The most concrete piece of knowledge a company can hold in an FYY negotiation is which request passes with which majority. Thresholds set strategy: put a request requiring unanimity on the table and a single creditor's resistance can lock the entire process. If the same outcome can be reached through a combination of instruments with lower thresholds, the file should be built that way from the beginning.
The general rule: two thirds and at least two institutions
The decisions that form the backbone of the process are taken with a two-thirds majority by claim amount and the approval of at least two creditor institutions. The critical detail is that the majority is measured by amount, not by headcount — the two largest creditors can decide the outcome even while in the numerical minority. Decisions taken at this threshold include:
- Signing the restructuring agreement
- Extending the initial 90-day period
- Selecting the lead bank
- Amending the repayment plan
- In the large-scale regime, any matter the agreement does not specifically regulate
New money: a threshold that moves with creditor count
Extending additional credit works differently depending on the creditor structure:
- 01With a single creditor institution, that institution's consent is sufficient.
- 02With two creditor institutions, unanimity is required.
- 03With three or more, approval is needed from two thirds by claim amount and at least two institutions by count.
Two-creditor structures are therefore harder than they look: the unanimity threshold hands the smaller creditor an effective veto. In that situation, the negotiation must be built around understanding the second creditor's position early.
The heavy decisions that require unanimity
Decisions that permanently touch the amount or the form of the claim require the consent of all creditors:
- Waiving principal, in whole or in part
- Converting the claim into equity
- Transferring or assigning the claim against consideration
- Liquidating the claim
This list explains why a principal write-off should be the last item in your file. Unanimity makes even the smallest creditor at the table decisive.
A special case in the small-scale regime
The small-scale regime is confined to a standard menu. When a transaction outside that menu is requested, the process moves to the large-scale regime with the consent of all creditor institutions. In other words, flexibility at small scale is bought at the price of unanimity.
Before entering negotiations, map your creditor distribution against this table: which combination of institutions carries the two-thirds threshold, and what is the real cost of a request that needs unanimity? We build the file from that map and order the requests according to what the thresholds will actually bear.
This article is general information and does not constitute legal advice.