Foreign Bankruptcy Research Articles

Procedural issues in international bankruptcy under Turkish law

This article examines the procedural issues in a bankruptcy lawsuit with a foreign element from a Turkish private international law perspective. The article begins with a brief overview of the bankruptcy procedure under Turkish domestic law. It then explores the jurisdiction of Turkish courts in an international bankruptcy lawsuit in detail. The effects of a foreign choice of court agreement and parallel proceedings are also addressed in discussing the international jurisdiction of Turkish courts. The article also touches upon the debates on the possible legal grounds for the inclusion of assets located abroad to the bankruptcy estate established before Turkish courts considering the approaches of universalism and territorialism. Finally, problems related to the recognition of foreign bankruptcy decisions are examined.

ПРИЗНАНИЕ ИНОСТРАННЫХ БАНКРОТСТВ В РОССИИ: ВОПРОС О ФИНАЛЬНОСТИ СУДЕБНОГО АКТА, ОТКРЫВАЮЩЕГО БАНКРОТНОЕ ПРОИЗВОДСТВО, И ПОИСКИ РЕШЕНИЯ ПРОБЛЕМЫ ЕГО ТРАНСГРАНИЧНОГО ЭФФЕКТА DE LEGA LATA

The article raises the question of the cross-border effect of foreign bankruptcy in Russia and whether it is possible to adapt the Russian legal tools to solve the problems of special bankruptcy recognition. The finality of foreign judgments is analysed in detail. It is concluded that the finality criterion is poorly suited for bankruptcy cases. But the finality of court decisions commencing insolvency proceeding may lose its significance for their verification as suitable objects of recognition, only when a special model of insolvency-specific recognition exists, and provides the mechanisms to ensure legal certainty in the recognising state.It is noted the «closed» regime of procedural recognition in Russia in relation to foreign court decisions opening foreign bankruptcy proceeding. Alternative options for ensuring the cross — border effect of bankruptcy are considered: the material recognition, the acknowledgment of foreign bankruptcy as a fact, the request for interim measures in support of foreign bankruptcy. Ideas about the use of truncated procedural recognition are expressed, the legal difficulties of implementing this option are noted. In contrast to the “closed” regime of procedural recognition in Russian court practice, examples of “informal” recognition have been identified — the perception of foreign bankruptcy as a fact with the protect measures provision to the debtor’s assets from the creditor’s individual actions, which is comparable to the universal effect of foreign bankruptcy. The unique situation of the existence in the country of both territoriality and universalism is noted. All this underlines the desirability of a special legal regulation for the foreign bankruptcy proceedings recognition based on the modern models of modified universalism.

ANTI-CRISIS MANAGEMENT AS THE BASIS OF ENSURING THE ECONOMIC STABILITY OF ENTERPRISES

Crisis management in today's economic environment is the basis for competitive and efficient operations of any company. Liquidation of unviable companies is a prerequisite for the effective functioning of the market mechanism. Indeed, launching bankruptcy proceedings is much easier than trying to restore the life cycle of an enterprise. However, the practical experience of global companies in overcoming crisis phenomena indicates the formation of a different approach to the development of the crisis process. In order to study the need to apply anti-crisis management mechanisms, the article analyzes the financial and economic condition of Sandora LLC using the methods of Fox, Tafler, Altman and Springate. The calculated data confirm the fact that the specifics of domestic business, inflation rates, tax legislation, general economic and political instability make it impossible to adequately apply foreign bankruptcy forecasting models with reliable results. The peculiarity of anti-crisis management at domestic enterprises is the need to use modern risk management methods, taking into account the timeframe and the impact of external and internal factors. Currently in Ukraine, only large corporations or branches of international companies create special structural units, hire risk managers or high-level managers whose experience and qualifications allow them to manage the company in a crisis situation. Therefore, the use of crisis prevention measures helps to increase the company's competitiveness, and ongoing diagnostics of activities, environmental analysis and identification of possible risks minimize future costs. The most important features of crisis management include the individuality of strategic programs for forecasting and overcoming crisis phenomena at an enterprise, which is primarily related to the individuality of the stages of formation and development of each company, indicators of economic efficiency and mission, the specifics of the management system, as well as the personal qualities, knowledge and experience of managers. In other words, each company should develop an individual crisis management program taking into account the global experience of risk management and the specifics of strategic planning in the short and long term. To evaluate the effectiveness of the crisis management strategy, it is necessary to determine the performance indicators and goals of such management. At the same time, the criteria for determining the effectiveness of the implemented program are purely individual and depend on many factors: the scope of activity, profitability, level of profitability, form of ownership, sales markets, company size, number of employees, etc.

Cross-border bankruptcies in Ukraine: organizational and legal issues

The article conducts a scientific and practical study of organizational and legal issues regarding cross-border bankruptcies, which is one of the spheres of regulation of international private relations. The current legislation of Ukraine in the field of bankruptcy procedures, in particular, proceedings in bankruptcy cases related to foreign bankruptcy procedures, and international documents in the field of cross-border insolvency were analyzed. The lack of legal certainty in the Code of Ukraine on bankruptcy procedures of the "cross-border" category, the procedural rights of the parties in the bankruptcy procedure with the participation of a foreign element, the organizational and legal algorithm during the proceedings in bankruptcy cases related to the foreign bankruptcy procedure, the procedural aspects of granting judicial assistance to the manager of the foreign bankruptcy procedure. The practical ineffectiveness of the implementation of legal mechanisms of cross-border bankruptcy procedures in Ukraine, which hinders the proper resolution of problematic issues in this area, is noted. The necessity of building organizational and legal algorithms of the bankruptcy procedure with the participation of a foreign element in Ukraine in order to optimize the simplified and at the same time effective exercise of rights and the achievement of the financial interests of the participants in cross-border bankruptcy procedures was determined. Recommendations are provided for the regulatory consolidation of organizational and legal aspects of cross-border bankruptcies on the basis of recognized world principles, reflected in special international documents, taking into account the constant change of regulatory requirements with a mandatory comparison between them and the updated provisions of the UNCITRAL Model Law on Cross-Border Insolvency dated May 30, 1997 and international judicial practice, which will ensure the practical implementation and implementation of logically formed procedural algorithms for settling the insolvency of entities within the specified sphere in Ukraine.

Applying forecast reporting to assess the probability of financial insolvency (bankruptcy)

Subject. During the pandemic, contacts between many organisations and their business partners were disrupted: their sales volumes and other sources of financing decreased and non-payments became more frequent. These reasons may result in an increased risk of financial insolvency for economic entities and may lead to bankruptcy. In this regard, financial forecasting is a way to avoid negative consequences.Purpose. The development of a universal analytical tool that allows predicting the probability of financial insolvency (bankruptcy) which has been tested within the PROTEK group of companies. Methods. The research results were obtained using analysis, synthesis, analogy, historical and logical approaches, classification, etc. The assessment of the financial insolvency (bankruptcy) risks has been based on several Russian and foreign bankruptcy methods which give contradictory probability estimates for studied organisations. In this regard, an attempt was made to predict the financial stability of an economic entity. Results. The authors propose to make a modified forecast report based on the balance sheet and the financial performance statement which provides in a single form the calculation of absolute and relative indicators of financial stability and solvency. At the same time, these data in combination with the G. G. Kadykov and A. S. Saifulin’s method can be used to assess the probability of bankruptcy. Conclusions. The proposed version of the forecast report allows obtaining a real-time forecast of the probability of bankruptcy and thereby taking timely measures to prevent the deterioration of the financial stability of the organisation.

Status of foreign creditors in secondary bankruptcy proceedings

The status of foreign creditors in international bankruptcy, i.e., bankruptcy proceedings with foreign element, depends on the manner in which this matter is regulated in particular country. We distinguish between main and secondary bankruptcy proceedings in which creditors can file their claims. In the countries that regulate the initiation of both main and secondary bankruptcy proceedings, creditors have equal status, which means that foreign creditors are equal to local creditors in secondary bankruptcy proceedings. By foreign creditors in secondary bankruptcy proceedings, we mean creditors who do not have the citizenship of the country in which the respective secondary bankruptcy proceedings have been initiated. These may be persons who have already filed a claim in the main bankruptcy proceedings, as well as in other secondary bankruptcy proceedings. We must keep in mind that the secondary proceedings are initiated in order to contribute to the fulfilment of the principle of unity of the bankruptcy estate, as well as the efficiency of settling creditors’ claims. In any case, the secondary proceedings enable the assets of the bankruptcy debtor or most of them to be part of the bankruptcy estate. In addition, the transfer of excess assets of the bankruptcy estate from the secondary to the main proceedings allows creditors to be settled efficiently. In order for foreign creditors to be able to exercise their rights in the secondary bankruptcy proceedings, it is necessary for the competent authorities from different bankruptcy proceedings against the same debtor to cooperate. This especially refers to the cooperation of the bankruptcy trustee appointed in the main bankruptcy proceedings with the competent authorities in the country of initiating the secondary bankruptcy proceedings. The paper pays attention to Regulation (EU) 848/2015 on insolvency proceedings, as well as the provisions of the Act of Bankruptcy of the Republic of Serbia that regulate this matter. In order to define the status of foreign creditors, it is necessary to determine the status of a foreign bankruptcy decision, as well as the status of a foreign bankruptcy trustee. Attention is also paid to situations when secondary bankruptcy proceedings are not initiated, which is regulated by Regulation 848/2015. The decision on that is made by the bankruptcy trustee who was appointed in the main bankruptcy proceedings, and he must then give a guarantee to the local creditors that their claims will be settled. In order to talk about the equal status of creditors, care must be taken to adequately apply the two basic rules in international bankruptcy, namely lex fori and lex fori concursus. This will ensure even settlement of all claims of all creditors.

Globalized Cross-Border Insolvency Law: The Roles Played by China

This study empirically investigates China’s participation in the globalized cross-border insolvency collaboration system. It is the first time for the development of China’s cross-border insolvency law to be examined against the background of private international law on foreign judgment recognition and enforcement. The findings of this article reveal that foreign bankruptcy representatives face considerable difficulties in satisfying the treaty and reciprocity requirements when seeking judicial assistance from China, and that local protectionism in favour of China’s state-owned and state-linked companies undermines foreign bankruptcy representatives’ confidence in approaching China’s courts for support. Although there are several court recognitions of foreign bankruptcy judgments in China, this article finds that they are only used to acknowledge the legal status of foreign bankruptcy representatives to meet the demands of government authorities; Chinese courts have not taken a substantial step in recognizing a foreign bankruptcy judgment so as to bar individual creditors’ action in the interest of a foreign bankruptcy proceeding. On the contrary, for Chinese bankruptcy representatives seeking assistance abroad, they could take advantage of the liberal judicial infrastructure, especially of some advanced jurisdictions, to obtain recognition and relief.

ОСПАРИВАНИЕ СДЕЛОК В РОССИЙСКОМ СУДЕ В РАМКАХ ИНОСТРАННОГО БАНКРОТСТВА

​ The article addresses the special features of avoidance transactions of a foreign insolvent debtor for alienation of property within Russian Federation. The author argues that the power of the foreign insolvency administrator to bring a claim to challenge the transaction stems from the Arts. 1195–1197 and 1202 of the Civil Code of the Russian Federation regarding the law applicable to the legal capacity of a person. On the separate line the article discusses the issue of law applicable to challenging of various categories of transactions of a foreign debtor. Based on the analysis of the doctrine and judicial practice, the author comes to the conclusion that transactions concluded by a foreign debtor after the introduction of a bankruptcy procedure may be challenged in a Russian court on the basis of the limitation of the legal capacity of a foreign person (Arts. 1195–1197 and 1202 of the Civil Code of the Russian Federation). At the same time, foreign bankruptcy legislation cannot be applied to avoidance of real estate transactions concluded before the introduction of bankruptcy procedure against a foreign debtor due to paragraph 2 of Art. 1213 of the Civil Code of the Russian Federation. The article is concluded with an analysis of the issue of jurisdiction of the claim for challenging the transaction of a foreign insolvent debtor.

The principle of reciprocity in international cooperation in cases of administrative offences

The subject of this research is the principle of reciprocity. This principle is perhaps one of the first principles of international law that remains unchanged up until today. The scientific literature studies the essence of the principle of reciprocity in correlation with one or another institution (legal aid in criminal cases, legal aid in cases of administrative offenses, recognition of foreign bankruptcy, enforcement of the decisions of foreign courts, etc.), as an element of private or public international law. The principle of reciprocity also characterizes the process of interaction between the legal subjects. In the Russian legislation, the principle of reciprocity is implemented for regulation of international cooperation in civil, criminal, and administrative cases. The author’s special contribution consists in determination of certain essential characteristics of the principle of reciprocity and its role within the system of principles of administrative law of the Russian Federation; as well as in examination of the practice of its application. The principle of reciprocity is identified with certain imperative rules or universal behavioral norms. In the international law, the principle of reciprocity correlates with such concepts as “jus cogens” or “peremptory norms”, as well as “comitas gentium”. Among the principles of administrative law of the Russian Federation , it can be attributed to the procedural principles in cases of administrative offenses. The analysis of case law demonstrates that application of the principle of reciprocity expands the opportunities for international cooperation in different spheres, namely in the absence of normative regulation or restrictions thereof.

Последствия непризнания государством иностранных производств по банкротству на имущество должника, находящееся на их территории

Последствия непризнания государством иностранных производств по банкротству на имущество должника, находящееся на их территории

Overview of Selected Bankruptcy Prediction Models Applied in V4 Countries

Bankruptcy prediction models are often an applied tool for detecting unfavourable development of the financial situation of the company. The prediction of financial health of business entities is the most important information because of dynamic development of the business environment. Many prediction models are known nowadays. They are different by their reliability (predictive ability), the composition of used variables, trade union orientation, the degree of consideration of domestic market conditions etc. It is clear from this that it is not possible to create a universal, unified prediction model that would be able reliably and with sufficient time to indicate unfavourable company financial development leading to bankruptcy applied in all sectors or regions. Introductory part of contribution is devoted to the literature review of issues and the definitions of the concept of bankruptcy based on the so-called non-prosperity indicators (profit, total liquidity and equity/liabilities ratio), that take into account the current legislation of this issue in the Slovak republic. Then the contribution discusses the role and significance of prediction models in corporate practice, compares the advantages and disadvantages of models containing accounting and market indicators. The authors also devoted the space to identifying restrictions on the usability of known foreign bankruptcy models in economic conditions of V4 countries and to define a set of the most frequently applied models taking into account specific economics conditions in these countries.

Reorganization and Bankruptcy of Banks In Switzerland

This paper explores main steps of the Swiss Debt Enforcement and Bankruptcy Law for banks and securities dealers. It provides analysis of competences of the Swiss Financial Markets Supervisory Authority FINMA according to current Swiss law on insolvency for banks and securities dealers. FINMA orders and supervises restructuring and insolvency of banks. As Swiss bankruptcy proceedings for banks applies to all assets of the insolvent and bankrupt bank, regardless whether they are located in Switzerland or in another jurisdiction, FINMA is involved in recognition of the foreign insolvency proceedings and satisfaction in foreign proceedings, transfer of the remainder to the foreign bankruptcy administrator, foreign compositions with creditors. The analysis of competences of FINMA during the restructuring, bankruptcy and liquidation of insolvent banks is the main focus of the current article.

Reorganization and Bankruptcy of Banks and Securities Dealers in Switzerland

This paper explores main steps of the Swiss Debt Enforcement and Bankruptcy Law for banks and securities dealers. It provides analysis of competences of the Swiss Financial Markets Supervisory Authority FINMA according to current Swiss law on insolvency for banks and securities dealers. FINMA orders and supervises restructuring and insolvency of banks. As Swiss bankruptcy proceedings for banks applies to all assets of the insolvent and bankrupt bank, regardless whether they are located in Switzerland or in another jurisdiction, FINMA is involved in recognition of the foreign insolvency proceedings and satisfaction in foreign proceedings, transfer of the remainder to the foreign bankruptcy administrator, foreign compositions with creditors. The analysis of competences of FINMA during the restructuring, bankruptcy and liquidation of insolvent banks is the main focus of the current article.

Koordinacija stečajnih postupaka – sa posebnim osvrtom na transfer sredstava stečajne mase i stečaj povezanih društava / Coordination of Bankruptcy Proceedings - with special emphasis to the the transfer of bankruptcy assets and to bankruptcy of a members of group of companies

The possibility to start against the debtor more bankruptcy proceeding, of which one is main bankruptcy, and the other are secondaries or specials, has led to the necessity of defining the rules governing coordination of these proceedings, in order to achieve the unity of the bankruptcy assets and to the equal settlement of creditors. Today, national laws and international statutory sources contain rules governing the coordination of bankruptcy proceedings. However, these rules have their basis in Private International Law. The author presents the rules of the EU Regulation No. 2015/848 of the European Parliament and of the Council of 20 May 2015 on insolvency proceedings, then the rules of Model Law on Cross-Border Insolvency of the United Nations Commission on International Trade Law, and, also, the rules of the USA legislature. The paper analyzes the status of the foreign bankruptcy decision on the territory of the country of recognition, then, the relationship and cooperation between the subjects referred to bankruptcy proceedings, in particular between the bankruptcy trustees, as well as between foreign bankruptcy trustee and the court, and the transfer of bankruptcy assets from the secondary to the main bankruptcy proceeding, which defines the status of the main relative to the secondary proceeding. Special attention is paid to bankruptcy of a members of group of companies.

The Chinese Approach Toward Cross‐Border Bankruptcy Proceedings: One Progressive Step Ahead

AbstractThe birth of the law on enterprise bankruptcy of the People's Republic of China in 2006 was highly acclaimed. It was generally regarded as a modernized comprehensive legislative work at home and abroad. The “territorialism” approach adopted therein respecting foreign bankruptcy proceedings, however, has received floods of criticism ever since. It has left a great legal vacuum for the protection of foreign bankrupt debtor's assets in China. Foreign investors, however, may see dawn and have their confidence restored after the recent decision of the Supreme People's Court in the well‐known case of Thumb Environmental Technology Group v Sino‐Environment Technology Group, which was made on 11 June 2014. From this case on, with some limitations, the legitimate powers of foreign bankruptcy administrators might normally be ensured once foreign bankruptcy proceedings are initiated in the place of registration or place of principal business of the foreign debtor, whereby foreign administrators will be able to take effective measures to investigate, protect and dispose of the bankrupt's assets located within the Chinese territory.

Legal and Practical Aspects of Bankruptcy Proceedings in Albania and Their Role in the Protection of Stakeholders

Bankruptcy represents an effort to find the correct ratio between the need to protect economic assets left over from a subject in crisis and need to take care and realize greater extent the rights of creditors. Bankruptcy in Albania, for the first time was adjusted in the Commercial Code of Zogu, " Book six – Bankruptcy". Today in the Republic of Albania the law in 2002 "On bankruptcy" amended by law in 2008. This law is largely a continuation of adjustments made in 1995. This paper will address the news that the new law brings, regarding the procedures to be followed and the conditions to be met for a person debtor, can be downloaded from the remaining obligations. Regulated recognition of a foreign bankruptcy procedure and the opening of a secondary procedure, as well as collaboration between the higher of the two bankruptcy proceedings. Also, according to recent changes have envisaged by the law, Bankruptcy Supervision Agency" which is a public legal entity. We will treat the compatibility of our legislation with EU Regulation of 2000. The methodology used in the paper is the analysis of legislation and practical decisions. The conclusions show a positive tendency of legal norms to protect creditors, but the level of jurisdiction decisions and practice seems more embryonic. Relevance of this topic is related to social, legal but also economic aspects.

Bankruptcy Jurisdiction and Enforcement of Foreign Bankruptcy Judgments in Egypt

(2010). Bankruptcy Jurisdiction and Enforcement of Foreign Bankruptcy Judgments in Egypt. Journal of Private International Law: Vol. 6, No. 3, pp. 623-635.

The legal responses of Canada and Poland to international bankruptcy and insolvency with a focus on cross‐border insolvency law

AbstractThis article discusses and compares the respective legal responses of Canada and Poland to international bankruptcy and insolvency with a focus on cross‐border insolvency law. Specifically, the issues addressed herein concern jurisdiction, recognition of foreign bankruptcy proceedings, and co‐operation with foreign courts and foreign administrators. Notwithstanding some real differences between Canadian and Polish international insolvency proceedings, both legal regimes may be compared, since both countries have adopted many of the principles contained in the UNICTRAL Model Law on Cross‐Border Insolvency. The major impetus behind the changes established by Canada in its bankruptcy and insolvency laws have been the economic realities produced by the North American Free Trade Agreement. Likewise, Poland's accession to the European Union (EU) has been a major catalyst for revising the Polish Insolvency and Restructuring Act. Part II of the said act is entirely devoted to international insolvencies. However, following Poland's adherence to the EU, those sections of the Polish Insolvency and Restructuring Act that deal with international or cross‐border insolvencies will be severely limited or constrained in scope. The article indicates that Poland, the EU and Canada are taking the necessary steps to meet the needs of debtors who would like to restructure in an international setting. Copyright © 2006 John Wiley & Sons, Ltd.

Fear of Commitment in International Bankruptcy

This article discusses the difficult questions of conflict and cooperation among national bankruptcy regimes that arise with the failure of a multinational firm. The firm's failure typically leaves assets and unpaid creditors in several jurisdictions, but no overarching international bankruptcy system exists. Instead, the national bankruptcy laws of several states might plausibly apply to the firm's bankruptcy or particular aspects of the case. Though multinational firm failure has become more and more common, states have made precious little progress in regularizing coordination or cooperation among national bankruptcy systems. Uncoordinated territorial competition is the norm, resulting in complex conflicts of law. Scholars and policymakers alike have demonstrated renewed interest in international bankruptcy cooperation. Among academics, the idea of universalist cooperation has long dominated the debate over international bankruptcy reform. Under universalism, the bankruptcy regime of the debtor's home country would govern worldwide. Home country courts applying home country law would exercise extraterritorial jurisdiction to treat all the debtor's assets and creditors wherever located. Despite the academic preference for universalism, however, no universalist arrangements exist in the world. In this article, Professor Tung explores states' reluctance to commit to universalism. While recent scholarly critique of universalism has focused on its hypothetical efficiency, Professor Tung instead discusses political feasibility constraints, an issue that universalist advocates have largely failed to consider. Professor Tung compares the universalist demand for recognition of foreign bankruptcy proceedings with the more straightforward matter of civil judgment recognition. He relies on existing international judgment recognition arrangements as a rough barometer of states' cooperative inclinations with respect to bankruptcy recognition. Jurisdictional limits in the former area suggest even greater reluctance to accede to the broader deference required under universalism, forecasting dim prospects for its widespread adoption. Professor Tung also discusses particular types of states for which universalism may be particularly unattractive. Finally, Professor Tung raises the question whether universalism is even possible among states that might prefer it. Assuming states exist that find universalism attractive, they might find themselves in a prisoners' dilemma, for which ready solutions may be elusive. Prepared for the symposium on Global Trade Issues in the New Millennium at The George Washington University Law School (September 2000).

Faillite internationale - Compétence - Effets d'une faillite prononcée à l'étranger - sûretés réelles - droit de préférence

After establishing the general legal framework for international bankruptcies, and then examining the competence of the forum state to open bankruptcy proceedings, and the effects recognised by the forum state in relation to a foreign bankruptcy, the present report tries to provide a brief overview of the fate reserved for security rights, whether rights in rem, created by statute (legal mortgage, privilege), or contractual, as well as rights of preference (right of retention, or compensation), in the context of an international bankruptcy under German, English, Belgian, Canadian, Greek, French, Italian, Japanese, Dutch, North American, Swedish and Yugoslavian law.