Practice In Bankruptcy Research Articles

Corporate nationality, foreign control and capital structure decisions in Nigeria

The main objective of this study is to investigate whether corporate nationality and degree of foreign control influence capital structure decisions in a developing economy. The study makes use of eighteen-year time series data from 70 non-financial quoted firms in Nigeria. Using fixed effects panel regression models, it is found that though firm nationality and the degree of foreign control are significant determinants of corporate financing decisions in the country, they are not as important as acclaimed by local corporate stakeholders who champion discriminatory polcies in favour of indigenous firms. Thus, there is need for the Nigerian government to devote more attention in improving policy frameworks on areas such as corporate tax, corporate governance and bankruptcy practices, which are found by previous studies to be very important determinants of firm’s access to long-term investment capital.

Bankruptcy Policy: A Review and Critique of Bankruptcy Statutes and Practices in Fifty Countries Worldwide

Countries around the world vary greatly in how they legislate and practice bankruptcy law. Typically, however, these differences can be synthesized into two, three, or four major approaches that countries copy from former colonial powers and follow. The research reveals how different legal concepts in different jurisdictions can achieve similar legal and economic outcomes. However, not everything that is functionally possible is functionally practicable. What distinguishes an optimal from a less-than-optimal bankruptcy statute is the ease with which it attains the efficient outcome. The research reveals also that legislators in various jurisdictions lack for a comprehensive vision and for an integrated approach to bankruptcy law and to its goals. This explains the absence in some countries of reorganization laws, or at least, of reorganization rules that are as intrusive as liquidation rules. Such countries privilege the formal denomination of the bankruptcy procedure - i.e. liquidation v. reorganization - over the substantive transactions and financial choices that face the debtor. To a certain extent, these inconsistencies reveal an enduring stigma of bankruptcy worldwide.

Game-Theoretic Bankruptcy Valuation

AbstractThe rules of bankruptcy reorganization in the United States permit a debtor to retain a secured claim’s collateral in exchange for judicially approved compensation even over the objection of the secured creditor. An alternative would grant a secured creditor the right to recover its collateral unless satisfied with the compensation, a right often implicit in modern bankruptcy practice despite the formal rules. Either debtor or secured creditor domination of the bankruptcy process may yield inefficient continuation decisions, violations of absolute priority, and high transactions cost. As a remedy to these pitfalls, a mechanism that would mediate between debtor and creditor control and could harness the parties’ information about collateral value is proposed here: junior interests would, on behalf of the debtor, propose a reorganization plan that could include a take-it-or-leave-it offer for collateral with assured liquidation of the collateral being the consequence if the secured creditor rejected...

Cracking the Code: The Legal Authority Behind Extrastatutory Debtor-in-Possession Financing Mechanisms and Their Prospects for Surival

In surveying the landscape of bankruptcy law twenty-five years after its dramatic renovation in 1978, Professor Douglas Baird has observed the gradual development of numerous practices in debtor-in-possession (“DIP”) financing that do not accord with the plain meaning of the text of the Bankruptcy Code (the “Code”), yet “have become deeply engrained and will remain a part of bankruptcy practice as long as no one objects.” However, when someone does object, appellate judges, expressing “little sympathy for interpretations of the Bankruptcy Code that are out of step with what seems the plain language of the statute,” have sometimes stricken such procedures, despite their common acceptance among bankruptcy specialists. By examining three practices that lack explicit statutory approval—cross-collateralization, critical vendor orders, and restrictive loan covenants—this survey piece seeks to evaluate not only their legal and normative validity, but also the ability of strict constructionist judges to curtail them in opposition to the will of most practitioners and DIP lenders.

A STUDY of Inefficient Going Concerns in Bankrupty

Using Hungarian data, this paper provides the first large-scale study measuring the bias in favour of inefficient going concerns induced by court-administered bankruptcy procedures. We find that the large majority of bankrupt firms in our sample are kept as going concerns, although the evidence suggests that they sharply reduce aggregate proceeds to pre-bankruptcy creditors. These results stem from bankruptcy law and practices that dilute rights of secured creditors, and provide the trustee managing the bankruptcy process with strong incentives to maintain a going concern. The bias in favour of going concerns encourages trade creditors to trigger bankruptcy, either to be bought out by secured creditors or to benefit from supplying the firm in bankruptcy.

The Theoretical Underpinnings of Commercial Law: A Russian View of Bankruptcy and Securities

AbstractPart One. The history of bankruptcy in Russian law both before and after the 1917 Revolution is the tool used to introduce the reader to this article. During the Soviet period, creditors of enterprises never participated in proceedings for their liquidation. This state of affairs began to change in 1992 with the adoption of the first bankruptcy legislation in the post-Soviet period.However, as reality soon showed to most observers, this was not a successful piece of legislation—at least as regards the needs of liberalized trade and commerce. This prompted the Russian legislator to promulgate new bankruptcy legislation in 1998; in turn, its life span was but a short four years. The reader here will be offered critical comments on the most recent RF Bankruptcy Law dating from 2002 and thoughts on how its provisions compare with those from prior versions of RF laws on insolvency. This will include views on bankruptcy practice in Russian courts the case load of which is growing each year.Part of the growth in application of bankruptcy legislation in Russia is a function of its use by entrepreneurs as a tool to divide up business assets. This has led to the phenomenon of fictitious bankruptcies. Another major problem in the application of bankruptcy legislation in recent years in Russia has been—the authors argue—a failure to take into account the interests of minority shareholders in corporate bankruptcies as well as of those corporate creditors who obligations are secured by collateral.Part Two. Transactions that are declared invalid during bankruptcy proceedings are the subject of this section. This analysis will be made using the approach of classic, continental law to the grounds for declaring a transaction to be invalid. The authors then highlight the logic in applying this institution to the area of bankruptcy. In doing so, the specific features are revealed of voiding transaction in bankruptcy proceedings.In particular, the authors draw the attention of the reader to the criteria under which a transaction concluded by an insolvent debtor is either void (nichtozhnaia) or voidable (osporimaia). They also underscore the necessity of striking a balance between the interests of creditors and those of an insolvent debtor. In this regard, the institute of the invalidity of transactions is examined from the point of view of providing a pro-creditor, pro-debtor, or neutral system in bankruptcy legislation.Part Three. The development of the generic institute of securities in Russia—as a form of debt instrument—is the focal point of this section. The influence of the Pandect system of Russian law on securities is illustrated as is that of politics (that has led to substantial changes in commerce and entrepreneurial activity) and doctrine. The authors argue the point that the characteristics of a security—both those seen on a paper document as well as those in an electronic form—can be united into a single, generic concept. The particularities of this concept are of an evidentiary nature.Each security is an evidentiary document that is distinguished (both in paper as well as electronic form) from other documents in the manner in which it can be contested and entered into evidence in judicial proceedings. The contestability of a security depends, in turn, upon the type of security involved and the rights that they confirm (a good, money, income).Arguments are given by the authors of this article in support of the thesis—not uniformly shared by all Russian scholars—that such means of legal defense as vindication is permissible vis-à-vis electronic securities. Yet the authors here also speak of a just (spravedlivyi) balance of the risks between the holder of a security that has lost the legal control (ownership) there over and a bona fide acquirer of such a security. Justice is reached through a determination in substantive law of procedural norms that apportion in a set fashion the burden of proof among interested persons.Lastly, this work also highlights the work of regulating the institute of securities in other CIS jurisdictions. In doing so, the authors point out a few areas in which Russia is lagging behind as concerns the organization of electronic trading in securities.

A Conception of a New Act on Insolvency

As it is known the effective act on bankruptcy, liqudation and voluntary dissolution was adopted in 1991 in Hungary. Nevertheless there have been modifications on this act since then, the new economic conditions require a more appropriate regulation of this field. The author presents a thorough summary on the critical points of the valid regulation. He applies a comparative method by referring to the legal solutions of different European countries concerning this branch of law and underlines that there are even significant terminological differences between the Hungarian regulation and e.g. the regulation of the EU-countries. This circumstance itself would demand modification of the law of bankruptcy in Hungary with respect to the join of Hungary to the European Union. The author mentions examples of the everyday practice of bankruptcy and liquidation, which can also prove the necessity of creating a new act on this issue. He puts high emphasis on the role and activity of the liquidator (trustee in bankruptcy). Finally the article attempts to outline those essential elements of this branch of law, which should be taken into consideration during the codification of the new act on bankruptcy, liquidation and insolvency.

Chapter 11 at Twilight

In The End of Bankruptcy we detailed the forces that have rendered obsolete traditional conceptions of corporate reorganization. In a response to our article, Lynn LoPucki asserts that our paper lacked empirical foundation. In this response, we draw on LoPucki's data set of the reorganization of large, publicly held entities to show the robustness of our claims, both empirical and theoretical. Looking in detail at the firms whose Chapter 11 cases ended in 2002, most of which concluded after we completed our original piece, we find that in over 80% of the cases the assets of the firm were either sold or the bankruptcy proceeding put in place a restructuring plan agreed to before bankruptcy was filed. The remaining firms evince little in the way of going-concern value. Moreover, equityholders are nearly always wiped out, and the board of directors is usually replaced. Today's bankruptcy practice reveals creditors, particularly the senior lenders, in control. They use their powers to remove managers in whom they have lost confidence, replace the board of directors, put the corporation on the auction block and terminate the interest of equityholders. This paper provides further evidence that issues of control rather than priority dominate modern reorganization practice.

Toward a Statutory Approach to Sovereign Debt Restructuring: Lessons from Corporate Bankruptcy Practice around the World

This paper provides an overview of key elements of corporate bankruptcy codes and practice around the world that are relevant to the debate on sovereign debt restructuring. It highlights that there are four components common to most bankruptcy reorganization institutions: a stay on debt collection efforts to prevent a costly run for the assets, broad enforcement of absolute priority, majority voting among creditors on the proposed reorganization plan, and new higher priority financing to keep the firm going while its liabilities are restructured. The paper goes on to argue that these components ought to be present in some form in any sovereign debt restructuring procedure even if important differences exist between corporations and sovereign states. [JEL F34, G34]

Comment on "Toward a Statutory Approach to Sovereign Debt Restructuring: Lessons from Corporate Bankruptcy Practice around the World"

Comment on "Toward a Statutory Approach to Sovereign Debt Restructuring: Lessons from Corporate Bankruptcy Practice around the World"

Toward a Statutory Approach to Sovereign Debt Restructuring: Lessons From Corporate Bankruptcy Practice Around the World

"Volume 2003 (2003): Issue 013 (Jan 2003): Toward a Statutory Approach to Sovereign Debt Restructuring: Lessons From Corporate Bankruptcy Practice Around the World" published on 01 Jan 2003 by International Monetary Fund.

Toward a Statutory Approach to Sovereign Debt Restructuring: Lessons from Corporate Bankruptcy Practice Around the World

This paper provides an overview of key elements of corporate bankruptcy codes and practice around the world that are relevant to the debate on sovereign debt restructuring. It highlights four components common to most bankruptcy reorganization institutions: a stay on debt collection efforts to prevent a costly run for the assets, broad enforcement of absolute priority, majority voting among creditors on the proposed reorganization plan, and new higher priority financing to keep the firm going while its liabilities are restructured. The paper argues that these components ought to be present in any sovereign debt restructuring procedure.

Four (or Five) Easy Lessons From Enron

At the time that Enron filed for bankruptcy, it had substantial assets, thousands of creditors, an opaque capital structure, and more than a whiff of fraud. By the traditional account, Enron is a prototypical example of a firm with problems that a law of corporate reorganizations is designed to solve. Like the 19th century receiverships of the great railroads, the reorganization of Enron could have allowed creditors and others to negotiate with each other and find a way to preserve the value of the firm as a going concern at the same time misdeeds are uncovered and losses are allocated among the different players. Negotiations aimed at preserving Enron's value as a going concern never took place, however. As is increasingly the case in large Chapter 11s, Enron's assets were sold quickly, most within a few weeks or months of the filing. The decision as to how to deploy Enron's assets lay not in the court but in the new owners. After selling the assets, the bankruptcy court quickly turned to what courts do best - sorting out complex and perhaps conflicting legal entitlements. This pattern of a prompt sale followed by litigation over the distribution of the proceeds reflects a dramatic change in large firm bankruptcy practice. It suggests that we should no longer think of Chapter 11 as a collective forum in which the interested parties gather to bargain over the fate of the firm.

Solzhenitsyn's Challenge to Russia and the West

Operating out of a Slavophile tradition, Aleksandr Solzhenitsyn offers a critique of both Soviet and Western societies that is comprehensive and damning. A review of his writings reveals a profound rejection of many core values and practices of Western civilization. What is viewed as an aberrant Soviet experience is understood as but a logical extension of developments in the West. Solzhenitsyn′s prescription for an identified Soviet and Western moral bankruptcy draws on past Russian Orthodox thinking and practices. Playing to Russian collectivist and conservative instincts, he venerates an idyllic Russian rural setting; but that setting has little relevance to contemporary Soviet reality. Ironically, Solzhenitsyn′s strong reformist inclinations are not unlike those of many reformers now championing change in a post‐Soviet Russia. But his stated political and economic preferences place him solidly in the ranks of contemporary Russian nationalist extremists, making him a leading figure for those promoting a return to earlier authoritarian Russian practices.

Proposed reforms in Japanese law and practice in international bankruptcy

Proposed reforms in Japanese law and practice in international bankruptcy

The New Companies Legislation. By Gerard McCormack. [Dublin: The Round Hall Press. 1991. xxiv, 245 and (Index) 6pp. Hardback £37.50 net.] - Bankruptcy Law and Practice in Ireland. By Mark Sanfey and Bill Holohan. [Dublin: The Round Hall Press. 1991. lv, 243, (Appendices) 32 and (Subject Index) 16pp. Hardback £45·00 net.

The New Companies Legislation. By Gerard McCormack. [Dublin: The Round Hall Press. 1991. xxiv, 245 and (Index) 6pp. Hardback £37.50 net.] - Bankruptcy Law and Practice in Ireland. By Mark Sanfey and Bill Holohan. [Dublin: The Round Hall Press. 1991. lv, 243, (Appendices) 32 and (Subject Index) 16pp. Hardback £45·00 net.

Williams' Law and Practice in Bankruptcy

Book Notices Get access The American Journal of Comparative Law, Volume 7, Issue 2, Spring 1958, Pages 309–321, https://doi.org/10.2307/837580 Published: 01 April 1958

A Handbook on Bankruptcy Law and Practice. By Ivan Cruchley, ll.b., of Gray's Inn, Barrister-at-Law. [London: The Solicitors' Law Stationery Society, Ltd. 1950. xx and 208 pp. 18s. net.

A Handbook on Bankruptcy Law and Practice. By Ivan Cruchley, <scp>ll.b</scp>., of Gray's Inn, Barrister-at-Law. [London: The Solicitors' Law Stationery Society, Ltd. 1950. xx and 208 pp. 18s. net.

Bankruptcy Practice and Procedure

Bankruptcy Practice and Procedure

Gibson's Bankruptcy. Intended as an explanatory treatise on the Law and Practice of Bankruptcy. Eleventh edition. By Arthur Weldon, Solicitor (Honours) and H. J. B. Cockshutt, Solicitor (Honours). London: ‘Law Notes’ Publishing Offices. 1938. lvii and 293 pp. (20s.)

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