An entity ("the debtor") requiring a licence to seek a Composition shall have a written declaration of at least 25 per cent of the voting creditors, both by number and by amounts, that they recommend the Composition on the basis of the proposals put forward. A Composition agreement may provide for total relinquishment of debts, proportional relinquishment, deferred dates of payment, changes in form of payment, or all of these arrangements jointly.
The following shall be specified in a Composition proposal:
- to what extent the debtor offers payment of the Composition claims, and in what form;
- the date or dates of payment;
- whether interest, and if so, at what rate, will be paid on the Composition claims from the date a Composition agreement is concluded and to the date of payment, if deferred payment is envisaged;
- whether security, and if so of what kind, will be placed to secure performance of the Composition agreement.
A Composition proposal may contain a provision to the effect that claims up to a certain amount, which in the absence of such a provision would be counted among Composition claims, will be paid in full, provided the amount in question is deemed insignificant with a view to the debtor's financial situation. However, such a provision may only be included if all the Composition claims will be paid by the same or higher amount.
When a license to seek Composition with creditors has been granted, the District Court judge shall appoint an agent to carry out the preparations for the Composition. The Winding Up Board of Glitnir shall perform the duties normally performed by a Composition agent.
The Composition agent shall issue and have published two times in the Legal Gazette a notice to creditors, calling upon the debtor's creditors who consider themselves in possession of Composition claims, to declare them to the Composition agent within four weeks from when the notice is first published.
Since Glitnir is in winding-up proceedings it is not necessary to issue this notice. If the Winding Up Board decides that voting shall take place on the proposal, it shall convene a particular meeting of the creditors for this purpose. Such a meeting shall however not be held until a creditors' meeting held to discuss the list of stated claims against the bankruptcy estate is held and completed. The right to vote on the debtor's Composition proposal shall be restricted to the voting creditors who have stated their claims to the Composition agent/ Winding Up Board within the period granted for this purpose.
A Composition proposal shall be deemed approved if supported by the same proportion of votes as the proportion of composition claims to be relinquished according to the proposal, provided this reaches 60 per cent at a minimum, by number of voting creditors as well as amounts. If neither proportional nor total relinquishment is proposed, a Composition proposal shall be deemed approved if supported by 60 per cent of all voting creditors by number as well as amounts.
Composition does not affect the following claims against a debtor:
- claims originating after a court order has been issued granting a debtor license to seek Composition;
- claims for performance other than payment of money, which can be performed in substance;
- claims that would be ranked as provided for in Articles 109, 110 or 112;
- claims secured upon the debtor's assets, to the extent the value of the relevant asset covers the claim;
- claims that could have been settled by set-off had the debtor been declared bankrupt;
- any claims particularly exempted from Composition under the terms of the Composition agreement by reason of their full payment.
If the Composition procedure has ended with an approval of the debtor's proposal, the debtor shall submit a written petition for confirmation of the Composition agreement to the district court judge within one week from when this conclusion was announced at a meeting.
