How are groups of companies treated on the restructuring or insolvency of one of more members of that group? Is there scope for cooperation between office holders?
Restructuring & Insolvency (2nd Edition)
Under the Hungarian law each liquidation proceeding shall be commenced separately against the legal entity. Besides, Section 3:59 of the Civil Code establishes underlying liability of the dominant member of the group of corporations. If any controlled member of the group is undergoing liquidation, the dominant member shall be held liable for any outstanding debt the member may have. The dominant member shall be relieved of liability if it is able to verify that the controlled member’s insolvency did not arise as a consequence of the group’s common business strategy.
Under Hungarian law each bankruptcy proceeding shall be commenced separately against the legal entity, hence there is no automatic group insolvency proceeding.
IBL does not recognize the concept of group of companies. Each one members of a group of companies is treated as separate in all respects from its other group of companies members, whether or not in the restructuring or insolvency proceedings. Therefore, there is no scope for cooperation between office holders.
In practice, the receiver / administrator in certain bankruptcy / PKPU proceedings use various different considerations and grounds in deciding to accept or reject claims being submitted by a creditor which constitutes the affiliates of the bankrupt debtor / debtor in PKPU on the basis of certain intercompany loan.
According to the Company Law, the liability of the direct parent company for its subsidiary as a shareholder shall not go beyond its shares' value in the subsidiary. Therefore, the parent company should not be held liable for the subsidiary's actions and transactions. However, in certain circumstances, the parent company may be held liable for the subsidiary’s actions, or for the loss incurred by the subsidiary, if it is established that any of the followings apply:
a. The subsidiary has not yet acquired legal entity status.
b. The parent company, in bad faith, uses the subsidiary solely for its own benefit.
c. The parent company is involved in unlawful acts committed by the subsidiary.
d. The parent company uses the assets of the subsidiary, causing the subsidiary to be unable to pay its debts.
e. The subsidiary has only 1 (one) shareholder for more than 6 (six) months.
Under Canadian insolvency law, there are two separate forms of consolidation in respect of groups of companies whereby one or more members of such group are subject to insolvency or restructuring proceedings: substantive consolidation, and administrative consolidation.
Substantive consolidation refers to the consolidation of assets and liabilities of affiliated entities such that the claims of all creditors in respect of the affiliated entities may be jointly satisfied. While not expressly permitted under the BIA or CCAA, Canadian Courts have relied on their equitable jurisdiction pursuant to section 183(1) of the BIA and section 13 of the CCAA to permit consolidation of corporate groups where one or more members of such corporate group are subject to insolvency or restructuring proceedings. In determining whether it is appropriate to do so, Canadian Courts look to determine whether the benefits of such consolidation outweigh the costs on a case-by-case basis with a view to the most efficient proceedings the preservation of assets. Canadian Courts will consider the following factors in determining whether it is appropriate to substantively consolidate companies for the purposes of insolvency or restructuring proceedings:
- difficulty in segregating assets;
- presence of consolidated financial statements;
- profitability of consolidation at a single location;
- commingling of assets and business functions;
- unity of interests in ownership;
- existence of intercorporate loan guarantees; and
- transfer of assets without observance of corporate formalities.
Canadian Courts will look to whether creditors would suffer greater prejudice in the absence of substantive consolidation than the debtors (and any objecting creditors) will suffer from its imposition. Recognizing that substantive consolidation will always threaten to prejudice the rights of creditors to some degree, Canadian courts have utilized the remedy of substantive consolidation where the possibility of economic prejudice that would result from continued corporate separateness outweighs the minimal prejudice that consolidation would cause. The underlying rationale for Canadian Courts’ use of substantive consolidation is to be fair and reasonable in the circumstances each case.
Notwithstanding the foregoing, there has been notable reluctance on the part of Canadian Courts to substantively consolidate members of corporate groups on account of prejudicing certain creditors.
Administrative consolidation refers to the joint administration of affiliated debtor estates while the assets and liabilities of such debtors are left separate. Administrative consolidation is typically driven by efficiencies and aims to avoid the multiplicity of proceedings while seeking the most expeditious and least expensive determination of claims.
Neither the BIA nor the CCAA prohibit the administration of affiliated debtor estates by a single party, however, consistent with Canadian Courts’ utilization of the doctrine of substantive consolidation, Courts rely on their equitable jurisdiction pursuant to Canadian insolvency statutes to order the consolidation of debtor estates for administration purposes, as appropriate. As is the case with the doctrine of substantive consolidation, Courts seek to balance the benefits and costs of administrative consolidation in light of the various stakeholders in determining whether it is appropriate to order such consolidation.
“One debtor, one estate, one procedure” – this characterizes one of the main principles of German insolvency law. Affiliated companies that are in distress and/or insolvent are generally liquidated or restructured in separate proceedings.
However, the Insolvency Proceedings of Corporate Groups Improvement Act (Gesetz zur Erleichterung der Bewältigung von Konzerninsolvenzen) came into force in 2018 and allows for concentration of group insolvencies (at least for group companies with their COMI in Germany) in the same competent court, with the same judge and the same (preliminary) insolvency administrator.
In addition, so-called coordination proceedings (Koordinationsverfahren) have been enacted as an additional option for group insolvencies. In case different insolvency administrators or monitors have been appointed, these proceedings allow appointing a coordinator of proceedings (Verfahrenskoordinator) who can draw up a coordination plan for the group as a whole in order to ensure concerted restructuring or liquidation measures. In cross-border group insolvencies, the involved insolvency administrators often enter into so-called protocols which can serve a similar purpose.
These new German rules confirm and further facilitate what had been common practice in many insolvency proceedings regarding group companies anyway. They do not change the basic principle that the insolvency proceedings regarding one debtor have to achieve the best results for this debtor’s creditors.
Under South African law, each company is a separate legal entity with its own legal personality. However there is nothing preventing a group of companies to be entered into insolvency or restructuring processes at the same time under combined supervision, so there is scope for cooperation between office holders in that way.
In a liquidation scenario, intercompany claims are considered subordinated and are the last to receive compensation under the ranking established in Article 83 of the BRBL. The legal doctrine explains that there is a presumption in the insolvency regime (i.e., in a liquidation) that any funding provided by shareholders – directly or indirectly through other controlled entities – shall be treated similarly to an equity stake and therefore shall be paid only after all other creditors of the debtor.
However, this presumption does not apply to a judicial reorganization, since this proceeding does not entail the liquidation of the debtor's assets, but rather allows the debtor to propose payment conditions to the creditors with a view to restructure its activities and continue operating. Therefore, under a judicial reorganization proceeding, intercompany claims will receive compensation according to the type of the credit and to the judicial reorganization plan.
However, in any case, the debtor’s partners, as well as associated, controlling and controlled companies or those having a partner or shareholder with an interest of more than 10% of the debtor’s capital stock may not vote in the general meeting of creditors.
The insolvency of each member of the family is tested based upon the figures of each individual member. This means that positive consolidated results of the family do not provide a safe harbor for those members of the family that meet the insolvency test on a stand-alone basis, while on the other hand, negative consolidated results of the family do not pull the healthy members of the corporate family beneath the surface.
In case of insolvency, each respective member of the family must commence insolvency proceedings for itself. Insolvency proceedings commenced by one member of the corporate family are not acknowledged for the purposes of insolvency proceedings of other members. Those proceedings are completely separate proceedings with separate files, lists of assets and creditors, etc. However, if the insolvency cases of the members of the family are decided by the same insolvency court, all such insolvency cases are assigned to the same judge (i.e., partial procedural consolidation is allowed).
In the case of a corporate family whose members operate in different districts, each member of the family may file the insolvency petition with the district court in the place in which another member of the family already filed its own insolvency petition. This means that the place of the first filing is crucial for the determination of a favorable jurisdiction. On the one hand, this allows the family of companies to engage in forum shopping, i.e., to choose which of the district courts will decide the insolvency case; on the other hand, insolvency cases of the family of companies are consolidated within the same insolvency court or even under the same insolvency judge.
Czech insolvency law provides no specific rules for substantive consolidation as is generally interpreted, since the concept of substantive consolidation is not recognized in the Czech Republic. In other words, creditors of one member of the corporate group do not have a statutory right to claim the consolidation of assets and liabilities with other insolvent member(s) of the corporate group.
Claims of secured creditors with respect to members of the corporate family do not collapse into one claim in insolvency proceedings. If the secured creditor has a security interest in the assets of one member of the family, and a guarantee from another member of the family, both such claims may also be valid in insolvency proceedings. This, however, does not mean that secured creditors are allowed to receive multiple payments for their underlying claim. Czech law distinguishes between primary and secondary claims. Secondary claims, i.e., those that secure a primary claim, exist only for as long as the primary claim exists and only up to the amount of the primary claim. Debtors from secondary and primary claims may obviously be different entities. In principle, any payments received under the secondary claim automatically reduce the primary claim and vice versa. The secured creditor is allowed to submit in the insolvency proceedings of all members of the corporate family all sorts of secured claims (mortgages, pledges, guarantees, etc.) that were duly created and perfected in respect of assets of such corporate members, although payments received under such claims may not exceed the aggregate amount of the primary claim.
This will largely depend on where the insolvent company sits within the group. However, generally speaking, liquidators of a holding company will have the ability to take control of and sell the company's subsidiaries.
Consolidated proceedings are not recognised by Cayman Islands law and the Cayman Court will generally recognise the separate legal personality of each company within the group. However, if multiple companies within the group are the subject of winding up proceedings, the Cayman Court may take a pragmatic approach to the management of the proceedings and may permit the proceedings to be dealt with together in certain cases. Further, the Cayman Court may appoint the same or common liquidators if it is satisfied that it is appropriate to do so (and having regard to the facts of the case and the risk of any conflicts of interest arising).
No statutory provisions exist in order to govern co-operation between liquidators of different group companies, although liquidators appointed over different group companies may co-operate informally if it is in the best interests of both estates. In exceptional circumstances, the Cayman Court may also permit to allow the pooling of assets and liabilities between members of the same corporate group, for example, to allow the liquidators to achieve a compromise in relation to cross-claims between the group entities.
Under the Israeli law, each company is an independent and separate legal entity, and the officers of each company must act for the benefit of such company and have fiduciary and loyalty duties towards such specific company. Such rule applies also to insolvency situations. However, if the separation of the companies was artificial and they in fact acted as one entity, it may be possible to "pierce the corporate veil" between such companies.
In general, there are no specific legal provisions on how to treat group companies in restructuring or insolvency proceedings. However, as a practical matter, group companies will usually file these proceedings at the same time because they have to resolve guarantee claims with respect to bank loans, typically in situations where the parent company has guaranteed its subsidiary’s bank loans.
There are no specific legal provisions on cooperation between office holders. However, in general, the court will usually appoint the same trustee if group companies have a parent-subsidiary relationship. If the relationship is other than parent-subsidiary, and a subsidiary is extremely large or there are potential conflict issues among the group companies, the court sometimes will appoint different trustees. Nevertheless, the same court will have jurisdiction over the group companies in most cases, which makes it easy to proceed with several restructuring or insolvency proceedings at the same time and to construct a cooperative relationship between the trustees.
The companies within a group are still treated as individual legal entities, and must still file separate restructuring or insolvency applications.
On a practical level, the Singapore Courts will usually assign a single judge to hear all applications relating to the same group of companies, and applications involving different companies within the same restructuring efforts are usually heard together. Further, the one of the factors that the Court will look at in deciding whether to approve the appointment of an insolvency practitioner is whether duplicate costs can be avoided. It is thus common for the same insolvency practitioner to be appointed in respect of multiple companies in the same group.
In addition, where a company proposing a scheme of arrangement has obtained a moratorium, related companies are entitled to apply to Court to obtain similar protection.
British Virgin Islands
There are no specific provisions of the IA that deal with the restructuring or liquidation of groups, though it is possible that an arrangement could be tailored towards rescuing a group of companies in financial difficulties. In such a situation, the relevant approvals would be needed from the different classes of stakeholder and (save in the case of creditors’ arrangements) the court would need to be satisfied that the arrangement satisfied the relevant requirements. Although a creditors’ arrangement might be formulated to rehabilitate a group of companies, there might be a greater risk that a disgruntled shareholder or creditor might allege that their interests were unfairly prejudiced.
When insolvency proceedings commence against a company, it is treated as an independent legal entity. This means that the remaining part of a group is not affected by the insolvency.
If restructuring or proceedings are commenced against more companies of the same group, it will often be the same trustee or restructuring administrator who administers the estates.
Group companies are not entitled to vote in restructuring proceedings.
There’s no explicit provisions in China’s bankruptcy law on consolidated bankruptcy of members of a company group. Chinese courts respect the independent legal person status of each group member, and, as a basic principle, treat the bankruptcy of each member as an isolated case. Only when the insolvent members of a company group are inextricably intertwined, and separation between their assets would result in unreasonably high costs and severely prejudice the creditors’ rights to a fair compensation, will the courts handle the bankruptcy cases of the members on a substantively consolidated basis. If more than one member of a company group has a ground to be bankrupted, but their bankruptcy cases are not qualified to be heard on a substantively consolidated basis, their courts may coordinate with each other how their bankruptcy cases will be heard based on the applications of relevant parties and taking into account the efficiency of hearing, the order of the bankruptcy filings, the scale of each insolvent member and the location of the controlling member, among other concerns, and then request their common higher-level court to designate a court to hear all these bankruptcy cases. In practice, to facilitate the disposal of the assets and dealing with the debts of group members of which the bankruptcy cases are heard on a substantively consolidated basis, the hearing court usually appoints the same administrator for all the members involved.
In insolvency proceedings involving corporate groups, a consolidated group is not considered as a single entity. Where companies operate as a consolidated group, the starting legal position is that the ‘separate legal personality’ principle prevents creditors of an insolvent company from gaining access to the funds of other companies for payment of their debts. Having said that, groups of companies often enter into a deed of cross guarantee to afford themselves the benefit of consolidated financial reporting. That deed commits the companies a party to it to pay the liabilities of all the other companies party to it in a liquidation.
The Corporations Act does provide for a holding company to be liable for the debts of its insolvent subsidiaries in certain circumstances. These provisions enable the subsidiary’s liquidator to recover amounts from the parent company equal to the amount of the new debt incurred by the subsidiary after the subsidiary becomes insolvent, but only where the parent company failed to prevent the subsidiary from incurring the debts and where there were reasonable grounds to suspect that the subsidiary was cash flow insolvent.
The corporate veil may also be lifted in circumstances where an insolvent subsidiary is deemed to be acting as a mere agent, conduit or partner of its parent company. However, Australian courts have displayed some reluctance to lifting the corporate veil in these circumstances.
Pooling of group funds may occur in limited circumstances, as prescribed by Division 8 and Part 5.6 of the Corporations Act, being section 5.71 to 5.79L. Generally, those circumstances are where there is a substantial joint business operation between members of the same corporate group and external parties; such members of the group are jointly liable to creditors. The liquidator of the corporate group entity being wound up makes what is called a pooling determination, after which separate meetings of the unsecured creditors of each company must be called to approve or reject the determination. The court may vary or terminate any approved pooling determination.
Finally, in group insolvencies, office holders tend to be appointed from the same firm. If material conflicts arise, special purpose officeholders tend to be appointed.
Under Belgian law, there is no so-called company group law. Each company within a group structure is considered to be a separate legal entity (except if the conditions for piercing the corporate veil are met). Hence, the insolvency of a parent company does not automatically lead to the insolvency of its subsidiaries.
For the purposes of (amongst others) streamlining and coordination with respect to insolvency proceedings of group companies, the same person is often appointed as the trustee for, in principle, all members of the group. It is of relevance to note that even though the trustee could be the same person for various members of a corporate group, each proceeding remains distinct and separate from the other.
There are no specific Dutch rules on group insolvencies.
The Bankruptcy Code permits, and courts routinely allow, affiliated debtors or parents and subsidiaries with integrated operations to file jointly and seek joint administration of their chapter 11 cases, thus allowing debtors to combine all filings on one docket for administrative ease and cost efficiency. The joint filing and administration of a case is distinct from substantive consolidation, for joint administration does not allow a court to distribute group company assets pro rata without regard to the assets and liabilities of the individual corporate entities in the proceeding. Rather, when entities are jointly administered, the distributive value allocated to each entity within a corporate group depends on the assets and liabilities of each entity in the group and a creditor with a claim against one entity has no rights against another entity, as joint administration is merely a procedural efficiency.
In contrast, substantive consolidation combines all assets and liabilities of a group of debtors into one estate for voting and distribution purposes, creating one fund from which all creditors of all entities are paid. U.S. courts generally only allow substantive consolidation when the various estates are too intermingled to properly distinguish amongst the entities.
The French insolvency regime did not include specific rules tailored for corporate groups until Law No. 2015-990 dated 6 August 2015. Before that, insolvent corporate groups were obliged to initiate separate plenary insolvency proceedings for individual companies. This new law created specialised commercial courts which have jurisdiction in case of large insolvency cases. If a specialised commercial court has jurisdiction over the parent company, it will also have jurisdiction over its subsidiaries.
In addition, the corporate veil may be lifted and insolvency proceedings initiated against a company may be extended to another company on the ground either that (i) the debtor is held to be a fictitious legal entity, or (ii) that the assets and liabilities of the parent company and those of its subsidiary are so intertwined that they should be deemed to be one single entity.
Finally, European law tends to take into consideration the existence of a corporate group. EU Regulation 2015/848 of the European Parliament and of the Council dated 20 May 2015 has introduced a group co-ordination proceeding between all courts before which an insolvency proceeding is opened by an entity of a group.
Under Luxembourg law, there is no recognition of the concept of group. Each company within a group structure is considered to be a separate legal entity (except if the conditions for piercing the corporate veil are met). Hence, the insolvency of a parent company does not automatically lead to the insolvency of its subsidiaries.
Separate legal personality
In an insolvency proceeding involving corporate groups, the members of the group are not considered as a single entity. The starting legal position, is that the 'separate legal personality" principle prevents creditors of an insolvency company from gaining access to the funds of other group companies for payment of the debts of the insolvent company. The common exception to this principle is where guarantees are granted which commit one or more related company of a debtor to pay particular debts of that debtor.
Pooling orders in liquidation
A liquidator may seek an order of the Court under section 271 of the Companies Act 1993 that the liquidation of two related companies proceed as if they were one company (a pooling order).
The definition of 'related company' is broad and includes majority shareholders, subsidiaries, companies which are both related to a third company or companies where the businesses of the two companies are carried on such that the separate businesses of each company are not readily identifiable.
In determining whether to grant a pooling order the Court will have regard to the extent to which any of the companies took part in the management of any of the other companies, the conduct of any of the companies towards creditors of any of the other companies, and the extent to which the circumstances that gave rise to the liquidation of any of the companies are attributable to the actions of any of the other companies.
Pooling orders in voluntary administration
A administrator or creditor may seek an order of the Court under section 239AER of the Companies Act 1993 that the administration of two or more related companies proceed as if they were one company (a pooling order).
The applicable definition of 'related company' is the same in administration as that discussed above in the context of liquidation and the Court will have regard to the same factors as for liquidation in determining whether to grant a pooling order in an administration situation.
Cooperation between office holders
It is not unusual in New Zealand for receivers and liquidators or receivers and administrators to be appointed to the same company. In situations of parallel appointment, there is scope for cooperation between office holders with the receiver typically responsible for the realisation of assets subject to relevant security, whilst the relevant liquidator or administrator undertakes meetings of creditors, administration of unsecured claims and reporting.
Regulation in the area of insolvency of groups of companies is based on rules providing for the “consolidation” of the insolvency procedures opened against the members and provisions regarding their “coordination”. Consolidation implies that all the procedures opened against the companies that are part of a group be reunited in front of one court and the same insolvency practitioner be appointed to administer the group’s insolvency procedure. The second component implies the regulation of mechanisms of cooperation and coordination of the insolvency procedures initiated against members of the group of companies. The insolvency law encourages communication of information and it even obliges insolvency practitioners to cooperate as much as possible based on a protocol for the integrated performance of the economic, legal and operational activities at the group’s level, as well as by the granting of the right to participate in the creditors’ meetings or the creditors’ committees of any of the group members. Thus, these measures may lead to the improvement of the economic decisions made in the insolvency proceedings and to the avoidance of making of contradictory decisions at the level of the group of companies.
Swiss insolvency law does not recognize the concept of substantive consolidation. Hence, separate insolvency or restructuring proceedings will have to be initiated for each member of a corporate group. That said and pursuant to Art. 4a DEBA, Swiss insolvency authorities are held to coordinate their actions to the extent possible in a group insolvency. A similar obligation is currently proposed for international group insolvencies where the Swiss authorities would have to coordinate and cooperate with foreign office holders.
Where related companies enter into insolvency or restructuring, the corporate veil remains in place.
Liquidators’ duties will be owed only to the creditors of the company to which they were appointed. In practice, where a number of entities in a corporate group enter liquidation, it would be usual for the same persons to be appointed liquidators over each of the insolvent entities, and the Court will generally favour that approach where faced with competing candidates for appointment. In relation to cooperation generally, see the discussion under the preceding heading.
In an examinership, the Court can appoint the Examiner to a related company or related companies at the same time or thereafter (provided any related company also has its COMI in Ireland), where it is satisfied that:
- the making of the order in respect of a related company would be likely to facilitate the survival of the insolvent company as a going concern; and
- there is also a reasonable prospect that the related company and the whole or any part of its undertaking is capable of surviving as a going concern.
Related Irish companies are generally not wound up as a group. However, where two or more related companies are being wound up the liquidators, creditors and / or contributors of those companies can apply to court for a pooling order whereupon the assets of the related companies are pooled and the companies are wound up together as if they were one company. The court must have regard to the following (a) the extent to which any of the companies took part in the management of the other companies, (b) the conduct of the related company towards the creditors of the other companies (c) the extent to which the circumstances that gave rise to the winding up of any of the companies is attributable to the acts or omissions of any of the other companies and (d) the extent to which the business of the companies have been intermingled.
Cross-border group insolvency in EU
The Recast EU Insolvency Regulation (Regulation (EU) 2015/848) introduces a framework for group insolvencies. It provides for voluntary co-ordination between office holders in order to achieve a greater chance if rescuing the entire group. Where utilised, insolvency practitioners from different jurisdictions will co-ordinate a restructuring plan and seek a stay on enforcement mechanisms. The duty to co-ordinate shall exist to the extent that it is not incompatible with local procedural rules and does not give rise to any conflict of interest. The framework envisages one court co-ordinating the group coordination plan with one insolvency practitioner acting as group co-ordinator. Insolvency practitioners in member states can refuse to participate in the group coordination proceedings and therefore, the coordination plan will only be effective where it is consensual.
Under English law, each company in a corporate group is treated as a single entity and its directors are required to consider the interests of creditors in relation to that particular company (rather than the group as a whole). However, the commercial reality is that what is beneficial for a group is often beneficial for each individual company, and there is scope for co-ordination between affiliated entities.
The Insolvency Regulation recast makes specific legislative provision to try to facilitate co-ordination between officeholders (albeit on a voluntary basis).
The case may be different where a group may be looking to offload an unprofitable subsidiary through an insolvency process. Given the need to consider the creditors of each company on an individual basis, directors that sit on both group and company boards in such a scenario may need to consider whether a conflict of interest exists and, if so, recuse themselves from one of the boards.
Entities of the same corporate group are entitled to file a petition for joinder insolvency with the only requirement that one of the entities of the corporate group complies with any of the Insolvency Standards (as described in our answer to Question 3 above), and such event results in one or more of the corporate group´s entities being in the same situation.
The Insolvency proceedings of entities belonging to a corporate group accumulate as a single proceeding but are dealt with on a separate basis. Furthermore, the estates of each entity shall remain independent throughout the Insolvency Proceedings.
Regarding the restructuring proceedings, in the refinancing agreement with banks and other financial entities regulated in article 71 and Additional Provision 4º of SIA, the credits that has any company of the group against others of the same group, will be individualized. However, these debts will not be computed as a liabilities of the insolvency proceeding.
Regarding the treatment of group of companies in a insolvency proceeding, first of all, article 6.2.2 of SIA establishes that if the insolvency company is a member of a group of companies, it will have to be indicated in the petition of the DIP and it will be necessary to attach the consolidated annual accounts, the management reports of the last 3 financial years and the audit report issued with regard to those accounts shall also be attached, as well as a report stating the operations performed with other companies of the group during the same period (art. 6.3.4 SIA).
The SIA allows to apply the DIP of group of companies for the whole group. Furthermore, it is allowed that one or some of the members of the group of companies, individually apply for the DIP. However, if the parent company is declared insolvent, the insolvency proceeding of the subsidiaries companies shall be grouped in the same proceeding of the parent company (art. 25 bis SIA). In addition, it is possible forming a group of subsidiaries which will be added to the insolvency proceeding that has more liabilities (art. 25.3 bis SIA).
Finally, article 93 of SIA considers subsidiaries companies as persons specially related to the insolvency debtor. It implies that the credits between the companies of the group could be qualified as a subordinated claims.
Both insolvency and restructuring proceedings of companies involved in a same corporate group can be combined and the same administrator can be appointed for both. This normally depends on a request by the court-appointed administrator but can also be order ex officio by the court or be requested by the relevant debtor companies. However, different companies keep their separate legal personalities and their assets and liabilities of the different companies are never pooled together as in the proceedings.