Abstract
This article traces the emergence of the concept of ‘group solution’ and its manifestations in insolvency law and bank resolution as an alternative to the rigid entity-by-entity approach. The rise of this concept can be linked to the recognition of the specificity of problems related to the insolvency of multinational enterprise groups, arising from group operational and financial interconnectedness. This has not happened at once, but has resulted from the evolution of views and ideas, evident in hard and soft law instruments of the 2000s and the 2010s. In light of this important development the article explores the concept of a group solution, its rationale, scope of application and limitations. It concludes that despite the gradual acceptance of the group phenomenon, a group solution has not been formed as a coherent and well-defined legal principle. Instead, it represents a variety of approaches, tools and practices, which pursue different policy objectives underpinned by different societal values. Among them are asset value maximization, business rescue, the protection of financial stability and the preservation of banks’ critical functions. With all its flexibility, a group solution has one pervasive limitation—it cannot trump the interests of individual group members and their creditors. At the same time, in order to realize the full potential of a group solution, it is necessary to embrace the group-sensitive and forward-looking interpretation of creditors’ interest, facilitating commercially sensible and practical group solutions.
Highlights
The outbreak of COVID-19 and the subsequent drastic governmental measures to curb the pandemic have affected many businesses, small and large
The rise of this concept can be linked to the recognition of the specificity of problems related to the insolvency of multinational enterprise groups, arising from group operational and financial interconnectedness
The BRRD, the EIR Recast and the Model Law 2019 recognize the specificity of corporate groups, give a definition of a group of companies27 and offer special mechanisms and tools to address the challenges of enterprise group insolvencies
Summary
The outbreak of COVID-19 and the subsequent drastic governmental measures to curb the pandemic have affected many businesses, small and large. For a long time (and perhaps still), insolvency law has largely remained microprudential or single entity-focused, resulting in the entity-by-entity treatment of enterprise group members in financial distress It is primarily centred around post-crisis liquidation of the debtor’s assets and the allocation of sale proceeds among creditors of an individual legal entity. This article explores whether a new phenomenon or even a legal principle of a ‘group solution’ (as opposed to an ‘entity solution’) has taken shape and has replaced or pushed aside the inflexible entity-by-entity approach This examination is carried out by this article, which analyses five main questions: (i) what is a group solution?; (ii) which goal does a group solution seek to achieve?; (iii) how does it try to achieve it?; (iv) what are the limitations or boundaries of a group solution?; and (v) what are the strengths and weaknesses of modern approaches to a group solution?.
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
