SW 10-12 Flashcards by dario gallati

Merger Accouting:

Annexation

Explain

A –> B = A
A swallows B
B disappears as legal entity (disapperenace without liquidation procedure –> delation in the commercial Register)
B Shareholders getting Shares of A

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Merger Accouting

Combination

Explain

A + B = C
A and B disappearing
C is newly founded
A + B shareholders receive C-shares
universal succession

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Merger Accounting

Simulated Merger

Explain

Meger Contract
A brings all assets and liab. into B –> by transfer of property
A Shareholders get B Shares
A is liquidates
Single succession –> complex legal process

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Merger in TM Situations:

Explain Art. 6 FusG (Merger Law)

receiving company needs to have enough free reserves to compensate the capital loss of the company they are want to overtake

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Merger Accounting:

Why does the Effective value ratio is NOT always the same as the exchange ratio (which was calculated)

–> das effektive austauschverhältnis entspricht nicht dem “mathematischen”

Explain

Because of the bargaining Power of the two companies

–> das effektive Verhältnis wird verhandelt

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Merger Accounting:

How is the intrinsic value of the shares calculated?

Total Equity / pices of Shares

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Merger Accounting

How is the Exchange Ratio calculated?

intrinsic value of shares (company A)

intrinsic value of shares (company B)

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Employment Law:

what is the link, according to F. Blaser, between flexible employment contracts and the unemployment rate in Switzerland

In Switzerland, companies have the possibility to dismiss people quickly but also to hire people very flexibly and quickly. For this reason, people are hired much faster than in France or Italy.

more flexibilty = lower unemployment rate

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Employment Law:

There is a diffrent of the rules between normal redundancy and mass redundancies.

When is a redundancy qualified as a “mass redundancy”

Art 335d OR ff.

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Employment Law:

Mass redundancy

–> in which two cases are Art. 335d ff. OR not applicable?

bankruptcy
composition agreement

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Employment Law:

What happens with the pension funds of the company which is bankrupt?

–> the pension funds is a separate legal entity

–> bankruptcy of the company does not affect the pension funds

8tung! –> trotz dieser Aussage von F. Blaser gibt es Pension Funds Benefits für die entlassenen MA, die einen Effekt haben können (siehe ZF)

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Employment Law:

Pension Funds:

What happens if there is a Funding free Reserves (funding >100%) when the Pension funds is Liquididated?

–> this free reserves are distributed to the dismissed employees

–> nicht direkt ausgezahlt zu den MA aber zu ihrer nächsten PK

–> this is only happening if there is a mass dedundancy!!!

–> wenn 1,2 MA das Ug. verlassen nehmen sie die free reserves nicht mit

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Employment Law:

Social Compensation Plan

–> when is it applicable and for which companies?

Company with more than 250 employees
within 30 days , more than 30 employees dismissed

(except for composition agreements)

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Employment Law:

Provisions for transfer of enterprises

Explain OR Art. 333

–> all employees must be transfered

–> afterwards you can start with mass redundancy

(except composition agreement (in court) –> z.B. you can pick onyl the good employees)

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Rescue Companies:

Explain the process for “rescue” the profitable part of a company

grafik

Note: 1. RC’s cash postion have to be high enough for standalone buisiness

–> the also need to have all operations (HR, IT etc.)

only collatoralized claims will be transfered into the RC

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Rescue Companies:

Explain the 3 Benefits for the creditors of the company which goes bankrupt

workforce is transfered into the new company (priviledge claims like salary must now not be paid)
the RC will overtake the contracts (e.g. obligations) and has to fullfill them (less claims against the bankruptcy assets)

- the selling of the company leads to cash inflow (increase bankruptcy assets)

–> RC = the new Company

Leasing:

There is a protocol between the “Lessee” and the “Leasing-Company”

Explain the Protocol

a) The Seller delivers the Leasing-Good directly to the “Lessee”
b) for that sales contract to become valid it needs a protocol

–> the Lessee confirms that he has taken possesion of the Leasing-Good

Leasing:

Direct Leasing vs. Indirect leasing

Explain both and the differences

Direct leasing

the lessor is usually the producer and seller of the leasing goods

Indirect leasing (triangle)

a separate leasing company is the intermediary
between the producer/seller of the asset and the buyer

Leasing:

Financial Lease

Explain the most important points

it pretends as if the Lessee would hold title in the Leasing-Good (legally it’s the leasing company)
the Lessee puts the Leasing-Good in it’s B/S
at the same time show a full blown obligation as a liability
P+L: interest expense and depreciation
B/S: amortization –> minimum lease payment

Leasing:

What does “Annuity” means?

–> A steady payment over Time

Leasing:

Split of Leasing Payments between Interest and amortization

Explain the Split Table and how it’s done

Leasing:

Sale and Lease Back (over FMV)

explain the result..

If there is a delta between FMV and the Price

or / and FMW and the Leasing Payments:

–> you have to show as separat financing in the B/S (liab?)

Chapter 11, USA bankruptcy code

Which things are similar as in CH?

 If the judge approves the reorganization plan (restructuring plan) and the creditors agree to it the plan will be confirmed.
 Empowerment to trustee (administrator) to supervise the debtor’s business (administration by debtor in possession)

Debtor may obtain further funding from investors and even grant them priority on the net profits of the company

 Possibility to re-negotiate or terminate long term contracts
 A creditor committee is formed that consists normally of the 7 largest unsecured creditors; such committee consults with the debtor in possession with regards to the administration of the business and participates in the formulating the
restructuring plan

Chapter 11, USA bankruptcy code

Which things are different as in CH?

 Even if one class of creditors votes against the plan it still may be confirmed if the **cramdown** requirements are met
 If the plan is denied either liquidation procedures apply or the company is returned to status quo ante the filing of the petition --\> **Do or Die in CH**
 When the estate has been fully administered (the plan put into action) a final decree closes the chapter 11 –process

Chapter 13: ## Footnote **name the 3 classes**

**1. priority claims:** e.g. taxes and admin expenses for the bankruptcy proceedings ## Footnote --\> must be paid in full under the plan **2. secured claims**: collateralized claims --\> are to be paid at least up to the collateralized amount **3. unsecured claims** --\> should also be repaid

**_Chapter 13 vs. Chapter 7_** Name some **differences**

- under chapter 13. you can **save some** assets (indiv. assets) - the plan sould **offer more to the unsecured creditors** than a chapter 7 liquidation procedure would offer them - some claims are forgiven if it is hopeless (not so in CH) - under chapter 7. everything is sold out

US: **_Cram Down_**

- A cram down is the **involuntary imposition by a court** of a reorganization plan over the objection of some classes of creditors. - A cramdown is often utilized as part of a Chapter 13 bankruptcy filing and involves **the debtor changing the terms of a contrac**t with a creditor with the **help of the court**. - A cramdown reduces the amount owed to the creditor to reflect the fair market value of collateral that was used to secure the original debt. - A cramdown provision (also known as "cram-down") is primarily used on certain secured debts, such as a car or furniture. Cramdowns are not permitted on mortgages for homes that serve as a primary residence.

**_EU restructuring directive_** explain and name the 3 goals

- valid July 2021 - harmonize the laws and procedures of EU member - at the moment they have diverse laws - restructrurings, insolvency, discharge of debt ------------------------------------------------------------------------------- the three main goals:  Enterprises in each member state should have access to a preventive restructuring framework which enables them to avoid insolvency and to continue operating.  Insolvent or over-indebted entrepreneurs should benefit from a full discharge of debt within a reasonable period of time.  The efficiency of procedures involving restructuring, insolvency and the discharge of debt should be improved.

**_ESUG: Germany_** explain

- Valid March 2012 - law on further facilitation of the restructuring of corporations **_1. more influence of creditors_** **_2. self administration_** **_3. more concise restructuring process_** **Goal of this law is to facilitate restructuings through:** - more influence of creditors on the selection of the administrator - grant the debtor easier access to self-administration (debtor is allowed to manage the restructuring process by himself together with an administrator) - ensure a more stringent restructuring / insolvency process - concentration of competencies with the insolvency courts

**_ESUG: Germany_** What is the **pendant of the "moratorium (CH)"** in Germany?

--the **“protective umbrella”**-process allows management to prepare a restructuring plan within three months together with a (self selected) administrator and together with the creditors --\> and chapter 11 in US

**_IDW-S 6 Report_** Explain

Banks in Germany always want this Report ## Footnote **it's a report from an expert (tax/cpa/lawyer) who gives them confidence that there is a high likelihood that the TM will be successful**