Insolvency Law Research Articles

Tensions between sanctions and insolvency law: Searching for a model solution with a focus on the European Union and Poland

AbstractThis article explores the conflict between insolvency law and sanctions law, particularly in the context of European responses to Russia's invasion of Ukraine. Historically, conflicts between legal systems have shaped laws, and modern insolvency law continues this struggle by determining creditor priorities in cases where debtors cannot fully satisfy them. The article highlights how recent sanctions, which freeze assets to restrict the economic activities of sanctioned individuals and entities, complicate insolvency proceedings. The European Union, along with Poland, has imposed unprecedented sanctions on Russia, including bans on transactions, asset freezes, and trade restrictions. These sanctions, while aimed at political objectives, often push businesses into insolvency by preventing access to resources. Case studies such as GoSport in Poland, Amsterdam Trade Bank in the Netherlands, and Fortenova in Croatia demonstrate the complexities that arise when businesses linked to sanctioned entities become insolvent. Key issues include the legal treatment of frozen assets, creditor satisfaction, and the potential for sanctioned entities to benefit from bankruptcy proceedings. Poland has revised its sanctions law, introducing provisions for the appointment of independent managers to oversee sanctioned companies, ensuring continued operations without benefiting sanctioned owners. However, uncertainty remains over the management and distribution of frozen assets, with no clear framework in place. The article concludes that insolvency and sanctions law, though often in conflict, must be applied flexibly to address individual cases. A balanced approach is needed to protect creditors while adhering to the political and legal objectives of sanctions.

Guest editorial: The interaction between US bankruptcy law and European insolvency Laws (some thoughts on the 45th anniversary of the US bankruptcy code)

Guest editorial: The interaction between <scp>US</scp> bankruptcy law and European insolvency Laws (some thoughts on the 45th anniversary of the <scp>US</scp> bankruptcy code)

Canadian cross‐border insolvency law and the triumph of “modified universalism”: A retrospective

Canadian cross‐border insolvency law and the triumph of “modified universalism”: A retrospective

The Principles of the Insolvency Procedure in Romania

The insolvency law in Romania is one with tradition, its first form being adopted in 1995. At that time, although no principles were expressly stipulated to govern this procedure, they could somehow be deduced from the interpretation of the legal norms. The legal consecration of the principles of the insolvency procedure can only be found in Law No. 85/2014, still in force today. It should be mentioned that Law no. 216/2022 amended the legal rules regarding the principles applicable to insolvency. These principles can be summarised as follows: encouraging negotiations regarding the prevention of insolvency, maximising the debtor's wealth, enabling effective restructuring, efficiency, reasonableness in the procedure, insolvency of the creditor mass, transparency and predictability, pro rata and pari passu rules, credit risk limitation, the superpriority of financing in the procedure, a representative and fairly assumed reorganisation plan, useful and efficient capitalisation, procedural coordination in the matter of the group of companies and legality control. Keywords: Insolvency; Principles; Rules.

India's Journey towards Cross-Border Insolvency Law Reform

India's Journey towards Cross-Border Insolvency Law Reform

Re‐examining insolvency law and theory: perspectives for the 21st century. By Edited by EmilieGhio, JohnWood, JenniferGant (Eds.), (1st ed) Cheltenham: Elgar. 2023. pp. 312. £115. ISBN: 978‐1‐80392‐875‐3

Re‐examining insolvency law and theory: perspectives for the 21st century. By Edited by EmilieGhio, JohnWood, JenniferGant (Eds.), (1st ed) Cheltenham: Elgar. 2023. pp. 312. £115. <scp>ISBN:</scp> 978‐1‐80392‐875‐3

Emilie Ghio, John M Wood, and Jennifer L L Gant, Re-Examining Insolvency Law and Theory: Perspectives for the 21st Century

Emilie Ghio, John M Wood, and Jennifer L L Gant, <i>Re-Examining Insolvency Law and Theory: Perspectives for the 21st Century</i>

Legal nature of the institution of insolvency of individuals

With the entry into force of the Code of Ukraine on Bankruptcy Procedures, the norms governing the recognition of a natural person as bankrupt began to apply to all natural persons, regardless of whether they have the status of an entrepreneur. This became a new stage in the history of the development of domestic insolvency (bankruptcy) law, since now the participants in the economic process are natural persons, whose debts are not related to the implementation of economic activity, and the court, in whose proceedings such a case is pending, can deal with legal relations, which were traditionally considered by general courts in civil proceedings. All this determines the need to clarify the legal nature of the institution of insolvency of natural persons. The purpose of the article is to clarify the legal nature of the institution of insolvency of individuals and the place of this institution in the legal system of Ukraine. The author considered the approaches that exist in legal science regarding the legal nature and place of the institution of insolvency of a natural person. It is emphasized that since the issues of bankruptcy and insolvency have historically always been in the scope of economic law and process, and the introduction of the possibility of declaring bankrupt individuals without such status, along with the bankruptcy of natural persons – entrepreneurs, does not mean the transfer of these legal relations to the sphere of civil law. Rather, the opposite is the case here - the spread of economic and legal norms to the peculiarities of legal regulation of the status of natural persons without the status of a subject of entrepreneurial activity. It is substantiated that during the time of its existence, commercial courts have demonstrated quality and efficiency in resolving commercial disputes, including developing an effective toolkit for considering bankruptcy cases, which is currently effectively used in the case of insolvency of individuals. The concentration of all disputes involving the debtor within the insolvency case of a natural person was analyzed. It was emphasized that from the moment of the opening of proceedings in the case of insolvency of an individual, all disputes arising regarding the latter’s property interests are decided by the commercial court.

Theoretical aspects of opening proceedings in the case of insolvency of a debtor – a natural person in accordance with the Code of Ukraine on bankruptcy procedures

The paper analyzes the theoretical aspects and legal norms regulating the procedure for initiating proceedings in cases of personal insolvency according to the Bankruptcy Procedures Code of Ukraine. It provides an in-depth analysis of Article 115 of the Code, which establishes the grounds for the court to decide to start examining a case of insolvency. This includes examining the debtor's inability to fulfill obligations to creditors, the absence of assets that can be subjected to enforcement, and other factors affecting the debtor's financial state. The paper delves into the legal intricacies and conditions under which a court can declare an individual insolvent, highlighting the critical importance of these conditions in protecting both the debtor and the creditors. Special attention is given to the importance of a detailed understanding and proper application of each norm, considering judicial practice and procedural nuances that can significantly affect the effectiveness and fairness of bankruptcy proceedings. The paper underscores the necessity for legal practitioners to be well-versed in these norms to navigate the complexities of insolvency cases effectively. It discusses how minor procedural missteps or misunderstandings of the law can lead to significant delays or even unjust outcomes, emphasizing the need for precision and thoroughness in legal proceedings. The role of the court is critically examined, particularly in ensuring an objective examination of the case circumstances. The court's duty is not limited to the evidence presented by the parties; it must also consider all relevant circumstances that might affect the case outcome. The paper highlights the court's subsidiary duty to assist the debtor in establishing the necessary circumstances for initiating proceedings, which is essential for ensuring that justice is served and that the debtor's rights are protected throughout the process. Furthermore, the paper discusses the broader implications of these legal norms and practices on the financial system and society. It considers how effective bankruptcy procedures can contribute to economic stability by providing a structured method for resolving insolvency issues. This, in turn, can encourage responsible lending and borrowing practices, as all parties have a clear understanding of the legal recourse available in cases of financial distress. This paper is particularly beneficial for lawyers, judges, and anyone interested in personal bankruptcy procedures, as it provides a comprehensive understanding of the procedural requirements and approaches used in Ukrainian legal practice. By offering detailed insights into the legal framework and practical applications of the Bankruptcy Procedures Code, it serves as a valuable resource for those involved in or studying insolvency law, helping to ensure that personal bankruptcy cases are handled with the highest standards of fairness and efficiency.

Equity in German Private Law

The German legal system, as in most continental legal systems, is primarily based on statutes. When deciding a case, judges apply the law as written in norms and do not put their own idea of a just and equitable result in place of the solution provided by the legislature. Seen in this light, statutes are “curdled equity”. This leaves little room for deciding a case under the principle of equity, understood as a means to find a resolution of the tension between the abstract-general provisions of the law and the particularities of the case at hand, i.e., the establishment of justice in individual cases. In this article, the relationship between statute and equity will be illustrated for German private law, highlighting the principle (predominance of statutes) and the exemptions (gateways to equity for legislature and courts). Further examples from German insolvency law complete the picture.

Гармонизация процедур реструктуризации в банкротстве: итоги Гаагской конференции по международному частному праву 2024 г.

From 5 to 8 March 2024, a meeting of the Council on General Affairs and Policy of the Hague Conference on Private International Law (HCCH) was held. The meeting was attended by 429 participants accredited by 74 states. The delegation of the Russian Federation included 6 representatives of various federal executive authorities, including the author of this article. One of the pressing issues considered by HCCH was the harmonization of international insolvency law. The main achievement in this direction was the cooperation of the Permanent Bureau of HCCH with Working Group V on Insolvency law of the United Nations Commission On International Trade Law (UNCITRAL) in matters of unification and harmonization of regulation of restructuring procedures, development of documents on issues of applicable legislation in proceedings on cases insolvency, as well as tracking and recovery of assets during insolvency proceedings. This article presents an analysis of the problems in this area that existed before the start of the HCCH’ meeting in 2024, as well as the progress and results of the discussion within HCCH on the unification and harmonization of insolvency restructuring procedures, taking into account its interaction with UNCITRAL Working Group V.

A comparative analysis of corporate rescue and insolvency laws in Zimbabwe and Mauritius

A comparative analysis of corporate rescue and insolvency laws in Zimbabwe and Mauritius

Exit strategy for solvent companies under Indian insolvency law

The Insolvency and Bankruptcy Code, 2016 (IBC) was enacted with the objective to create robust ecosystem for entrepreneurship. One of the key features under this regime is availing exit strategies for business entities or corporate persons which may not be financially distressed or solvent but with non-viable businesses. The doctrinal legal research methodology is adopted with the help of cases to check the efficacy and purpose of the law. The articles test the two major theories on corporate insolvency and bankruptcy to derive on the theory which influences the Indian voluntary liquidation regime. The article attempts to compare voluntary liquidation proceedings of corporate person are dealt with under erstwhile Companies Act 1956 and 2013 with IBC 2016. The Current voluntary liquidation regime provides legal remedy for small yet solvent businesses to exit the market without acquiring financial burden, hence supporting entrepreneurship in India.

A critical assessment of administration as a rescue mechanism of an insolvent corporate debtor in Uganda

Insolvency law enhances growth and alleviates financial challenges of businesses, but it can also be inefficient and delay commercial justice. This article critically evaluated Uganda's insolvent corporate debtor administration method and impacts. At the end, the article call for the bankruptcy protective order duration to be extended to at least a month in order to allow a debtor to establish payment arrangements. This period may be sufficient for the bankrupt to decide on the next steps to take to clear their debts, compared to the 14 days allowed under present insolvency law. Without increasing this term, the temporary protection order will fail since the bankrupt will still be panicked and may sell his/her business property at a loss. It is also recommended by the study for legal training to be organized for insolvency practitioners. This will ensure that only trained insolvency practitioners can practice. Finally, there is urgent need for enhanced insolvency law. Keywords: Insolvency, Administration, Corporate debtor, Creditor, Insolvency practitioners

Enforcing payment obligations under construction contracts by insolvency proceedings

Purpose States have intervened with legislation to improve cashflow within construction project supply chains. The operation of the UK’s Housing Grants, Construction and Regeneration Act 1996 leads to payment obligations stated either as a contract administrator’s certificate (or equivalent) or an adjudicator’s decision. The purpose of the intervention would be defeated unless there are speedy ways of transforming these pieces of paper into real money. The combination of the legislation, contractual provisions and insolvency law has produced a minefield of complexity concerning enforcement of payment obligations stated in these documents. Unfortunately, the knowledge and understanding required to navigate these complexities have been sorely lacking. The purpose of this paper is to plug this gap. Design/methodology/approach Legal research methods and case study approaches, using relevant court decisions as data, were adopted. Findings The enforcement method advised by the court is the summary judgment procedure provided under the Civil Procedure Rules. An overdue payment obligation, either under the terms of a construction contract or an adjudicator’s decision, amounts to a debt that can be the subject of insolvency proceedings. Although the insolvency enforcement method has been successfully used on some occasions, using it purely as a debt collection weapon would be inappropriate and likely to be punished by the court. Originality/value The paper contributes to knowledge in two ways: (i) it maps out the factual situations in which these payment challenges arise in language accessible to the construction industry’s professions; and (ii) comparative analysis of payment enforcement methods to aid decision-making by parties to construction industry contracts. It is relevant to the other common-law jurisdictions in which similar statutory interventions have been made.

Creditor Driven Insolvency Resolution Law – A Review of Intent v/s Practice.

Purpose- This paper aims to examine the effectiveness of Insolvency Law in India in addressing cases of corporate distress and enabling them to revive the business through restructuring by passing appropriate resolution as envisaged by the Law. It aims to seek evidence as to whether the ‘creditor driven insolvency resolution’ model has a propensity towards ‘resolution’ or is it driven more towards ‘liquidation’ leading to ‘value erosion.’ Design/Methodology/Approach- The paper is descriptive in nature. The paper studies the practice and impact of the Insolvency and Bankruptcy Code in India. The data reported by Insolvency and Bankruptcy Board of India have been used to examine the Insolvency law in practice. Findings- The author argues that Indian Insolvency Law tends to lean towards ‘Liquidation’ of distressed entity rather than ‘Reorganization’ of the entity against legal wisdom behind insolvency laws to promote revival of the distressed entity. The authors also imprint that increasing instances of withdrawal of admitted cases from IBC is an indicator of distressed entities resorting to informal methods of resolving cases outside IBC. Originality/Value- The paper puts across the dichotomy between ‘intention’ and ‘impact’ of Insolvency law in India. The study highlights deviation of insolvency resolution framework in India from the ‘Evolutionary Theory’ which states that increased dispersion of corporate ownership would lead to increased affinity towards ‘manager driven insolvency regime.’ Practical Implications-This study would be useful to insolvency resolution regulators, insolvency professionals and government to examine the insolvency law framework to improve effectiveness of Insolvency and Bankruptcy Code in practice.

Insolvency Law Toward Commercial Transactions in Jordan

Insolvency Law Toward Commercial Transactions in Jordan

Private Equity in Distress and the Incentives of Collateralised Loan Obligations

Abstract This article explores the problem that both modern private equity (PE) firms, and collateralised loan obligation (CLO) lenders to PE portfolio companies, have incentives to avoid a formal restructuring of PE portfolio companies in financial distress. The author is concerned that this may lead to negative social costs for suppliers, employees, customers and even government agencies. She explores how and why the problem arises, and the ways in which corporate and corporate insolvency law might be able to respond to it. Some suggestions are made, but it is accepted that any solution involves a sensitive balance that needs to be approached with considerable care.

Insolvency and Intellectual Property Rights Protection and Enforcement Issues in Bankruptcy Proceedings

This research paper explores the intricate relationship between intellectual property (“IP”) rights and insolvency proceedings, particularly within the framework of the Insolvency and Bankruptcy Code (“IBC”) in India. Intellectual property assets, including trademarks, patents, copyrights, and other intangible assets, hold significant value for companies, often becoming pivotal factors in insolvency resolution outcomes. Despite the critical role of IP, the IBC lacks explicit provisions addressing the treatment of IP licenses during insolvency, leading to uncertainties and gaps in legal guidance. Through a comprehensive examination of relevant sections of the IBC, such as Section 18 and Section 29, alongside comparative analysis with international insolvency laws, this paper elucidates the complexities surrounding the treatment of IP licenses in insolvency scenarios. It delves into concepts like the disclaimer of onerous property, avoidance powers, and the role of resolution professionals in managing IP assets during insolvency resolution processes. Furthermore, this paper identifies the absence of clear guidelines for cross-border insolvency cases involving intellectual property licenses, highlighting the need for harmonization and regulatory clarity to address potential conflicts between different insolvency regimes. The research underscores the importance of administrative inquiry and legislative action to provide robust protection for IP rights within insolvency frameworks, ensuring equitable treatment for all stakeholders involved. Keywords: Intellectual Property, Insolvency, Insolvency and Bankruptcy Code, IP Licenses, Cross-border Insolvency

Debt and Federalism: Landmark Cases in Canadian Bankruptcy and Insolvency Law, 1894–1937. Thomas G.W. Telfer and Virginia Torrie

<i>Debt and Federalism: Landmark Cases in Canadian Bankruptcy and Insolvency Law, 1894–1937</i>. Thomas G.W. Telfer and Virginia Torrie