Insolvency Regulation Research Articles

Cramming down cross-border secured debt under the Insolvency Regulation and the Directive on Restructuring and Insolvency: laws in conflict or in development?

Article 8 of the European Insolvency Regulation provides creditors with security rights on assets located in another member state than where insolvency proceedings are opened with the remarkable position that the opening of the insolvency proceedings cannot affect their security right. This has been heavily debated in the past, including whether art. 8 EIR protects against a reduction of the cross border secured claim in foreign insolvency proceedings. This debate is cast in a new light by not only the increased interconnectivity of the European continent since the development of (predecessors of) art. 8 EIR, but also by the introduction of the Directive on Restructuring and Insolvency and the plan-proceedings it has sparked. Whilst art. 8 EIR aims to protect cross border secured creditors against unexpected foreign insolvency proceedings, cross border secured creditors can now no longer legitimately expect that other member states have not implemented the Directive and incorporated in their national law plan proceedings that can bind secured creditors. The Directive not only shapes the legitimate expectations of cross-border secured creditors, it also sets a new standard for restructuring proceedings, including a new standard of creditor protection with the best interest test. This paper argues that in this light art. 8 EIR should be interpreted as to not prevent a cram down of cross-border secured claims that meets the safeguards of the Directive, although amendment of art. 8 EIR to adapt it to the new Directive is to be preferred.

Institution of insolvency (bankruptcy) of individual entrepreneurs: concept, evolution, legal nature and prospects development

Modern economic relations objectively need legal regulation of the procedure of termination of activities of those participants of turnover, who were unable to continue it due to deterioration of their property status. Due to the prevalence of participation of individual entrepreneurs in economic activity, they may also be among the insolvent subjects. These circumstances cause the need to study the specifics of insolvency (bankruptcy) of individual entrepreneurs, including in the context of forming the practice of application of the relevant legislation. Based on the analysis of the specifics of the legal status of an individual entrepreneur as a participant of property turnover, the purpose of legal regulation of insolvency (bankruptcy) of entrepreneurs, the conclusion is made about the possibility of singling out an independent institute of insolvency (bankruptcy) of entrepreneurs, institute of insolvency (bankruptcy) of an individual entrepreneur, it some principles are defined. When identifying the branch affiliation and place of this institute in the Russian legal system, it is defined as an arbitration-procedural legal institute. The peculiarities of the legal status of an individual entrepreneur also determine the necessity of fixing somewhat different approaches to the regulation of insolvency of these subjects compared to those that should be applied to ordinary citizens. The author concludes that it is necessary to fix as a general rule the obligation of the entrepreneur to repay the outstanding debt after the end of bankruptcy proceedings, as well as to establish the possibility to be released from this obligation only in a declaratory procedure.

The Bankruptcy of Foreign Companies

Abstract Until recently, in Russian jurisprudence prevailed a conservative approach. According to it, Russian courts did not consider themselves an appropriate forum for the bankruptcy of foreign companies. The situation started to change in April 2022, when the first judicial act opening bankruptcy proceedings in respect of a foreign company was rendered. This case reached the Supreme Court of the Russian Federation and paved the way for subsequent similar cases. As a result, in February 2024 the Supreme Court of the Russian Federation issued a landmark ruling which set an important precedent regarding several fundamental questions of cross-border insolvency in Russia. This article tracks the development of case law and the shifts in the focus of judicial reasoning towards stronger and more effective protection of the creditors’ interests. It gives an overview of the applicable rules in the absence of special regulation of cross-border insolvency. The article identifies the criteria developed by courts and common features of foreign entities currently most affected by the changes in case law. These changes demonstrate how jurisprudence strategically adjusts to the challenges of our time and customizes international trends.

The European Insolvency Regulation and Implementing Legislations—A Commentary, 1st edition. By GillesCuniberti and AntonioLeandro, Cheltenham: Elgar. 2024. pp. xlix +718. £265. ISBN: 978‐1‐80220‐520‐6.

The European Insolvency Regulation and Implementing Legislations—A Commentary, 1st edition. By GillesCuniberti and AntonioLeandro, Cheltenham: Elgar. 2024. pp. xlix +718. £265. <scp>ISBN:</scp> 978‐1‐80220‐520‐6.

Lack of Risk Management at Insolvency Consulting Companies: An Empirical Study in Germany 2024

In the wake of the COVID-19 pandemic, the Russian war of aggression against Ukraine and the resurgence of the Middle East conflict, government measures to support the economy have intervened massively in economic activity and thus influenced the real insolvency situation. This situation creates disruptive conditions in insolvency counselling and requires comprehensive risk management for the strategic safeguarding of internal processes in insolvency counselling companies. Despite a number of academic articles that address a lack of risk awareness in insolvency counselling, there have been no valid statistical surveys on this topic to date. The topic has also been largely ignored in practice. This article presents a study that examines risk management in insolvency advisory companies in the context of government intervention in the global economy from 2020 to 2023. The aim of the research is to assess the necessity and existence of risk management in these companies. A survey of 350 insolvency advisors was conducted between March and April 2024, from which 113 complete data sets could be analysed. The central hypothesis of the research study is that a significant majority of insolvency advisory companies have insufficient risk awareness and do not implement comprehensive risk management strategies. The survey results confirm that risk management is rarely practised and that a well-founded risk awareness is lacking in most consulting companies. It is noteworthy that two-thirds of those surveyed consider the benefits of risk management to be low, although more than half of those surveyed recognise increased risks due to government crisis measures. Ultimately, this study concludes with a recommendation that a standardised EU insolvency regulation could offer the greatest benefits for the insolvency sector, as it would simplify risk management for consultants in all member states.

IUS Constituendum Of Cross-Border Insolvency Regulation In Asean (Analysis Of The Uncitral Model Law On Cross-Border Insolvency And The European Union Regulation On Insolvency Proceedings)

Currently, ASEAN has an economic integration program that is stated in the ASEAN Economic Community Blueprint. As is well known, the European Union is the only regional organization that has succeeded in creating economic integration in its region supported by a unified law. One of the legal unification that needs to be initiated by ASEAN in supporting its economic integration is cross-border insolvency regulation. Some international legal instruments that can be a reference for the establishment of the ASEAN Cross-border Insolvency Regulation include the UNCITRAL Model Law on Cross-Border Insolvency and EU Regulation 848/2015 on Insolvency Proceedings. However, the comparison between ASEAN and the EU is not equivalent. ASEAN is a regional organization that is intergovernmental in nature, while the EU is a regional organization that is supranational in nature. Therefore, the comparative approach and statute approach are the right approaches in this article's writing. As for the research method used in this article writing is normative research. The objectives of this article are to describe the legal personality of ASEAN and the European Union in relation to the establishment of cross-border insolvency regulation and provide an overview of the substance of the UNCITRAL Model Law on Cross-Border Insolvency and EU Regulation 848/2015 to provide a reference for ASEAN to from cross-border insolvency regulation.

Article Oh Captain(s)! My Captain(s)

In this article, the author examines to what extent the European Insolvency Regulation (recast) authorizes Member States' courts to cooperate cross-border through appointing the same insolvency practitioner in insolvency proceedings relating to group companies (a so-called 'group insolvency practitioner'). The author concludes that, within certain boundaries which the article examines thoroughly, courts already can and should make such appointments. The article concludes with various recommendations in order to improve the useful application of this valuable cross-border insolvency tool. &#x0D;

Group concerns and communication and cooperation between practitioners under the European Insolvency Regulation (Part II)

AbstractIn this article, the author examines with a specific focus on the insolvency practitioner to what extent the Recast European Insolvency Regulation's provisions on communication, cooperation and coordination between the main actors in group companies' insolvency proceedings allow for efficient restructurings of those group companies. In doing so, the author will, at points, compare the provisions in Chapter V of the Recast European Insolvency Regulation to—and draw inspiration from—the German provisions on groups of companies that were adopted into the German Insolvency Act (Insolvenzordnung) and the United Nations Commission on International Trade Law's Model Law on Enterprise Group Insolvency. The author also aims to outline, among other things, the various forms of (cross‐border) communication, cooperation and coordination that the Recast European Insolvency Regulation obligates insolvency practitioners of groups of companies to engage in, how they should implement those forms of ‘CoCo’ and what would happen if they neglect to comply with those obligations. This article is Part II of a diptych on this topic; Part I was published in an earlier issue of this journal.

Strengthening secured creditors: Implications on debt financing and investment

This paper investigates the effects of a comprehensive insolvency regulation reform in Colombia, focusing on strengthening secured creditor rights, expanding the collateral menu, and establishing a national collateral registry. Leveraging a difference-in-difference design, the study examines the impact on firms with varying levels of movable assets. The reform significantly increased debt usage for firms with high movable assets, indicating a positive effect on financing. The national collateral registry played a pivotal role, benefiting firms in less financially developed regions. Furthermore, the analysis reveals nuanced interactions between the reform, firm size, and movable assets, suggesting differential effects on large and small enterprises. The study extends the Law and Finance literature, offering firm-level insights into the intricate dynamics between institutional changes and access to debt financing.

Licensing Insolvency Practitioners in Zambia: Aligning with International Best Practices

A well-regulated insolvency regime is crucial for fostering economic activity. This article examines a recent development in Zambia’s insolvency framework – the introduction of licensing requirements for insolvency practitioners by the Patents and Companies Registration Agency (PACRA) under the Corporate Insolvency Act No. 9 of 2017. We analyse how this aligns with international best practices in insolvency regulation, where jurisdictions like the UK, South Africa, and Kenya have similar licensing regimes to ensure practitioners competence and ethical conduct.The article further explores the potential for strengthening the Zambian system by considering the experience requirement for accreditation observed in other countries. We discuss the potential benefits of such a requirement, such as improved service quality and a more specialized pool of insolvency professionals. By examining Zambia’s recent licensing initiative and exploring the possibility of an experience requirement, this article contributes to the ongoing discussion on how to create effective and efficient insolvency regimes.

Analysis of the model of regulation of cross-border insolvency under German law

The article is devoted to the analysis of the model of regulation of cross-border insolvency under German law. The purpose of the article is the scientific understanding and identification of the characteristic features of the model of regulation of cross-border insolvency under German law.&#x0D; The presence of dualism in the legal regulation of the cross-border insolvency procedure under German law for EU member states and non-EU member states has been ascertained.&#x0D; It is argued that there are five types of proceedings in the cross-border insolvency procedure under the provisions of the German insolvency Statute 1) main proceedings; 2) secondary proceedings; 3) domestic secondary proceedings; 4) foreign proceedings; 5) territorial proceedings), as well as the absence of a legally established definition of these concepts.&#x0D; The absence of the concept of the debtor’s COMI was found in the provisions of the German insolvency Statute, even despite the fact that such a concept exists in the regulatory act itself, such concept does not fall under the classical understanding of cross-border insolvency, because it concerns the insolvency of a group of companies. The similarity of the provisions of the German insolvency Statute regarding the regulation of cross-border insolvency with the provisions of the predecessor acts of the 19th century regarding the same issue, as well as the exploitation of even similar terminology in relation to territorial proceedings, is proven. The almost complete impossibility of universalism in accordance to the provisions of the German insolvency Statute on cross-border insolvency has been proven, despite the presence, at first glance, of an environment favorable to the implementation of the mentioned theory.&#x0D; It is substantiated that the modern procedure of cross-border insolvency in Germany for third countries that are not members of the EU embodies the theory of territorialism. It has been proven that the existing territorial ideology of cross-border insolvency in modern Germany can be traced back to the existence of the Konkursordnung of 1877.&#x0D; By virtue of improving the legislation of Ukraine on bankruptcy, it is proposed to add a new Book to the Bankruptcy Code of Ukraine, which would contain the regulation of the cross-border insolvency procedure.

Impact of Sanctions on Formation of the Russian Approach to the Legal Regulation of Cross-Border Insolvency

This article is devoted to the analysis of the impact of sanctions and counter-sanctions measures on the formation of the approach of Russian courts to the consideration of disputes in insolvency cases. under the influence of integration processes on a global and regional scale, there is an intensification of foreign economic relations of economic entities from different countries, the interdependence of legal entities is formed within the framework of the international economic process. the active development of international economic activity brings with it not only great profits, opportunities for cost reduction and the development of international communication, but also the most severe crisis phenomena, a great risk of not staying afloat, resulting in a relatively new phenomenon of cross-border insolvency. The author noted the problematic aspects of the impact of sanctions on the consideration of insolvency disputes, including the initiation of bankruptcy proceedings, the inclusion of foreign creditors in the register of creditors’ claims, the recognition and enforcement of foreign judgments. The author studied cases from the latest practice of Russian courts, noted the features of the consideration of insolvency cases involving creditors and debtors of «unfriendly» countries, made conclusions and assumptions about the further development of judicial practice.

Ensuring effective insolvency procedures of natural persons (entrepreneurs): analysis of the legal regulation of insolvency in the European Union and Ukraine

"Full discharge of debts, as an outcome of the insolvency proceeding, should enable an entrepreneur to pursue their economic activity onward. This research analyses the implementation of the European Union’s discharge of debt standards into Ukrainian legislation. The article focuses on the comparison of the discharge procedures of natural persons (entrepreneurs) between the Code of Ukraine on Bankruptcy Procedures (CUBP) No. 2597-VIII from 18 October 2018 and the Directive (EU) 2019/1023 on restructuring and insolvency from 20 June 2019. As a result, the author observes that the CUBP maintains a different approach to protecting creditors’ and debtors’ interests in the discharge procedures compared to the Directive (EU) 2019/1023 on restructuring and insolvency. In conclusion, the author proposes approximating Ukrainian legislation to European standards by amending the CUBP. Keywords: discharge of debts, EU law, insolvency proceedings of entrepreneurs, repayment plan."

Reformation of Indonesian Insolvency Regulation on Execution of Cross-Border Assets Based on the European Union

The current possibility of hassle-free negotiations and transactions across countries allows international trade to be a significant source of profit for businesses in Indonesia. In the process, businesses are often exposed to risks of insolvency for being unable to repay debts. An insolvent debtor owning assets in other countries shifts the case to a cross-border insolvency case. As there is currently an absence of cross-border insolvency regulation in Indonesia, this paper therefore aims to reform Indonesian insolvency regulation through analyzing and applying learning points from the European Union’s success in managing cross-border insolvency. This paper identifies as legal normative research and is done through prescriptive analysis. The data used is secondary data obtained through a literature review, which includes primary and secondary sources. This paper uses the statute approach and will be analyzed qualitatively. Through the discussion, it is suggested that Indonesia adopt several relevant aspects of the EU regulation. To ease implementation, Indonesia should consider moving towards the reformation as a part of ASEAN. Alternatively, Indonesia can also independently engage in bilateral or multilateral treaties. To add on, Indonesia should advance from the idea of absolute territorialism or absolute universalism and instead seek to implement modified universalism in its cross-border insolvency regulation.&#x0D; &#x0D;

Group concerns and communication and cooperation between practitioners under the European Insolvency Regulation (Part I)

AbstractIn this article, the author examines with a specific focus on the Insolvency Practitioner to what extent the Recast European Insolvency Regulation's provisions on communication, cooperation and coordination between the main actors in group companies' insolvency proceedings allow for efficient restructurings of those group companies. In doing so, the author will, at points, compare the provisions in Chapter V of the Recast European Insolvency Regulation to—and draw inspiration from—the German provisions on groups of companies that were adopted into the German Insolvency Act (Insolvenzordnung) and the United Nations Commission on International Trade Law's Model Law on Enterprise Group Insolvency. The author also aims to outline, among other things, the various forms of (cross‐border) communication, cooperation and coordination that the Recast European Insolvency Regulation obligates insolvency practitioners of groups of companies to engage in, how they should implement those forms of ‘CoCo’ and what would happen if they fail to comply with those obligations. This article is Part I of a diptych on this topic, Part II of which will be published in a subsequent issue of this journal.

"INSOLVENCY LAW IN THE REPUBLIC OF UZBEKISTAN: HISTORICAL AND COMPARATIVE ANALYSIS"

"This article studied and analyzed the history of insolvency law of Uzbekistan, issues of protection of the entrepreneurs’ rights, restoring solvency of the debtor, and satisfaction of creditors’ claims with the use of insolvency procedures in accordance with the bankruptcy law of the Republic of Uzbekistan. In addition, when determining the signs of insolvency, it was analyzed that monetary obligations and debts on mandatory payments should be taken into account, and claims arising from labor relations should not be grounds for initiating bankruptcy proceedings. Particular attention was paid to the objectives of the credit policy when establishing insolvency regimes, based on two goals - fair distribution of risks and maximizing the value of the debtor’s assets. The models of insolvency regulation are analyzed using the example of the countries of Europe and the USA; their experience is compared with the practice of Uzbekistan. In particular, it has been established that rehabilitation norms appeared in US legislation and were subsequently used as a model in European countries, and the legislation of many countries is currently improving its legislation on the rehabilitation of the debtor. Analytical conclusions, ideas, and recommendations were also developed on the need to develop the concept of insolvency in Uzbekistan and the priorities that should be reflected in it."

Regulation of Cross-Border Insolvency in the EAEU Law

Regulation of Cross-Border Insolvency in the EAEU Law

Правовое регулирование несостоятельности (банкротства) граждан в России и Германии

The article analyses the peculiarities of bankruptcy of citizens. There are general and special insolvency procedures that are introduced over the property of citizens. The conclusion is made about the identity of regulation of consumer and commercial insolvency of citizens, in connection with which the rehabilitation of the entrepreneur’s enterprises is difficult. Particular attention is paid to the insolvency procedure of the mass of succession, as well as the insolvency procedure of the common property of spouses, qualified as special procedures, to which the rules on ordinary procedures are applied in a subsidiary manner. It is concluded that the heir, by virtue of a legal fiction, fulfils the rights and obligations of the debtor in the insolvency procedure in the event of the death of the testator. The emergence of the insolvency procedure of the common property of the spouses is noted, since it is introduced in judicial practice simultaneously regarding several separate property masses. The comparison of legal regulation and the objectives of procedures concerning separate masses of succession in Russia and Germany is made.

Legal Regulation of Insolvency (Bankruptcy): a Brief Historical Digression

The institution of insolvency (bankruptcy) is known to all modern legal systems, regardless of the specifics of the economic formation. The bankruptcy mechanisms implemented in the Russian Federation are not effective enough, while the number of bankruptcy cases is steadily growing. Further reform of the institution of bankruptcy in the Russian Federation implies the need to study the historical experience of legal regulation of bankruptcy both in foreign countries and in pre-revolutionary Russia. All the main methods of scientific cognition, in particular historical and comparative methods, were used in the preparation of the article. The article examines the origin and evolution of the institution of bankruptcy (bankruptcy law), identifies the beginnings of bankruptcy law in Roman law, touches on its development in the legal systems of Italy, France, Germany, Great Britain, USA, Russia. The concepts of non-payment and insolvency are analyzed, as well as the ratio of the institutions of enforcement proceedings and competition law. Conclusions are formulated about the exclusivity of bankruptcy in terms of economic consequences, the need to distinguish commercial bankruptcy from consumer bankruptcy, the importance of the criterion of good faith in relation to the debtor and creditors.

Cross-border Insolvency Protocols: Cooperation, Coordination, and Communication Duties under the European Insolvency Regulation Recast

Cross-border insolvency protocols are a practical phenomenon developed at the international level in the last 30 years. These protocols are agreements entered by the insolvency practitioners to facilitate cooperation and communication between insolvency practitioners and courts involved in cross-border insolvency proceedings. Protocols have been mentioned but not regulated by the European Insolvency Regulation Recast. This contribution seeks to analyse the aims, principles, and standard features of the protocols emerging in practice. Second, it aims to evaluate how this phenomenon fits with the duties of cooperation, coordination, and communication within the European Insolvency Regulation Recast to define the scope and role of protocols within the EU member states. Cross-border insolvency, protocols, transnational, cooperation, coordination, communication, European Insolvency Regulation