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.
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?”
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.
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.
The uneasy dual role of creditor and shareholder
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)”
“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”
“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”