The goal of the SaveComp Project, funded by the European Union, is to collect and exchange best practices in the field of (pre-)insolvency cross-border proceedings, to help office holders in insolvency proceedings to better coordinate and implement international cooperation, thus enhancing management of multiple proceedings, reorganization of companies and the protection of creditors and interests of stakeholders. The Project aims to collect best practices, private international rules and case law in (pre)insolvency cross-border proceedings. Moreover, the Project aims to develop and exchange best practices with respect to cross-border proceedings. Continue reading “Best practices in cross-border proceedings (SaveComp)”
Category: Insolvency
Past and future of bankruptcy
In a recent insightful paper, professor Mark Roe (Harvard) reflects on the past and future of bankruptcy. Three ages of bankruptcy are identified and linked to underlying market-based phenomena and institutional conditions (comp., R. Clark, “The Interdisciplinary Study of Legal Evolution”, Yale Law Journal 1981, pp. 1238-1274). The paper also looks forward. New market trends are identified that will shape the future of bankruptcy law. The paper can be read here.
Stealing Deposits: Deposit Insurance, Risk-Taking and the Removal of Market Discipline in Early 20th Century Banks
In a recent paper C.Calomiris (Columbia) and M. Jaremski (Colgate) argue that deposit insurance can reduce liquidity risk, but also can increase insolvency risk by encouraging reckless behavior.
By investigating state deposit insurance experiments in the United States of the early 20th century, they find the introduction of deposit insurance may have actually increased systemic risk, instead of mitigating it (see https://corpgov.law.harvard.edu/2016/11/11/stealing-deposits-deposit-insurance-risk-taking-and-the-removal-of-market-discipline-in-early-20th-century-banks).
The paper also argues that economic models that attempt to explain the attraction of deposit insurance may be less relevant than political ones.
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.
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.
De nieuwe kleren van de keizer
In een vonnis van 31 oktober 2016 heeft de rechtbank van koophandel te Antwerpen de homologatie van het reorganisatieplan van de NV Corsan geweigerd. In een aantal vonnissen van dezelfde datum werd eveneens de homologatie van de reorganisatieplannen van met de NV Corsan verbonden (project)vennootschappen geweigerd. Over de achtergrond van deze zaken is voldoende verslag gedaan in de (financiële) pers. De NV Corsan had zich toegelegd op de productie van films, o.a. het historische epos Emperor, gebruik makend van de fiscaal gunstige tax shelter-regeling. Een dispuut over de toepassing van deze regeling lag mede aan de grondslag van de financiële problemen van de schuldenaar. Continue reading “De nieuwe kleren van de keizer”
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”
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)”
Real seat by any other name would smell as sweet?
The Kornhaas judgment: insolvency law as a safe harbour for Real Seat provisions?
In its judgment of 10 December 2015 (C‑594/14, Kornhaas), the European Court of Justice (CJEU) addressed two issues which are at the heart of the debate on the intra-Union mobility of companies: Continue reading “Real seat by any other name would smell as sweet?”
Our own private Delaware: the ‘partnership en commandite’
Lessons from an ancient experiment with light vehicles: on moral hazard, agency problems, publicity systems and the unsavoury regions of Flanders
The limited partnership or “partnership en commandite” (commenda, société en commandite, Kommanditgesellschaft) has been a fixture of continental business law since the 12th century. It is an entity with one or more unlimited partners and one or more limited partners. For a long time, the limited partnership was the only form offering limited liability off-the-shelf, without the need for a specific governmental authorization. In many jurisdictions the “partnership en commandite” still enjoys a quiet popularity. Continue reading “Our own private Delaware: the ‘partnership en commandite’”
Everybody loses … except the lawyers
Settlement in the bankruptcy liquidation of Nortel
This week it was reported that a settlement has been reached in the bankruptcy liquidation of Nortel Networks Corp (read here). The Nortel group once was one of the world’s leading providers of telecommunications network solutions.
The insolvency of the Nortel Group was a dream for scholars of international insolvency law. Continue reading “Everybody loses … except the lawyers”
Corporate Finance Lab 