanymatterwhicharosemorethan6yearsbeforethecommencementoftheaction.

Anactionuponanyjudgementshallnotbebroughtaftertheexpirationof12yearsfromthedateonwhichthejudgementbecameenforceableandnoarrearsofinterestinrespectofanyjudgementdebtshallberecoveredaftertheexpirationof6yearsfromthedateonwhichtheinterestbecamedue.


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SpainLDCOncewehavecarriedoutalltheamicablerecoveryactionsandwehavetoconcludethatanamicablerecoveryisnotpossible,weanalyseifitispossibletofileacaseandifsowesendthefiletoanLDC.CurrentlyweareusingCyCexternallawyersandattorneys.Wevalueifitisfinanciallywise,itdependsontheamountofdebtinrelationwithamountofpossiblecostsandtimeinvolved.Wealsovaluethedebtor’ssolvencyandactivity.Ifadebtorisnottradingnorhasanyassetsitisnosensetoconsiderlegalaction.

BeforesendingthefiletoaLDC,weneedclientforthefollowing“originaldocuments”:powerofattorneysignedbeforePublicNotaryandsealedwithHagueApostille(HagueApostilleisneededifthepowerissignedoutofSpain).• originalinvoices• originalcontract,ifany.• originalorders• originaldeliverynotes• ourrentstatementofaccount• correspondencebetweenparts• originalpromissorynotes,chequesorbillsofexchanging,ifany• anyotherdocumentwhichcouldhelptoprovethedebt.

Otheractions

InterestsInSpainnointerestsareclaimedintheamicalephaseofdebtcollection.Itisusualtotoclaiminterestinlegaldebtcollectionproceedings.

Legalactions(typeandcosts):Oncewehavedecidedtostartlegalproceedings,wechosethekindoflegalprocedurethatwouldbebesttoclaimthedebt.Thechoiceisbetween:

Monitorio:Alegalprocedurefornondisputeddebtsunder30.000EUR.Ifwethink,becauseoftheamicableactions,thatdebtorwillpossiblyopposetothelegalclaimwewouldnotrecommendthistypeoflegalaction.

Proceeding:wefiletheclaim,thecourtsummonsthedebtorandifthereisnooppositionnorpayment,thecourtpronouncesafavourablejudgment.Ifthedebtsarepaid,theprocedurefinishes,whenthedebtorraisesopposition,wehavetofileaverbalproceeding(fordebtsunder3.000EUR)orordinaryproceeding(fordebtsfrom3.000EURandabove).

VerbalProceeding:legalprocedurefordebtsunder3.000EUR.

Proceeding:wefiletheclaim,thecourtsummonsthedebtorandfixesadayfortheoralproceeding.Inthecourthearingthecreditorshowsratificationoftheclaimandthedebtorfilesopposition.ThecreditorandthedebtorproposeandpracticetheproofstheyhaveandaftersometimetheCourtwillannouncethejudgement.

OrdinaryProceeding:legalprocedurefordebtsfrom3.000EURandabove.

Proceeding:wefiletheclaim,theCourtsummonsthedebtorandaskstofileforoppositionornot.Oncethedebtorhasfiledforopposition,oriftheperiodtodosohasexperid,theCourtfixesthedateforthePreviousAudience.InPreviousAudiencethecreditorandthedebtorshowratificationabouttheirclaimandoppositionandproposetheproofstheywanttouse.ThePreviousAudiencefinishesandCourtfixesanotherdateforpractisingtheproofsandtoissuefinalreport(OralProceeding).AfteraperiodoftimetheCourtwillhanddownthejudgment.Cambiario:legalprocedureforanydebtwhichisguaranteedwithPromissoryNote;chequeorBillof


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Exchanging.Proceeding:wefilethelegalclaim;theCourtsummonsthedebtorandordersthepreventiveattachmentofthedebtor’sassets;ifthedebtoropposes,theCourtsetsadatefortheoralproceeding(sameactionasinVerbalproceeding).Aftersomeperoid,theCourtwillpublishthejudgement.Ifnoopposition,theCourtgivethejudgmentandtheattachmentofassetsgoeson.Itisthebestlegalproceedingwhenwehave

PromissoryNotes,ChequesorExchangingBillsasthereasonsforoppositionareestablishedinLawsothatthedebtorcannotbasehisoppositioninanywaythatisnotforeseeninLaw.

Aboutthecosts,itdependsoneverykindoflegalprocedureandtheamountofdebt,sothatweonlycangivetheapproximateamountofdebtinthespecificcaseoncewehaveanalysedthekindoflegalprocedureandweknowtheamountofdebt.

Collectioncosts

PowerofAttorneyOncethedecisionismadetostartlegalproceedings,weprepareadraftofPowerofAttorneythattheclienthastosignbeforeaPublicNotaryandwhichissealedwiththeHagueApostille.PublicNotaryandHagueApostillearenecessaryforforeignpowersifwewantthemtobeusedinSpain.IfthePowerofAttorneyhasnotbeensignedbeforePublicNotaryorhasnotbeensealedwiththeHagueApostille,theywilnotbeacceptedbySpanishCourts.WeneedaspecificpowerforeverylegalproceedingasineveryPowerthelawyersandattorneysthatareempoweredaredifferent(itdependsonthecitywheretheclaimwillbefiled).

ExecutionofthejudgementIfadebtordoesnotpayvoluntarilyafterreceivedthejudgementformtheCourt,whehteritisbeenissuedinaMonitorio;Verbal;Ordinario;Cambiario, proceeding,wehavetofileforanewlegalprocedure:ExecutionProceeding.Thiskindofprocedureisneededforattachingthedebtor’sassets.Thecostsandtimeinvolveddependonthedebtor’sassets,ifadebtorhasalotofassetsandwehavetoorderalotofattachments,itwillbemoreexpensivethanifdebtorhasnotgotanyassets.

ExpectedTimeFrame:- Monitorio:8-12months- Verbal:1yearminimum- Ordinary:1yearandahalf- Cambiario:8-12months- Execution:1yearandahalfminimum(ifdebtorhaspropertieswithoutprevious

attachments).

StatuteofLimitationAccordinglywithSpanishLawthereare2periodsforprescription:• Generalperiod:15years(thisperiodisappliedforexampletodebtsgeneratedbydueinvoices).• Specialperiodofprescriptionforobligationsthatmustbepaidyearlyorinshorterperiodsof

time:5years.

Insolvencyprocedures.Whenweareinformedthatdebtorhasappliedforinsolvencyandonceweknowinsolvencyprocedure’sdata,wepreparethedraftofthewritthatclientmustfill,signandsendtoCourt.Wesendthiswritbymailtoclientwiththeinstructionshemustfollowtolodgethecredit.Wecan’tlodgecreditsonbehalfofourclientsasaspecificpowerisrequiredatSpaintoactonbehalfofotherpersonorcompanyandinInsolvencyProceduresthere’snotimeforgettingthisPower.

TypesofcompaniesThecommontypeofcompaniesinSpainareSL(limitedsociety)andSA(businesscorporation).TheminimumcorporatecapitalforsettingupaSLis3.000EUR;andforsettingupaSAis60.000EUR.InSAandSL,shareholders’assetsarenotaffectedbycompany’sdebts.


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ThereisalsoatypecalledCommunities,thistypeofcompanyisquitedifferentofaSLandSA.InCommunitiesco-owners’assetsareaffectedbycompany’sdebtbutonlyinasubsidiaryway(ifcompanyhasn’tenoughassetstopayallitsdebts).


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SwitzerlandLDCACSwitserlandmakesuseofanexperienceddebtcollectionpartnerwhohelpsuscollectquicklyourclaimsinaprofessionalandefficientwayeitheramicableorthroughtheofficialadministrativedebtcollectionofficeorifnecessary,throughhisownattorneys.Specializedattorneyscanbeentrusteddirectlywithspecialmattersorhighvaluecases.

OtheractionsOurpartner/attorneyscanprovideusonrequestwithsolvencyreportsorlegalopinionsonspecifictopics.

InterestsContractualinterestscanberecoveredfromthedebtor.Ifnot,legalinterestsfixedat5%p.a.willbeaddedtotheprincipalamount.

LegalphaseTheSwisslegalsystemisextremelywellorganizedandefficientbutcomplexforoutsiders.Switzerlandhas3levelsofcourts.

Firstinstanceandappealcourtsfallwithinthecantons’exclusivecompetence.Switzerlandisafederalstatecomposedof26cantons.

ThethirdlevelisconstitutedbytheFederalCourtinLausannewhichisthehighestCourtinSwitzerlandhearingtheappealsagainstjudgementsofthecantonalappealcourts.

ACommercialcourtsexistonlyinafewGermanspeakingcantons.

However,asfarasdebtcollectionisconcernedSwitzerland,hasdevelopedauniqueandefficientsystemthroughanofficialdebtcollectionoffice,anadministrativeauthorityexistingineachcanton.

Pre-legalactionBeforetheadministrativeofficialdebtcollectionauthoritycalledOfficedesPoursuitesorBetreibungsamt, theOfficenotifiestothedebtorasummons(Zahlungsbefehl inGerman)topaywithin20daysortomakeopposition(RechtsvorschlaginGerman)within10days.Ifnopaymentismadeandinabsenceofopposition,thecreditorcanrequestthedebtcollectionofficetoattachdebtor’sassetsoraBankruptcyPetitioncanbefiledifthedebtorisalegalpersonoramerchant.

DocumentsneededToaddressthedebtcollectionoffice,thecreditororhisrepresentativehastocompleteandsignapetitionformenclosingastatementofaccount.Furtherdocumentsarenotneededatthisstage.

CostsOffice’scostsareextremelylowevenirrelevantaslongasnooppositionisraised.

Legalactions(types&costs)

LiftingoppositionthroughsummaryprocedureIfitisnotpossibletoconvincethedebtortowithdrawhisoppositionortofindanarrangement,thecreditormustfileaclaimaimingatliftingtheopposition(mainlevéedel’oppositioninFrenchorRechtsöffnung inGerman),providedthatthecreditorhasnonequivocaldocumentsprovingtheexistenceofthedebt(billofexchange,cheque,acknowledgmentofdebt,contract).Thejudgewilldecideonlyondocumentaryevidenceinasummaryfastprocedure.Ifthejudgedecidesinfavourofthecreditor,thedebtorhas20daystobringanactionbeforetheCourt.


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DocumentsneededAlldocumentsprovingtherealityofthedebtasabove.

CostsThisisaratherinexpensive,albeitdependingontheclaimvaluee.g.foraclaimbetween10.000CHFand100.000CHF,thecostsvaryfrom60CHFupto500CHF.Ingeneral,theassistanceofanattorneyisnotnecessary,thelawyerofourdebtcollectionpartnerwilldealwiththesummaryprocedure.

OrdinaryproceedingsIfthecreditordoesnothaveanydocumentaryevidencetogettheoppositionliftedinthesummaryprocedure,hehastostartanordinaryactionbeforethecompetentcourt.SpecialcomplexcasesdonotgofirstthroughthedebtcollectionprocedurebeforetheofficialcompetentofficebutarebroughtimmediatelybeforetheCourtbyanattorney.Eachattorneyadmittedatthebarinaspecificcantonisauthorizedtorepresentclientsinthecourtsofothercantons.However,mostoftheseattorneysaretakingalocalcorrespondentduetothefactthatprocedurallawsaredifferentineverycantonandbecauseoflanguagebarriers.

Asageneralrule,theordinaryprocedurecomprisesofthefollowingsteps:• SummonsservedthroughthepostofficebytheCourtorbybailifforthepolice,dependingon

circumstancesandcanton• Conciliationhearing• Introductionoftheactionbeforethecompetentcourt• Writtensubmissionsexchanged• Hearingofwitnesses/appointmentofexperts• JudgementSubmissionsonevidencesgatheredafinalconclusion

PowerofAttorney&DocumentsneededAsimplePowerofAttorneyinfavourofthesignedattorney,signedbythepersonsempoweredtorepresentthecreditor. ThisPowerofAttorneywillmentionallpowersandrightsgrantedbythecreditortotheattorneyinthelegalaction.

Alldocumentsrelatingtotheclaim:invoices,contract,purchaseorders,confirmationsoforder,transportdocumentsandproofsofdeliverytechnicalreports,conditionsofsale,paymentinstruments,ifany,correspondence.

CollectioncostsInSwitzerland,thefesoflawyersareveryhighandgenerallycalculatedonanhourlybasis.Thefeesdependontheseniorityofthelawyerhandlingthecaseandmayvaryfrom250CHFupto480CHFperhour. Thecourtcostscanalsorepresentasubstantialpercentageoftheclaim,between5%and10%ormoredependingonthecase.However,courtcostsaregenerallychargeabletothedebtorifthecaseiswonbutnottheattorneys’fees,oronlypartiallytojudge’sdiscretion.Costsmayvaryfromcantontocanton.Althismeansthatthecostaspectshouldbeseriouslytakenintoconside-rationbeforestartinganordinaryprocedureinSwitzerland.

ExpectedtimeframeFourtosixmonthsbeforeexecutionisnecessaryintheprocedurebeforethedebtcollectionofficeprovidednooppositionismade.Executiontakesanother3or6monthsormoredependingoncircumstancesandworkload.

Summaryproceduretoliftoppositioncanlastmorethan6monthsandexecution.Ordinaryproceedingscanlast1to3yearsorevenmoredependingonthecase.

ExecutionofthejudgementSwissjudgementsareenforcedbyattachmentofthedebtor’sassetsorbyfilingaBankruptcyPetitionifthedebtorisalegalpersonoramerchant.This2ndtypeofexecutioniswidelyspreadbecauseitisanextremelyhighmeansofpressure,eitherthedebtorpaysormakesaproposalorheisdeclaredbankrupt.


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StatuteofLimitationGeneralstatuteoflimitation:• forcontractualclaimsin10years(art.127CodeofObligations)• forbillsofexchangeandpromissorynotes:3yearsfrommaturitydate


BankruptcyForcedliquidationofalldebtor’sassetsanddistributionoftheproceedstothecreditorsaccordingtotheirranking.Creditorsarerankedassecuredcreditors,e.g.mortgagecreditors,employeesetc.andunsecuredcreditors(commercialcreditors).CreditorsareinvitedtolodgeproofofdebtwiththeBankruptcyOffice(Konkursamt)generallywithin30daysfromtheBankruptcyDeclaration.Latelodgingispossiblebutentailssomecosts.Documents:copyofinvoices,paymentinstruments,ifany,statementofaccount,judgement.TrusteeinBankruptcyisappointedbytheAssemblyofcreditorswhichdecideswhetheritwillbeaparticularpersonoraspecializedofficerbelongingtotheBankruptcyOffice.Thecreditorsreceiveacertificateofloss(Verlustschein)iftheirclaimisnotsatisfiedintheBankruptcy.

TheMoratoriumandComposition(Sursisconcordataire)(Nachlaßstundung)Generallyondebtor’srequesttothejudgewhowillgrantthemoratoriumafterexaminingtherestructuringplan,thebalancesheet,thetradingaccountandthestateofthebookkeeping.Anofficer/trusteewillbeappointedtocontroltheactivities.Inventorywillbemade;thecreditorswillhavetodeclaretheclaims.TheMoratoriumisgrantedfor4or6monthsbutanprolongationupto24monthsispossible.Duringthemoratoriumperiod,apaymentplanorcompositionproposalisworkedout.Theproposalisacceptedifthemajorityofcreditorsrepresentingatleast2/3oftheclaimshavevotedinfavouror1/4ofcreditorsrepresentingatleast3/4oftheclaims.Aftertheacceptanceoftheproposalbythecreditors,itwillhavetoberatifiedbytheCourt.

Typesofcompanies1) SA/AG: Jointstockcompanies/capitaldividedintoshares:Liabilityofshareholderslimitedto

theirshares2) SARL/GMBH: Limitedliabilitycompanies:Liabilityofassociateslimitedtotheirshares3) SCOOP:Cooperativecompanies(Genossenschaften):Responsibilitylimitedtocapital4) &CO: incollectivename(withlimitationofliability)5) &CIEincollectivename6) +Sohn incollectivename7) SC/KG Insimplecommandite(limitedpartnership):onlythepersonallyliabledirector

(commanditéorKomplementär)isliablewithoutlimitation8) GMBH&COKG wheretheGMBHispersonallyliable

RetentionoftitleTheretentionoftitleclausemustbeagreedonatthelatestwhensealingthecontract.ThegoodsunderretentionoftitlehavetobeclearlyandspecificallyidentifiableandtheclausehastoberegisteredatthecompetentPublicRegistry.


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TurkeyLDCWehaveanexperiencedlocaldebtcollectionattorneyinIstanbulactinglikeadebtcollectioncom-panyprivilegingasmuchaspossiblethedebtcollectionoutofcourtbutrepresentingusalsoinCourtiflegalactionisunavoidable.

OtheractionsOurattorneycanprovideuswithlegalopinionsonspecial/complexlegaltopics.

InterestsContractualinterestscanusuallybeclaimed.Ifnot,thecreditorwhoseclaimisnotinthenationalcurrencymaytrytorecoveraratherlowinter-est(±3%ormore)buttheTurkishjudgemaydecidetodismissanyinterestclaimdependingonthecircumstancessurroundingthecase,dispute,debtor’sfinancialsituation.

IftheclaimisinTurkishcurrency,theinterestrateissignificantlyhigher(±20%p.a.)butwiththesamerestrictionsregardingjudge’sdiscretiontodismisstheinterestclaimorreduceit.

LegalphaseLegalactionsincaseofobjectionstoPaymentOrderissuedthroughtheBailiffsOfficewillbecon-ductedbeforetheCommercialCourts.Civilcourtsof1stinstancecoverallcivilcasesotherthanthoseassignedtothePeaceCourts.TheTurkishlegalsystemisingeneralwellorganized,ratherefficientbutsincethedebtorsaregen-erallymakingopposition,thelegalprocessturnsouttobeextremelyslowwithappointmentofexpertsandgrantingthedebtoralotofremedies.ThejudicialsystemisalsocomposedofHighCourts,CourtsofAppealandtheSupremeCourtofAppealwhichisthelastinstanceforreviewingjudgmentsrenderedbythelowercourts.

Legalactions(typeandcosts):1) PaymentOrderproceedings.

The1ststeptobetakenistohaveaPaymentOrderissuedthroughtheBailiffsOfficewherethedebtorislocated.Thedebtorissummonedtopayortodeclarehisobjectionswithin7daysasfromtheserviceofthePaymentOrder,failingwhichallhisassetswouldbeattached.Thedebtorhas3options:a) paytheamountdue+thedisbursementsb) fileanobjectionc) keepsilence

Intheoptionc).,thecreditorwillapplytotheBailiffsOfficeandattachmovable,immovableprop-ertiesincludingbankaccounts.

Intheoptionb).objection:executionwillbestoppedbutthecreditorhastoapplytotheCommercialCourt.Finescanbeimposedtodebtorshavingobjectedinbadfaithprovidedthecredi-torcanprovethebadfaith.

Partieswillsubmittheirpetitionsandreplies.InmostofthecasestheCourtwillsendthefiletoexperts.Partiescanthereaftersubmittheirobjectionstotheexperts’report.Thecourtwillrenderhisjudgmentafterconsideringandexaminingallwrittenpetitionsrelatingtotheobjectionsandallegationsbythepartieswhichcantakeaconsiderabletime.

IftheCourtdecidestothenullityoftheobjectionmadebythedebtorandifthedebtorappealsthedecision,itispossibletocontinuetheexecution(appealnotsuspensiveexceptifthedebtorsubmitsaBankGuaranteefortheclaimamounttotheBailiffsOffice).

2) FilingaBankruptcyPetition.ThecreditorcandecidetofiledirectlyaBankruptcyPetitionagainstthedebtor,ifheisnotina


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positiontopayanyofhisdebtsthecreditorcanalsorequiredebtor’sbankruptcyifafterPaymentOrderproceeding,thedebtorhasfailedtopay. ThecreditorisonlyentitledtorequireonetimethiskindofbankruptcyafterhavingstartedaPaymentOrderproceeding.

ItistobenotedthatincaseofobjectiontothePaymentOrder(seeabove),thecreditorcaninitiatealawsuitbeforetheCommercialCourtnotonlyforthenullityoftheobjectionbutsimultaneouslywiththethreatofbankruptcy.Iftheclaimappearstobesufficientlyproved,theCourtwillgenerallyoptfordebtor’sbankruptcy.

DocumentsneededtostartcourtproceedingsinTurkey.• invoices(legiblecopies)• purchaseorders(legiblecopies)• deliverydocuments&transportdocuments(legiblecopies)• exchangeofcorrespondence• ofcourse,paymentinstruments,ifany,likebillsofexchange,promissorynotes,checksinoriginal

Ifthecopiesarenotlegibleenough,theCourtwillrequirethedocumentsinoriginal.

CollectioncostsAverylimitedamountofcostsarechargedbythejudgetothedebtorbutnottheattorneys’fees.Wegenerallyforeseeabudgetof20%oftheclaimtobepaidtoourattorney(5%forCourtcosts,administrativeexpensesand15%attorney’sfeesbutonlyonthecollectedamount.)Ifnocollection,wejustpay5%oftheclaimamountforcourtcosts,administrativeexpenses,researches…).

PowerofAttorneyEachattorneyhastobeempoweredwhenactingonbehalfofacreditor.PowersofAttorneyhavetobesignedbythepersonswhocanrepresentthecreditorcompany. TheirsignatureshavetobeauthenticatedbyaNotaryPublicandtheApostilleoftheHagueConventionhastobeputthereafteronthePowerofAttorney.

ExecutionofthejudgementWillbemade,assaidabove,onallmovableorimmovablepropertiesincludingdebtor’sbankaccountsorthroughbankruptcy.Enforcementofjudgmentturnouttobeproblematic,time-consuming(severalmonthsormore)andinourexperiencegenerallynotprofitable.Legalactionsareconsideredasapressureondebtorstogetavoluntarypaymentfromthecompaniesorfromthedirectors/shareholderswhogenerallyhavehighvaluepersonalassets.ItisparticularlyadvisabletotryandgetfromthemaPersonalGuaranteeActdraftedaccordingto Turkishlaw.

ExpectedTimeFrameAnaverageof3/4yearsincaseofoppositions(moreifheavydisputes)butalsolessdependingoncaseandcircumstances.IfnooppositiontoPaymentOrder:+-8months

StatuteofLimitation• 10yearsforcommercialinvoices• Shippinginvoices:1year• Billsofexchange:3years• Promissorynotes:3years• Checks:6months

Insolvencyprocedures.

BankruptcyTheapplicationtotheCourtcanbemadebythedebtororbythecreditorwherebytheCourtwill-investigateanddetermineifthedebtor(naturalorlegalperson)isinsolvent.Thebankruptcyofficerwillsendnoticesandinviteallthecreditorstoattendameeting.TheelectedBankruptcyManagementBoardwillmanageandliquidatethebankruptestate.Allcreditorswillhave


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toregistertheirclaimswhichwillbelistedbythebankruptcymanagement.Thecreditorsmayobjecttotheclaimlisted.Bankruptcyproceedingsareextremelytime-consuming(severalyears)andnotprofitabletocredi-tors.IourdailycollectionworkwehavenotnotedahighnumberofbankruptciesinTurkey.

JudicialCompositionBeforeorafterBankruptcy,acreditorisentitledtoproposeapartialsettlementoratotalpaymentoveracertainperiodoftime.Theproposalhastobesubmittedtocreditors’approval.InourdailycollectionworkwehavenotedanextremelylownumberofJudicialCompositionsinTurkey.

AdjournmentofBankruptcyProcedure.ThedebtorappliesforhisownBankruptcy&simultaneouslyforitsadjournment:ThedebtorshouldsubmittotheCourtaclearandcompletefeasibilitystudyshowinghow&whenthefinancialsituationcanimprove.TheCourtwillexamineifthefeasibilitystudyisrealisticandifthemanagementwillbeabletoturnthecompanyaround.Ifso,theBankruptcywillbeadjournedforacertainperiodoftime

SameifacreditorinitiatesBankruptcyproceedings:IftheCourtisconvincedbydebtor’sfeasibilitystudy,theBankruptcydecisionwillbeadjourned.

The“Protection”periodofthedebtorwilllast12months,periodwhichcanbeextendedbytheCourt.Duringthe“Protection”nojudgmentcanbeenforced.

TypesofcompaniesThemostfrequentlyusedcompanystructuresaretheAnonimSirket(JointStockCompany)andtheLimitedSirket(limitedcompany).Therearealsoaconsiderablenumberofindividualfirmswherethedirectorispersonallyliable.

RetentionoftitleItispossibletoagreearetentionoftitleclause.HoweverthecontracthastobecertifiedbyaTurkishnotaryanddulyregisteredinaspecialregister.Itoffershowevernoprotectionagainstthirdpartiesingoodfaithsincetheyarenotobligedtoexaminetheregister.Thereforetheretentionoftitlegenerallyhaslimitedpositiveeffects.


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UnitedKingdomLatePaymentofInterestActThisActsetsouttoassistbusinessesfacedwithlatepaymentproblems.Itdoesthisbyaddinganumberofrulestocontractsbetweenbusinesses.Itisimportanttorealisethatthislegislationonlyappliestoacommercialdebt.Itdoesnotapplywhenoneofthepartiesisnotactingasabusiness,forexamplesalestoaprivateindividual/consumer. Thedebtshouldbeonethathasariseninthecourseofbusiness.Bothpartiesshouldbebusinesses,commercialentitiesorpublicsectororganisations.InterestisclaimedattheBankofEnglandrateplus8%.TherateislistedastheUKclearingbankbaselendingrateintheFinancialTimes.Itisalsosometimesknownastherepo-rate.Theratethatappliesistherateinforceattheendofthedayonwhichthepaymentwasdue.Inadditiontothisforcontractsformedonorafterthe7thAugust2002,inadditiontointerestthesuppliermayalsochargeanamounttocompensateforthecostsofcollectinglatepayments.Theamountofcompensationthatcanbeclaimedisdeterminedbytheamountoutstandingasfollows:

AmountOwedCompensationupto9.99GBP 40GBP1.000to9.999GBP 70GBP10.000GBPandover 100GBP

TheLimitationsAct1980Outlinesthetimelimitwithinwhichacreditorcanchaseadebtorforoutstandingdebts.TheLimitationsAct1980onlyapplieswhennocontacthasbeenmadebetweenthecreditorandthedebtorwithinthegiventimelimitandonlyappliestoresidentsofEnglandandWales.Creditorsaregivenafixedperiodoftimetochasetheirdebtors,whichisoutlinedintheLimitationsAct1980.Thisis6yearsafterthistimeitisnolongerpossibletopursuetheirdebt.

LegalActionsWithintheUnitedKingdomthereareseveraldifferentandseparatelegaljurisdictions:• EnglandandWales• Scotland• NorthernIreland

Whilstingeneralyoucantakethesameactionsineachcountrythesearethefollowingdifferences:• differentsolicitors• differenttimescales• differentcosts

Generallyspeaking,thefirststageoflegalactionineveryjurisdictionistheissuingofanLetterBefore Action(LBA).Thisisalettersenttothedebtorfromthesolicitorinformingthemthatshouldtheynotmakepaymentinfull,legalproceedingswillbeissued.IftheLBAisnotsuccessfultherearethreemainoptions:• CountyCourtJudgement(CCJ)• FullCourtProceedings,generallyatrial• Makingacompanyinsolvent,oftencalledwindingthemup.

However,inthelastoption,thereisnoguaranteethatmakingacompanyinsolventwillre-coupyourmoneyinfulloratall.

TherearetwostepstosuccessfullyrecoveryourmoniesintheUKbytakinglegalaction.Thefirstisobtainingthejudgementandthenthesecondistheenforcingofthatjudgement.Dependinguponwhetheryourdebtisinsuredorun-insuredwillaffecttheinitialstagesoflegalaction.Generallyspeakinginsureddebtcollectioncaseswill,fromacostsperspectivebecoveredunderthepolicyandassuchnodiscussionisneeded.Whereasun-insureddebtsandcustomerswillneedtoagreecostspriortotakinglegalaction.Furthermoreun-insuredcustomerswillneedtosignaTermsofEngagementletterforthesolicitors,thishastobesignedbyacompanydirectorandthisallowsthesolicitorstoactontheirbehalf.


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CourtProcessForObtainingaJudgement

ClaimissuedandServedonDefendant

DefendantfilesAcknowledgementofService

DefendantfilesaDefence?

AllocationQuestionnairefiled?

EnterjudgmentinDefault

Casestayed(onhold/struckout)subjecttoJudgesdecision

PossiblycheckwithCourt

Whole/part/acceptall

14days

14 days Yes

Yes

Yes

No

No

No

▲

EnforcementofJudgementTherearetwostepstosuccessfullyrecoveringyourmonies,intheUKthefirstisobtainingthejudgementandthenthesecondistheenforcingofthatjudgement.

ThereareseveraloptionsforenforcementbutthemostcommonisviaanEnforcementofficerorSheriff

Onceajudgementisobtained,thenenforcementactioncanbetaken.Ajudgementdoesnotnecessarilyleadtoasuccessfulcollection.Theenforcementofficerwillvisitthepremisestotryandcollectthemonies.Ontheotherhand,thiscanbealengthyprocessoverseveralmonthsandreportsfromtheseofficersarenotissuedonaregularbasis.

PowerofAttorneyThisisnotarequirementfortheUK,neverthelessforcasesinNorthernIreland,ifthedebtorfilesanoticeofappearancethentheyintendtoattendcourtandwerequireanaffidavitofdebt.Thismustbesignedbysomeoneattheclientwhoisawareofhedebtdetailsandhassomelevelofauthority. Theaffidavitisissuedbyoursolicitorandmustbereturnedtothem.

LegalCostsThesewilldiffergreatlydependinguponthetypeoflegalactionnecessaryandthejurisdictioninwhichwearetakingaction.Inanycase,ourexperiencedcollectorswillhaveafulldiscussionwithyouregardingcostsandtimescalesbeforelegalactioniscommenced.


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Certainlegalcostscanbechargedtothedebtor,e.g.somecourtcosts.Thedecisiontoallocatecostslieswiththejudgebutinmostcasesapproximately60–70%ofallcostsareforthedebtor’saccountaftersuccessfuljudgement

InsolvencyIfweestablishthatyourdebtorhasbecomeinsolventwewilladviseyouwhetherthereisanyhopeofapaymentfromyourdebtor.Wewillalsoregisteryourdebtwiththeinsolvencypractitioner.Ifitisjudgedthattherewillbedividendsatsomepointinthefuture,wecanmonitorthedebtortoclaimthedividendswhenappropriate.


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UnitedStatesAtradiusCollectionsUShasatwo-tieredcollectionprocess:theamicablephaseandthelegalphase.Amicablecollectioneffortscanpursuetheprincipalamountdue,aswellasinterest,collectioncostsandattorney’sfees.Legalcollectionsinwhichalawsuitisfiledcanonlypursuetheprincipalamountdue,unlessthereisanagreement,signedbythedebtor,inwhichthedebtoragreestopaypre-judgmentinterestand/orcollectioncostsand/orattorney’sfees.

AmicablecollectionThefirstUScollectiontieriscarriedoutin-house,byourstaffofcollectionprofessionals.Theyrelentlesslypursuedebtorswithintheboundsoffederalandstatelaws,andliasewithclientsandtherelationshipmanagementteamtoensurethatweserviceourclientsefficientlyandproductively.Collectorsworktoensurethat,iftheamicablephaseisnotproductive,thefileisadequatelydocumentedtofullyutilizethesecondtierofthecollectionprocess,thelegalphase.

LegalcollectionThesecondtierofUScollectionsislegalcollections.TheUShasdedicatedlegalcollectorswhomaintainanextensivenetworkofcommercialcollectionattorneys,servicingtheUSandpartsoftheCaribbean.Weuseonlyattorneyswhoaremembersofoneormorelawlists,whichindependentlyassessandbondprospectiveattorneymembers.Inthisway,weareassuredthattheattorneysworkingourfilesarecommittedto,andexperiencedincommercialcollectionsintheirrespectivejurisdictions.

LegalSystemTheUSlegalsystemiscomprisedof51separatelegalsystems:thefederalcourtsystemandthecourtsystemsofthe50states.Thevastmajorityofcommercialcollectionmattersarehandledthroughstatecourts.

StatutesofLimitationsThestatutesoflimitationsgovernthetimeperiodwithinwhichalawsuitmustbecommenced.Statutesoflimitationvaryfromstatetostate,andgenerallyarebetween2and6yearsforanopenaccountorsaleofgoods,andbetween3and10yearsforawrittencontract.

AttorneyProcessAttorneysintheUSarerequiredtomakeamicableeffortstoresolveanaccountbeforefilingalawsuitonbehalfofacreditor. Attorneyswillgenerallylimittheiramicableeffortsfrom7to30days,dependingonwhethertheyareabletomakepersonalcontactwiththedebtor.

AttorneyCostsandFeesOurattorneyshandleUSlegalcollectionsonacontingencyfeebasis.Theonlyexceptionstothecontingencyfeearrangementareiftheaccountisheavilydisputed,orifthedebtorfilesacounter-claimagainstourclientandtheattorneymustdefendtheclientagainstthecounterclaim.Inthoseinstances,theattorneywillrequirecompensationatanhourlyrate,andwillrequireanupfrontretaineragainstwhichhewillbillthehourlyrate.

Ifourattorneyhasmadenocontactwiththedebtor,orthedebtorremainsuncooperative,ourattorneywillsubmittoushisrecommendationsandsuitrequirementsforourclient’sconsideration.Anattorney’ssuitrequirementsconsistofcourtcostsandanon-contingentsuitfee.Courtcostscovertheout-of-pocketcostsanattorneymustincurtofilealawsuit,suchasthefilingfee,serviceofprocessfee,andsometimesmotionsfeesorgarnishmentfees.Anyunusedcostsarerefundeduponcompletionofthecase.

Thenon-contingentsuitfeecanbeupto5%ofthebalanceplacedforcollection.Thatamountiscreditedtowardanoverallcontingentsuitfeeof10%,whenoriffundsarecollectedaftersuitisfiled. Wenegotiatewithourattorneystokeepnon-contingentsuitfeeslow,particularlyoncasesover$100.000.Theattorneyearnsthenon-contingentsuitfeeuponthefilingofthelawsuit,andthefeeisnon-refundable.


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USclientsadvancesuitrequirementtoouroffice.Thisrequirementensuresthatourofficeincursnoexpensetolitigateafileontheclient’sbehalf,andfurtherconfirmsthattheclientwillbefullyresponsiveandcooperativethroughoutthelitigationprocess.Weforwardsuitrequirementstotheattorney,alongwithanyrequireddocumentation,suchasclient’saffidavit,declaration,orsup-portingdocumentation.

FilingtheLawsuitOncetheattorneyreceivesthesuitrequirementsandanynecessarydocumentation,hewillpreparethesummonsandcomplaint,andfilebothwiththeclerkofthecourt. Allcourtsrequirepersonalserviceofprocessuponthedebtor. Mostcourtsrequirethatthedefendantbeservedwiththesummonsandcomplaintwithin90to180daysofwhenthelawsuitiffiled,andwillfrequentlydismissthelawsuitifthedebtorisnotservedwithinthestate’sstatutoryperiodoftimeforserviceofprocess. Ifthedebtorisacorporation,andservicecannotbeperfectedonthecorporation’sregisteredagent,ourattorneycanseekleaveoftheCourttoperfectsubstituteserviceofprocessupontheSecretaryofStateforthestateinwhichthedebtorcorporationislocated.Substituteserviceofprocessisnotavailableforindividuals,soleproprietorships,orotherbusinessesnotregisteredwiththeSecretaryofState.

ProceedingwithLitigationandDiscoveryWhenserviceofprocesshasbeenperfected,thedefendantwillhavebetween20and40daystofileananswertothecomplaint.Thetimelimitsvarydependingonthestateinwhichsuitwasfiled.

Ifthedebtorfilesananswertothecomplaint,thenextstageisdiscovery,thelongeststageoflitigation.Discoveryisacourt-mandatedperiodoftimeduringwhichthepartiescanformallyrequestproductionofdocuments,requestsforanswerstointerrogatoriesandrequeststoadmit,andtakedepositionsofwitnessesfortheopposingparty. TheCourtwillsetadeadlinebywhichalldiscoverymustbecompleted.

Themostimportantaspectofdiscoveryisthateachpartymustprovidetheinformationtheyarerequestedtogive.Ifapartydoesnotfullyproviderequestedinformation,theCourtwillbarallinformationthathasnotbeenproduced,orwitnesseswhohavenotbeendisclosed.Thisisaveryseriousstageoflitigation,designedtopromoteresolutionofalawsuitwithoutresortingtotrial.Inadditiontobarringevidence,thecourtscanimposemonetarysanctiononpartieswhoarenottimelyorcompleteintheiranswerstodiscovery.

AlternativeDisputeResolutionTheUScourtsareincreasinglybacklogged.Moreandmorecourtsarerequiringthatpartiestoalawsuitsubmittonon-bindingmediationorarbitrationbeforeacasewillbeallowedtoproceedtotrial.Thepartiessplitthecostofthemediatororarbitrator,whoisfrequentlyanattorneyorformerjudge.

Mediationorarbitrationisaninformalprocessbywhichanarbitratorormediatormeetswiththeparties’attorneysandoneortwowitnessesforeachside.Thepartieseachpresenttheirdocumentaryevidenceandoneortwowitnesses.Themediator/arbitratorwilldiscussthestrengthsandweaknessesofeachparty’scase,andwillmakearecommendationaboutaprobableoutcomeattrial.Ifbothpartiesagreewiththerecommendation,asettlementagreementissubmittedtotheCourt.

Therecommendationofthemediatororarbitratorisnon-binding,andeitherpartycanchoosenottoaccepttherecommendation.Nevertheless,thereisoneimportantconsiderationforthepartywhichchoosesnottoaccepttherecommendation.Ifthatpartyreceivesalesserresultattrialthanwhatthemediator/arbitratorrecommended,thatpartymustpaytheopposingparty’sattorney’sfees.

ObtainingJudgementJudgementcanbeobtainedby4differentmethods,andwillgenerallyincludeanawardofcourtcosts(filingfees,servicefee)andpost-judgmentinterestatthestatutoryrate.


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Ifthedebtordoesnotfileananswertothecomplaintwithinthestatutorilyprescribedtime,ourattorneywillfileamotionfordefaultjudgment.Dependingonthebacklogoftheparticularjurisdiction,itcantakefrom30to180daystoobtainanorderofdefaultjudgmentfromtheCourt.AjudgementdebtorcanfileamotionintheCourt,seekingtovacatethedefaultjudgementordersothathecandefendthelawsuit.Eachstateallowsthemotiontovacatetobebroughtwithinaspecificperiodoftime,usuallyfrom6to12monthsafterthedatethedefaultjudgmentwasentered.

Judgementcanbeenteredasaresultofasettlementagreement,throughentryofaconsentjudgmentorder.Settlementagreements,whetherfromamediation,arbitrationorsimplythenegotiationofthepartiesandtheirattorneys,normallyincludeaconsenttojudgementclause.Theconsentjudgementclauseallowstheplaintiff/creditortoasktheCourtforimmediateentryofjudgementagainstthedefendant/debtor,ifthedefendantdefaultsontheagreement,anddoesnotcurethedefaultwithinashorttimeperiodsetforthintheagreement.

Judgementwillbeenteredattheconclusionofatrial.Dependingonthecourtbacklog,itcantakefrom6monthsto5yearstoobtainatrialdate,asoldestcasesaretriedbeforenewercases.

Alesser-used,buteffective,methodtoobtainjudgementisthesummaryjudgementmotion.Summaryjudgementisreservedforcaseswherethereisnodisputeastothematerialfactsofthecase.Itissimilartoatrialonpaper,andnowitnessesarepresented.Anyhintofafactualissuewillusuallydefeatthesummaryjudgementmotion. Ifamotionforsummaryjudgementisdenied,thecaseisnotconcluded,andthematterwillproceedtotrial,ifthepartiesdonotsettle.Itcantakefrom3to12monthsfromthetimethemotionisfiledforthecourttoruleonasummaryjudgementmotion,becausethepartiesaregiventimetofullybriefthelegalissuesforthecourt.

JudgementExecutionAftertheCourtentersthejudgementorder,ourattorneyrecordsthejudgementinthepublicrecord.Therecordingmakesthejudgementalienagainstthejudgementdebtor’scurrentorafter-acquiredproperty.Judgementlienswillremainvalidandenforceablefrom5to25yearsafterthedateofentry,dependingonthejurisdiction.Post-judgementinterestaccruesfromthedatethejudgementwasentered,atthestate’sstatutoryrate,iftheCourtincludespost-judgementinterestinthejudgementorder.

Thejudgementmustbeserveduponthedefendantthroughserviceofprocess,afterwhichtheCourtwillenterawritofexecution.Thewritofexecutionallowsthejudgementcreditor,throughthecourtandlocalsherifforbailiff,togarnishbankaccounts,seizeandsellproperty,andinsomestates,placeakeeperinthedebtor’sbusinesstoseizeallmoneysreceivedonthedaysthatthekeeperispresent.

Allout-of-pocketcoststoexecuteonthejudgementarechargeabletothejudgementdebtor.Costsincludegarnishmentfees,sherifforbailifffees,keeperfees,andanyfeesinvolvedinseizingandsellingthejudgementdebtor’sproperty.

Ourattorneywillengageinpost-judgementdiscoveryifheisunabletolocateassetsforthejudgementdebtor.Post-judgementdiscoverycanincludeinterrogatories,requeststoproducefinancialdocuments,anddepositionsofthedebtor’sprincipals,inordertolearnthenature,extentandlocationsofthedebtor’sassets.Ifthedebtordoesnotrespondtopost-judgmentdiscoveryrequests,theCourtcanissueabodyattachmentforthejudgmentdebtor’sprincipal.Ifthatbecomesnecessary,theprincipalwillbeheldinjailuntilhegivessworntestimonyincourtabouthisassets.

AppealAppealsarelimitedtocasesinwhichthereisalegaldisputeastohowthelawasappliedtothefactsofthecase.Factualissuesarenotappealable.


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BankruptcyBankruptciesarecontrolledbyfederallaw,whichpreventsanycollectioneffortorlitigationfromproceeding,solongasthebankruptcypetitionispending.Morebankruptciesarebeingfiledas‘noasset’bankruptcies,inwhichthedebtorgivesaswornstatementthattherearenoassetstosatisfycreditors.Creditorsarenotallowedtofileproofsofclaimina‘noasset’bankruptcy,unlessthebankruptcytrusteelocatesassets.Inthatcase,thebankruptcycourtwillnotifycreditorstosubmitproofsofclaim.Inbankruptcyfilingswherethereareassetsandcreditorsfileproofsofclaim,itcantakefrom12to24monthstolearnifcreditorwillreceivedistributionsfromthebankruptcyestate.


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