Last week was a busy week for the Court of Justice (read here and here). A third judgment worth mentioning is the Dowling and Others judgment (read here). This judgment concerns the position of shareholders (of institutions of systemic importance) in times of financial crisis. Continue reading “When the Going Gets Tough, the Shareholders Get Going”
Category: *In English
Commercial Law Centre Webinar (University of Oxford)
The Commercial Law Centre (University of Oxford) hosts a series of interesting webinars. Previous webinars dealt with principles of cross-border insolvency law (Reinhard Bork) and form and substance in the determination of property rights (Anthony Duggan). Continue reading “Commercial Law Centre Webinar (University of Oxford)”
All creditors are equal, but some creditors are more equal than others
Les biens du débiteur sont le gage commun de ses créanciers, et le prix s’en distribue entre eux par contribution, à moins qu’il n’y ait entre les créanciers des causes légitimes de préférence
Article 8 Belgian Loi Hypothécaire (art. 2093 French Civil Code) contains the basic principle of paritas creditorum. All creditors have an equal right to payment and the proceeds of the debtor’s estate shall be distributed in proportion to the size of their claims. The principle of equality is, however, not absolute. Secured and preferred creditors jump the queue, and are paid before ordinary creditors. The pari passu principle still is a bedrock principle of insolvency law. In reality, however, the rule has gradually become the exception (read about the pari passu myth, here). Ordinary creditors are left with peanuts once secured and preferred creditors are paid. All creditors are equal, but some creditors are more equal than others, indeed. Continue reading “All creditors are equal, but some creditors are more equal than others”
The Insolvency Regulation (case-law)
Enefi – article 4 Regulation 1346/2000
In its recent Enefi judgment (C‑212/15, read here, no English translation available yet) the Court of Justice interpreted article 4 of Regulation 1346/2000. The judgment illustrates the shifting boundaries of the framework underlying the Insolvency Regulation.
Sovereign Debt Restructuring and International Law
The Max Planck Institute Luxembourg for International, European and Regulatory Procedural Law organises a series of lectures on sovereign debt (see here). In the absence of an international legal framework, the process of sovereign debt structuring remains fragmented and uncertain. This is best illustrated by the decade and a half of litigation that followed Argentina’s sovereign bond default in 2001 (read here).
The first two lectures (“The Law and Economics of Sovereign Debt and Default” and “Sovereign Debt Restructuring and International Law”) can be found here.
Whose interests are served by the corporate interest?
New shots fired in the ‘shareholders’ vs ‘stakeholders’ war
An international group of corporate law professors has issued a “Modern Corporation Statement on Company Law“, a peculiar two page document which describes itself as a “summary of certain fundamentals of corporate law, applicable in almost all jurisdictions, in an effort to help prevent analytical errors which can have severe and damaging effects on corporations and corporate governance.”
Their 10th and last statement is: Continue reading “Whose interests are served by the corporate interest?”
The High Court of England and Wales approves Nortel’s global settlement
In a previous post (Everybody loses … except the lawyers) the settlement in the bankruptcy liquidation of Nortel Networks Corp was announced. Last week, the High Court of Justice approved this settlement. The judgment can be read here.
What do Colonialism and Pizza Delivery Policies Have to Do with the Wells Fargo Scandal?
Jennifer Hill (Sidney Law School) on Oxford Business Law Blog
“Any economist will tell you that incentives matter in understanding human behaviour. The positive incentives provided to the Dutch managers confirm this – they helped to put the Netherlands ahead of the rest of the colonialist pack during the 17th century. But organizational incentives are not always positive. Fast forward three centuries and the story of Domino’s Pizza Inc provides a good example of how organizations can create perverse incentives.”
See post here.
‘You can’t dance at two weddings with one behind’ (Yiddish proverb)
The uneasy dual role of creditor and shareholder
1.
A previous post mentioned the rudimentary rule on distributions in the ‘partnership en commandite’ (limited liability partnership) in article 206 of the Belgian Company Code (‘BCC’), dating back to 1873:
“Third parties can force [the limited partner] to return any interest or dividends distributed to him, if such distributions are not taken from the non-fictitious profits of the partnership. The unlimited partner has recourse against the manager for any distributions he had to return, in case of fraud, bad faith or serious negligence by the manager.”
Today we discuss how one word in this antique (yet inspiring) rule foreshadows a topical subject: Continue reading “‘You can’t dance at two weddings with one behind’ (Yiddish proverb)”
Values in bankruptcy law
“Suppose that a bankruptcy judge has two options in a bankruptcy proceeding of a factory. First, the judge could reorganize the factory, resulting in a $1,000,000 payment to creditors and keeping the factory largely intact. Second, the judge could liquidate the factory, resulting in a $1,500,000 payment to creditors and the loss of 1,000 jobs as the factory is shuttered. What should the bankruptcy judge choose?”
With this deliberately provocative question Zachary Liscow rekindles the debate about the fundamental values of bankruptcy law in a recent article published in the Columbia Law Review (read here). Continue reading “Values in bankruptcy law”
Debt: use it wisely
“L’homme moderne est dans bien des cas plus enclin à la dépense que ne l’étaient ses ancêtres” (F. H. Speth, La divisibilité du patrimoine et l’entreprise d’une personne, Parijs, L.G.D.J., 1958, 10)
Our society is credit driven. Consumers and companies borrow against future earnings to finance actual spending. Banks borrow for a living. The Government borrows to pay for social peace, pushing the bill towards future generations. Money for nothing only exists in pop songs. Credit eventually has to be paid by somebody, be it the debtor or society as a whole.
The International Monetary Fund recently publised a report on the proliferation of private sector debt. Continue reading “Debt: use it wisely”
Legal challenges in a world of negative interest rates
Banking in a Brave New World
Financial institutions, insurers, investors, and their legal counsel need to substantially adapt their way of thinking and operating in a negative interest rate environment
See post (Stibbe) here.
Corporate law after Brexit
Michael Schillig on Oxford Business Law Blog
“The safest option for UK incorporated companies that have their central administration in real seat countries is to convert into a company form of another Member State prior to Brexit taking effect”
See post here.
Distributions to shareholders: inspiration from the ‘partnership en commandite’?
In case of an irregular distribution a shareholder – even in good faith – is less deserving of protection than a creditor
A previous post had a look at the ancient partnership en commandite as a treasure-trove for company law reform. This post explores what we can learn from the ‘partnership en commandite’ for the regulation of distributions to shareholders. Continue reading “Distributions to shareholders: inspiration from the ‘partnership en commandite’?”
The Insolvency Regulation (case-law)
SCI Senior Home – article 5 Regulation 1346/2000
In its judgment of today (read here), the Court of Justice interpreted article 5 of Regulation 1346/2000. Pursuant to this article, the opening of insolvency proceedings shall not affect the rights in rem of creditors or third parties in respect of tangible or intangible, moveable or immoveable assets – both specific assets and collections of indefinite assets as a whole which change from time to time – belonging to the debtor which are situated within the territory of another Member State at the time of the opening of proceedings. Continue reading “The Insolvency Regulation (case-law)”
Corporate Finance Lab 