Category: *In English

‘Minting Capital: The Role of the Corporation’ by Katharina Pistor (Columbia)

The youtube channel of the European Corporate Governance Institute has an interesting video of a discussion on “Minting Capital: The Role of the Corporation”. Professor Katharina Pistor of Columbia University discusses how corporate law can be used to generate wealth for the persons using this “legal code’ and how this can be seen as a legal subsidy.

This presentation develops the topics which Professor Pistor touched upon in her Heremans Lectures as Global Law Professor at the KU Leuven in 2016. She is working on an upcoming book on these topics

Blockchain IPOs: the dusk (/dawn?) of regulation has arrived

A post by guest blogger Cedric Hauben (DLA Piper)

Blockchain projects have been around for over a decade. Despite its turbulent and mysterious evolutions, the prototype case of Bitcoin remains the most well-known blockchain application on the market. It still stands as the leading example in the realm of cryptocurrencies, which is nowadays made up out of numerous variations on the theme called Bitcoin. While specifications vary, the underlying principles remain the same among cryptocurrencies. However, thanks to a shifting horizon, the legal landscape keeps on changing.

 Tip of the iceberg

We know by now that blockchain as a concept is much broader than just virtual currency applications. Hundreds of other use cases have been developed and, according to believers, blockchain shows the potential to realise a similar impact as the internet has had. Some say the practice field of notaries could be heavily diluted once land registration gets implemented on specifically developed blockchains. Continue reading “Blockchain IPOs: the dusk (/dawn?) of regulation has arrived”

Corporate Finance and chill

A reading list for at the pool (or in the rain)

The website of the Instituto Iberoamericano de Derecho y Finanzas (IIDF)  has an interesting list of recommended papers and books on law & finance, company law and insolvency law, most of them in English., with links to download the papers.

Limited Liability Company as one of the things that helped to create the modern world

BBC podcast by economist Tim Harford

The well known BBC podcast by Tim Harford on 50 inventions, ideas and innovations which have helped create the economic world focuses this week on the limited liability company. This recommended podcast tells in 9 minutes the importance of limited liability for the pooling of capital and introduces the listener through (a somewhat anglocentric) history of the limited liability company to economic concepts such as agency cost.

See for other historic views on the company previous posts on:

New ECJ ruling on price adjustments in mandatory bids in case of collusion

Marco Tronchetti Provera SpA e.a. v. Consob on article 5(4) of the Takeover Directive

In a decision of 20 July 2017 in the case Marco Tronchetti Provera SpA e.a. v. Consob, the European Court of Justice ruled for the first time on the interpretation of article 5(4) of the Takeover Directive, which covers the possibility for the national supervisory authority to adjust the price of a mandatory bid. In this case, the Italian supervisory authority, the Consob, had decided to increase the price because it believed that there was collusion between the bidder and one of the sellers. This price adjustment was allowed by Italian takeover law, but the bidder believed that the Italian law violated the Takeover Directive, arguing that the criteria for a price adjustment were insufficiently clear. Continue reading “New ECJ ruling on price adjustments in mandatory bids in case of collusion”

Reform of German Avoidance Provisions

Smoothing out the rough edges of “willful disadvantage”

A recent reform of the German Insolvency Statute (Insolvenzordnung, InsO) has relaxed the avoidance provision against so-called “willful disadvantage” (§ 133 InsO).

Under the willful disadvantage provision, a transaction is voidable if it was made by the debtor (a) within ten years prior the request to open insolvency proceedings; (b) with the intention to disadvantage his creditors and (c) whilst the other party was aware of his intention. Moreover, such awareness is presumed in case the other party knew of the debtor’s imminent insolvency, and that the transaction constituted a disadvantage for the creditors.

The German legislature has now added a number of exceptions to that rule (new paragraphs 2 and 3) applicable to transactions by which the debtor performs an obligation or grants a security interest. For example, such transactions shall now only be voidable if made within four years prior to the insolvency filing. In addition, transactions constituting willful disadvantage now benefit from the so-called cash transactions exception (which protects payments in return for equitable consideration, see § 142 InsO) unless the counterpart recognizes that the debtor has acted in bad faith.

Gillis Lindemans

The EU Conflict Minerals Regulation: The Uncertain Effects of Supply Chain Due Diligence

On 17 May 2017, a new regulation on supply chain due diligence was published in the European Union’s Official Journal. The regulation, known as the “EU Conflict Minerals Regulation,” imposes obligations on EU importers of tin, tantalum and tungsten, their ores, and gold (“3TG”) originating from conflict-affected and high-risk areas. Armed groups engaged in mining operations in these regions are believed to violate human rights and to use the proceeds from the sale of conflict minerals to finance their militia. The regulation is intended to disrupt the financial flows and, thus, stop the human rights abuses. Continue reading “The EU Conflict Minerals Regulation: The Uncertain Effects of Supply Chain Due Diligence”

The case for special insolvency regimes for small businesses – World Bank Group Report

Micro, small, and medium enterprises (MSMEs) drive employment, economic growth, and entrepreneurship across the globe. In many countries, however, bankruptcy laws are designed with the complexity and sophistication of large companies in mind, not to address issues relevant to micro and small businesses. Complex insolvency systems deter
MSMEs from resorting to formal procedures to tackle financial distress. Continue reading “The case for special insolvency regimes for small businesses – World Bank Group Report”

The European Insolvency Regulation (recast)

On 26 June 2017, the European Insolvency Regulation Recast (Regulation 2015/848) entered into force. An overview of the main rules that apply in European cross-border situations, along with, where applicable, an explanation of the changes in the Recast Regulation compared to the former European Insolvency Regulation, can be found in this timely publication, prepared by NautaDutilh.

European Insolvency Law (update)

As of tomorrow, 26 June 2017, European cross-border insolvency proceedings will be governed by the Recast Regulation on Insolvency 2015/848, which was published by the European Parliament and Council on 20 May 2015. Regulation 1346/2000 shall continue to apply to insolvency proceedings which fall within the scope of that Regulation and which have been opened before 26 June 2017.

Continue reading “European Insolvency Law (update)”

The ECJ in “Estro/Smallstep” on the Dutch pre-pack in relation to article 5(1) of Directive 2001/23

A red flag for the pre-pack as we know it?

In its preliminary ruling of today, the ECJ has decided that the Dutch pre-pack does not come under the derogation in Article 5(1) of Directive 2001/23. The reasoning of the ECJ will have important consequences for the pre-pack-practice and (draft) legislation in all European Member States, including Belgium, Germany, France and the United Kingdom.

Background: Project Butterfly

In November 2013, Estro Groep BV (with 380 establishments and 3.600 employees the largest childcare company in the Netherlands) entered into financial distress. Since plan A, i.e. consulting its lenders and principal shareholders in order to obtain further financing, was unsuccessful, “Project Butterfly” came into force. Under Project Butterfly, a significant part of Estro Group would be transferred pursuant to a pre-pack: 243 centers out of 380 would be saved and 2.500 employees out of 3.600 would keep their job. Continue reading “The ECJ in “Estro/Smallstep” on the Dutch pre-pack in relation to article 5(1) of Directive 2001/23”

€1,2 billion settlement in Fortis case rejected by Dutch Court

On 16 June 2017, the Court of Amsterdam refused to approve the settlement reached in a Dutch mass claims procedure between Ageas (Fortis’ legal successor) and four claimant organisations (VEB, Deminor, SICAF and Stichting FortisEffect) concerning allegedly false or misleading statements by Fortis during the financial crisis in 2007 and 2008. The €1,2 billion settlement was the largest of its kind in Europe. The main rationale for the court’s decision? The court held that the distinction in compensation between “Active Claimants” (those who filed a legal procedure or registered with any of the claimant organisations) and “Non-Active Claimants” (those who didn’t) was unjustified and that the fees for claimant organisations were exorbitant.

This means that Ageas and the claimant organisations will have to renegotiate their settlement agreement and address the concerns of the Court, if they want to have an agreement that is binding on all potential claimants. Continue reading “€1,2 billion settlement in Fortis case rejected by Dutch Court”

In “Vinyls”, ECJ Allows Debtor to Contract Around Insolvency Avoidance Rules: A Shield Turns Into a Weapon

ECJ endorses broad interpretation of Article 13 Insolvency Regulation

A debtor on the verge of insolvency may be tempted to favour related or influential parties (such as company insiders or important financiers) before his divestment in favour of a liquidator. That is why insolvency law typically allows the liquidator to avoid transactions which the debtor has concluded in the twilight zone prior to insolvency and which are detrimental to the creditors. In a recent preliminary ruling (Vinyls Italia, C-54/16), the ECJ offers the debtor an interesting escape route: he can simply contract around an avoidance provision by submitting an otherwise voidable transaction to a law under which the transaction is not avoidable.

Continue reading “In “Vinyls”, ECJ Allows Debtor to Contract Around Insolvency Avoidance Rules: A Shield Turns Into a Weapon”

More on Polbud

Does ‘Cartesio’ meet the ‘real seat’?

In a previous post (in Dutch) Gillis Lindemans discussed the opinion of AG Kokott in the Polbud-case arguing that this opinion, if followed by the Court, would add a pinch of “real seat” to theEU case-law on corporate mobility. More interesting thoughts on Polbud are to be found on the blog of Professor Geert Van Calster. Money quote:

“Ms Kokott suggests the Opinion is a simple confirmation of the CJEU’s case-law on the issue: no change of tack. Simply confirmation ex multi. That now does leave me puzzled: the Opinion walks and talks like confirming old precedent; but it does not, surely?”

The US Sunnyslope–case: a slippery slope for creditors?

Valuation in cramdown procedures: creditors be damned?

The facts of the case

The debtor, Sunnyslope Housing Limited Partnership (“Sunnyslope”), developed and operated an apartment complex intended to provide affordable housing. When Sunnyslope defaulted on the senior loan for the project, the Department of Housing and Urban Development honored its guarantee, acquired the senior loan from the original private lender, and resold it to First Southern National Bank. First Southern started the foreclosure process, which would have wiped out affordable housing restrictive covenants related to additional financing. The debtor then was put into bankruptcy, and it exercised the cramdown option of 11 U.S.C. § 1325(a)(5)(B) and elected to retain the property in exchange for a new payment plan that would require it to pay First Southern an amount equal to the present value of the secured claim at the time of bankruptcy.

Sunnyslope argued that the value of First Southern’s secured interest should be calculated with the affordable housing restrictions remaining in place. Continue reading “The US Sunnyslope–case: a slippery slope for creditors?”