Event Of Insolvency Research Articles

Regime de grupo corporativo na Colômbia: comparação da responsabilidade subsidiária na Coreia do Sul e no Japão

This paper develops a comparative law exercise between the legal systems of Colombia, South Korea and Japan in relation to the regulation of corporate groups, for which the research object of this paper focuses on the legal problem of whether the current Colombian regulation on subsidiary liability favours the parent companies over the controlled companies in the event of insolvency of the latter. To this end, the concept of business groups, Chaebol and Keiretsu is explored in order to delimit the object of research and determine their main similarities, such as control, the search for common objectives and a hierarchical structure, as well as their differences, such as the cross-shareholding schemes of the Chaebol and Keiretsu, and the influence of family structures in decision-making; Finally, subsidiary liability is addressed, where, based on the regulation of business groups in Colombia, the Chaebols in South Korea and the Keiretsu in Japan, it is observed that Colombian legislation is much more restrictive in terms of business groups than the regulations in South Korea and Japan.

Solving the insolvency of troubled banks: a theoretical and applied aspect

The European election of Ukraine takes place in the context of scaling military conflicts, global shifts from geo-economic fragmentation, and new economic challenges that require the determination of the legal status of the participants in insolvency relations, procedures of temporary administration, financial rehabilitation, and liquidation of banks. Methodological and applied approaches are characterized to track the growth of Ukraine's external financial vulnerability and the specific weight of cross-border banking operations in European integration. It is found that it is essential to determine the impact of gross flows on financial stability, geographical and financial determinants of cross-border banking requirements, and the impact of internal, external, and global factors. In the applied aspect, it is argued that in the event of insolvency, banks will use the same rights for protection, regardless of whether these measures were adopted under EU or national law. It was established that Ukraine's entry into international business cycles would spread financial innovations between countries, forming a critical channel for the transmission of financial shocks. The macroeconomic volatility of economies influences the occurrence of bank insolvency; the uncertainty of the macroeconomic situation affects the market balance and complicates the regulator's road maps. It was determined that monitoring trends between insolvency and illiquidity is expedient to form an additional equity buffer to cover additional costs. It was established that it is expedient to systematize measures to prevent insolvency from resolving the insolvency of problem banks and financial recovery considering modern realities; improve the efficiency of financial liability management; negotiations with debtors; protect the interests of managers and shareholders; consulting on issues of international insolvency. Keywords: bank insolvency, financial security, banking supervision, resolution tools, financial sector, financial recovery, capital, risks, creditors.

Несостоятельность (банкротство) застройщика: критерии определения и признаки

The essence of criteria for establishing the insolvency (bankruptcy) of organization-developer is revealed. Based on the analysis of the general mandatory signs of insolvency (bankruptcy) of debtors, the need for their presence in the event of insolvency (bankruptcy) of organization-developer is determined, special signs of insolvency (bankruptcy) of organization-developer are identified. The conclusion is substantiated, that in case of bankruptcy of organization-developer it`s advisable to be guided not by the criterion of insolvency, which was elected by the legislator as the main, but by the criterion of non-payment.

Financial Securities for Tour Operators in Case of Insolvency Resulting from the Directive 2015/2302 of the European Parliament and of the Council which are in Force in Poland

The insolvency of travel agencies is dealt with in a special way by the EU legislator. European Union law introduces legal solutions for the benefit of consumers insofar as the relevant services are not performed by organizers as a consequence of its insolvency. The current 2015/2302 Directive provides much more comprehensive protection than 90/314/EWG Directive for travelers in the event of insolvency of a tour operator. However, in the past, in the practical functioning of travel agencies, it has repeatedly turned out that the Polish legislation has not been able to guarantee full protection provided for in EU law. This situation has changed. In Poland, since August 1, 2018 the system of security and financial guarantees in the event of insolvency of organizers and traders facilitating linked travel arrangements consists of two pillars. If Pillar I funds are exhausted, the costs of actions taken by the Marshal of the Province related to the repatriation of the customers of an insolvent tour operator will be covered from Pillar II, which is created from contributions to the Tourist Guarantee Fund. Due to the COVID pandemic, another form of security was introduced in Poland from January 1, 2021 - Tourist Assistance Fund. The fund is designed to support tourism entrepreneurs in the event of extraordinary circumstances. The aim of the paper is to present the legal regulations in force in Poland in the field of financial security of tour operators in the event of their insolvency and to analyze whether these solutions sufficiently protect the interests of travelers. Conclusions included in the paper justify the statement that the extension of the security system by Pillar II make the full protection possible. The two-pillar solution should be sufficient in case of insolvency of a travel agency and that it fully implements the EU recommendations.

On criminalization of illegal actions in case of insolvency or bankruptcy

The paper examines the feasibility of criminalizing illegal actions in the event of insolvency or bankruptcy. In the scientific literature, attention is drawn to the impracticality of decriminalization of a number of criminal law norms in 2012, in particular, Art. 221 of the Criminal Code of Ukraine, which provided for liability for illegal actions in the event of bankruptcy. The regulatory legislation provides for property disposal, rehabilitation and restructuring procedures, which are carried out in the event of the debtor's insolvency, as well as procedures for the liquidation and repayment of the debtor's debts, which begin after the commercial court adopts a resolution declaring the debtor bankrupt. Accordingly, illegal actions can be committed in the event of the debtor's insolvency or bankruptcy. The arbitration manager, who is appointed as a property administrator, rehabilitation manager or liquidator, is equated to an official of a business entity. The public danger of illegal actions in the event of insolvency or bankruptcy is that they cause material losses to creditors, violating the established procedure for meeting the demands of creditors during the procedure of property disposal, remediation, liquidation, restructuring or debt repayment for the debtor. In addition, illegal actions that violate the established procedure for satisfying creditors' claims in the event of insolvency or bankruptcy are also intentional concealment of property information and falsification of rehabilitation or restructuring plans. Therefore, we consider it necessary to supplement the Criminal Code of Ukraine with a rule that will protect creditors' claims against illegal actions in the event of insolvency or bankruptcy. Punishment for illegal actions in the event of insolvency or bankruptcy, if they have caused great material damage, shall be established within the framework of the classification of criminal offenses, which is defined for a minor crime.

Legal Analysis of Limited Company Which Was Submitted to Bankruptcy

The purpose of this study is to analyze the legal consequences caused by a limited liability company being sentenced to bankruptcy. The research method used in this study is the normative legal method. The result of this study is that the result obtained from this study is that the Board of Directors can be held liable both civilly and criminally for the insolvency of a limited liability company. Civil liability may be liability for a lease for losses suffered by a limited liability company in the event of insolvency due to the fault and negligence of the Board of Directors and the company's assets are not sufficient to cover losses due to bankruptcy. Criminal liability in the form of imprisonment in addition to other responsibilities in the form of a forced entity as stipulated in the Insolvency Law, while the legal consequences of insolvency for a limited liability company can be in the form of termination of business relations from the company by creditors and curators, or even dissolved by the District Court on the grounds of creditors on the basis of the company being unable to pay debts after being declared bankrupt.

LEGAL ASPECTS OF MANAGING FAILURE OF A CENTRAL SECURITIES DEPOSITORY (CSD) PARTICIPANT

The success of the financial market in South Africa is dependent on investor confidence and such confidence is dependent on market stability and certainty with regard to the financial risks to which market participants are exposed when trading on the financial markets. Even before the global meltdown impacted on South Africa, some concerns were raised that the South African legal framework pertaining to the financial market does not contain comprehensive principles regulating the procedures and legal position after the event of insolvency of a market participant. In response, Strate Limited, with the assistance of other market players, has drafted a proposed manual, the Participant Failure Manual, regulating the event of insolvency of market participants, referred to as “Participant Failure”. This note aims to discuss the meaning of Participant Failure, provide an overview of the Participant Failure Manual and more importantly, discuss the impact of Participant Failure on settlement, and recommendations as proposed in the Manual.

التأمين الإلزامي من الكوارث الطبيعية كضمان في مجال البناء وفقا للتشريع الجزائري

هدفت هذه الدراسة إلى التعرف على موضوع أحكام الـتأمين من الكوارث الطبيعية بصفة عامة وإلزاميته في مجال البناء بصفة خاصة، على أساس الدور الذي يلعبه في المحافظة على ممتلكات الأفراد العقارية المبنية. مع إبراز مدى أهمية وجود هذا النوع من التأمين الإلزامي والتشاركي في تحمل الخسائر وتعميمها مع تشجيع ونشر ثقافة التأمين. وانطلاقا من الأهداف التي تسعى إليها هذه الدراسة وللإحاطة بمختلف جوانب الموضوع استعملنا المنهج الوصفي والتحليلي كركيزتين في هذه الدراسة من خلال العمل جمع المعلومات حول كل ما يتعلق بالتأمين بصفة عامة من مفاهيم مع تحديد الحوادث التي تشكل كوارث طبيعية وكذا تحليل واقع تدخل المشرع الجزائري استنادا إلى قانون التأمين أساسا. لهذا تم الاعتماد على النصوص القانونية الصادرة بهذا الشأن كمصدر لهذا الموضوع. بالاعتماد على التقسيم الثنائي للدراسة، إلى محورين أساسيين وكل محور قسم إلى محورين فرعيين. أما التقسيم الأساسي يتمثل في: الوقوف على ماهية التأمين الإلزامي على الكوارث الطبيعية وفقا للتشريع الجزائري، فالتعرض لآثار التأمين على الكوارث الطبيعية. ومن خلال هذا البحث توصلنا إجمالا إلى: أن التأمين على الكوارث الطبيعية هو نظام يستند في مضمونه على فكرة التضامن الاجتماعي. وأنه يحمل الطابع الإلزامي والتشاركي في تحمل الخسائر، كما أنه مرتبط بالتصريح بالكارثة الطبيعية. كما أن القاعدة العامة في التأمين على الكوارث الطبيعية هو اختياري لكن استثناء من ذلك فإن بعض التأمينات الزم المشرع الاشخاص بإبرامها والاكتتاب مع شركة التأمين على الكوارث الطبيعية، وعليه فإن اجبارية التأمين على الكوارث الطبيعية في الجزائر تبقى فعلا اقتصاديا بامتياز. وبناء على هذه النتائج المقدمة تم تقديم بعض التوصيات منها: وجوب تفعيل الرقابة على مدى الالتزام بهذا النوع من التأمين رغم إلزاميته قانونا لأن الأفراد في الواقع لا يلتزمون بذلك إلا أمام الموثق عند بيع العقار المبني أو تأجيره. لذلك معاقبة المخالفين لهذا الالتزام بموجب غرامات مالية ومضاعفتها في حالة العود وإنشاء صندوق للتأمينات في مجال البناء من أجل تعويض الأضرار في حال إعسار شركات التأمين.

Actual issues of protection of the rights of citizens participating in shared-equity construction In the event of insolvency (bankruptcy) of developers (on the example of the Krasnoyarsk Territory)

Actual issues of protection of the rights of citizens participating in shared-equity construction In the event of insolvency (bankruptcy) of developers (on the example of the Krasnoyarsk Territory)

The intersection between taxation and insolvency — The South African Revenue Service’s preference

When a debtor’s estate is sequestrated or an insolvent company is wound up, insolvency and taxation intersect whenever the debtor or company has an outstanding tax debt. This article considers whether the South African Revenue Service should, or could, be provided with a better standing in cases of insolvency. From a comparison of the situations in South Africa, Mauritius, Australia and the United Kingdom, it is clear that South Africa’s approach of determining the order of distribution in relation to tax claims based on the type of tax is in line with the approaches of Mauritius and the United Kingdom. However, s 179 of the Tax Administration Act and ss 114 and 147(1) of the Customs and Excise Act may have an impact on a claim by the South African Revenue Service in the event of insolvency. In this respect, we argue that, in instances where a taxpayer is sequestrated or wound up due to insolvency, the Insolvency Act and the Companies Act should take precedence. Since the Insolvency Act provides for a clear order of distribution both in respect of the insolvent estates of natural persons and when an insolvent company is wound up, tax legislation in South Africa should not be used to deviate from this order of distribution.

ПРОБЛЕМЫ ОСПАРИВАНИЯ СОМНИТЕЛЬНЫХ СДЕЛОК ПРИ НЕСОСТОЯТЕЛЬНОСТИ (БАНКРОТСТВЕ) КРЕДИТНЫХ ОРГАНИЗАЦИЙ

In this article, the author examines the problems that arise in connection with challenging dubious transac-tions in the event of insolvency (bankruptcy) of credit institutions.On the basis of the above examples from the judicial practice of arbitration courts, the author comes to the conclusion that gaps in the current legislation governing the invalidation of transactions that were made by a credit institution during the period of specific banking activities or after the arbitration court accepts an application for declaring a credit institution insolvent (bankrupt) , can lead to the impossibility of commensurate satisfaction of creditors’ claims, in connection with which there is a need to modernize the current legislation in the area under study.

TORT VICTIM’S ABILITY TO PROFIT FROM THE PROCEEDS OF INSOLVENT TORTFEASOR’S LIABILITY INSURANCE

<p><em>This article describes and examines whether the tort victim can profit from the proceeds of the tortfeasor’s liability insurance. This article aims to reflect on which approach, either in common or civil law, provides more access for the </em><em>tort</em><em> victim to profits from the proceeds of insolvent tortfeasor’s liability insurance policy. The method used in this research is comparative research. The result of this research showed that the status of insurance proceeds becomes debatable because the tort victim (as the claimant) will have no better rights than any other unsecured creditors during insolvency proceedings. This is regardless of the fact that the tortfeasor already got a fund, albeit indirectly through the insurer, to compensate the</em><em> tort</em><em> victim’s losses.</em><em> </em><em>In relation to this issue, the United Kingdom has adopted the Third Parties (Rights against Insurers) Act 2010 which gives right for tort victim to directly claim for compensation against tortfeasor’s liability insurer in the event of tortfeasor’s insolvency. </em><em>Meanwhile,</em><em> the Indonesian legal system provide</em><em>s</em><em> no clear legal protection to the tort victim. Thus, in the event of insolvency, the tort victim cannot obtain compensation from the insurer, but only from tortfeasor’s bankruptcy </em><em>estate</em><em> as part of creditors’ debts. Furthermore, as an unsecured creditor, the</em><em> tort</em><em> victim will obtain the debtor’s bankruptcy estate after all secured creditors have received their payment. </em><em></em></p>

Tort Victim’s Ability To Profit From The Proceeds Of Insolvent Tortfeasor’s Liability Insurance

<em>This article describes and examines whether the tort victim can profit from the proceeds of the tortfeasor’s liability insurance. This article aims to reflect on which approach, either in common or civil law, provides more access for the tort victim to profits from the proceeds of insolvent tortfeasor’s liability insurance policy. The method used in this research is comparative research. The result of this research showed that the status of insurance proceeds becomes debatable because the tort victim (as the claimant) will have no better rights than any other unsecured creditors during insolvency proceedings. This is regardless of the fact that the tortfeasor already got a fund, albeit indirectly through the insurer, to compensate the tort victim’s losses. In relation to this issue, the United Kingdom has adopted the Third Parties (Rights against Insurers) Act 2010 which gives right for tort victim to directly claim for compensation against tortfeasor’s liability insurer in the event of tortfeasor’s insolvency. Meanwhile, the Indonesian legal system provides no clear legal protection to the tort victim. Thus, in the event of insolvency, the tort victim cannot obtain compensation from the insurer, but only from tortfeasor’s bankruptcy estate as part of creditors’ debts. Furthermore, as an unsecured creditor, the tort victim will obtain the debtor’s bankruptcy estate after all secured creditors have received their payment.</em>

Overview of recent cases before the Court of Justice of the European Union (July – October 2018)

In the reporting period July-October 2018, the Court of Justice of the European Union (CJEU) delivered three rulings ( Alpenrind, Walltopia, and Commission v Belgium) concerning the conflict rule for posted workers as contained in Article 12 of Regulation 883/2004. The CJEU clarified the meaning of the `non-replacement condition', the legal status of workers who are recruited for the sole purpose of being posted to another Member State as well as procedural aspects relating to A1 certificates. In addition, the CJEU delivered judgments on the portability of personal care benefits (A), the application of the prohibition of discrimination on grounds of disability to social security provisions contained in collective agreements ( Bedi) and the protection of supplementary pension claims in the event of insolvency of the employer ( Grenville Hampshire).

The Governance of Blockchain Financial Networks

Since the emergence of the virtual currency Bitcoin in 2009, a new, internet-based way of recording entitlements and enforcing rights has increasingly captured the interest of governments and the Real economy. The technology is commonly called ‘blockchain’, which also comprises the concept of the ‘smart contract’. The global financial industry, including literally all systemically relevant institutions, is now exploring ways of using the technology in mainstream financial products and services, such as securities, payments and derivatives business. Acceptance of blockchain and smart contract technology will, however, not depend solely on its operational efficiency and reliability but also on its effective governance. No comprehensive conceptual framework has yet been developed, neither at a domestic nor at an international level. Fundamental questions include the relationship between State law and internal governance, the regulation of systemic risks and the ineffectiveness of anti-money-laundering laws. Furthermore, the new technology raises questions as regards the enforceability of rights to financial assets in the event of insolvency, and the survival of the contractual framework for risk mitigation on which the modern financial industry is built. The picture is further complicated by the fact that blockchain networks naturally encompass the idea of unrestricted, internet-wide activity, independent from jurisdictional boundaries and State regulation. This article develops a conceptual framework for the governance of blockchain-based networks in financial markets. It attempts a vision of how public and private law should limit the potential of this technology in order to protect market participants and societies at large, while at the same allowing for the necessary room for innovation.

Recovery Rate in the Event of an Issuer’s Insolvency — Empirical Study on Implications for the Pricing of Credit Default Risks in German Corporate Bonds

According to the Jarrow–Turnbull model, coupon bonds are valuated as a portfolio of zero-coupon bonds that, in the event of insolvency, pay a recovery rate at the end of their term. However, when it comes to valuations, the German insolvency law differs in certain respects. To find out whether a model adapted to the German insolvency law will prove to be more empirically robust, an empirical study of 103 corporate bonds was carried out over more than 800 trading days.

Close-Out Netting, Insolvency Law and Conflict-of-Laws

Close-out netting is a risk mitigation tool used by financial institutions. It is comparable to set-off and its effects in insolvency are loosely comparable to a super-priority. Therefore, it might conflict with the pari passu principle. Many jurisdictions have solved that conflict and adapted their laws so that close-out netting is enforceable even in the event of insolvency. However, as the financial market is global, the parties, their branches and assets might be located in different jurisdictions. Nevertheless, countries failed to agree on a harmonised conflict-of-laws rule, despite the obvious need, when they decided not to include a conflict-of-laws principle in the 2013 Unidroit Principles on the operation of close-out netting provisions. The relevant EU law, though patchy, already addresses this concern. This article identifies the underlying conceptual difficulties and proposes a solution for an improved framework for both the EU and other financial marketplaces.

Cross-Border Bank Resolution and Close-Out Netting

The wide use of netting agreements is regarded as highly beneficial, both by financial market participants and by regulatory authorities. One might even say that some of the fundamental mechanisms used to govern modern markets (risk management, establishment of capital requirements) are intimately linked with the functionality of netting. From the regulators’ perspective, netting agreements are top of the list of risk mitigation mechanisms, along with collateralisation, segregation of client assets and standardisation and regulation of derivatives over-the-counter transactions. However, netting can only do its job as long as there is perfect ex ante certainty that netting agreements are enforceable in each of the relevant jurisdictions, in particular in the event of insolvency of one of the parties. This assessment has always been challenging, since netting laws in the various jurisdictions are local in scope and differ widely, whereas the market itself is highly international and homogeneous. However, with anti-crisis measures now being designed and implemented, the more ‘traditional’ difficulties surrounding the cross-jurisdictional enforceability of netting get a new spin: by virtue of the new bank resolution tools, regulators can interfere with the contractual and insolvency law setting, thereby altering the legal analysis as to enforceability. To the extent that safeguards for netting apply, it is highly uncertain whether these are capable of guaranteeing the required level of ex-ante legal certainty in respect of netting agreements, in particular where cross-jurisdictional elements are involved.

Close-Out Netting, Conflict of Laws and Insolvency

Close-out netting is a risk mitigation tool used by financial institutions. It is comparable to set-off and in insolvency situations any solvent counter-party that is able to use it obtains a very strong position as compared to other creditors. Therefore, it might conflict with the pari passu principle. Many jurisdictions have solved that conflict and adapted their laws so that close-out netting is enforceable even in the event of insolvency. However, as the financial market is global, the parties, their branches and assets might be located in different jurisdictions. Still, countries failed to agree on a harmonised conflict-of laws rule, despite the obvious need, when they decided not to include a conflict-of-laws principle in the 2013 Unidroit Principles on the Operation of Close-out Netting Provisions. The relevant EU law, though patchy, already addresses this concern. This Article identifies the underlying conceptual difficulties and proposes a solution for an improved framework for both the EU and other financial marketplaces.

Draft Principles Regarding the Enforceability of Close-Out Netting Provisions

This paper sets out eight principles designed to ensure the cross-jurisdictional enforceability of close out-netting. Close-out netting is heavily used by the financial industry and used in many regulatory mechanisms like in particular bank’s capital requirements (Basel II). However, as soon as banks located in different jurisdictions agree to apply close-out netting between them, they risk that the relevant provisions are unenforceable in the event of insolvency of either of them. About 40 countries do allow close-out netting, however on differing terms. The Principles shall provide guidelines to legislators on how to amend national insolvency laws so as to be compatible with each other. Principle 1 defines close out netting. Principles 2 and 3 set a standard regarding the circle of netting-eligible parties and netting-eligible financial transactions. Principles 4-6 deal with formal requirements, promoting in particular the idea that unenforceability as a consequence of non-compliance with formal requirements is not the right means to achieve regulatory goals. Principle 7 is the core rule and defines the relationship between close-out netting and insolvency avoidance rules. Principle 8 clarifies the role of Principle 7 in respect of bank resolution procedures as recently promoted by the Financial Stability Board. Each Principle is accompanied by a detailed commentary explaining its background and reasoning. The paper is the final one in a sequence of four that the Author has produced for the International Institute for the Unification of Private Law (Unidroit 2012 Study 78C – Doc. 13). It has greatly benefited from the input of other Members of the Unidroit Study Group.