Pamela Foohey, Dalié Jiménez, Christopher K. Odinet
As part of federal and state relief programs created during the COVID-19 pandemic, many American households received pauses on their largest debts, particularly on mortgages and student loans. Others may have come to agreements with their lenders, likewise pausing or altering payment on other debts, such as auto loans and credit cards. This relief allowed households to allocate their savings and income to necessary expenses, like groceries, utilities, and medicine. But forbearance does not equal forgiveness. At the end of the various relief periods and moratoria, people will have to resume paying all their debts, the amounts of which may have increased to account for any missed or reduced payments. Yet in the interim months, people have faced persistent unemployment and dwindling household wealth. Many likely will be unable to resume all debt payments, leading them into formal or informal bankruptcy. Incentivizing lenders to work with people to craft successful loan modifications will stave off a swell of bankruptcy filings and economic loss. The 2008 financial crisis showed how poorly prepared creditors were to offer successful debt workouts. Now is the time for policymakers to plan for the coming crash of needed loan modifications across consumer credit products. This Essay sketches a path for how that should be done.
{"title":"Steering Loan Modifications Post-Pandemic","authors":"Pamela Foohey, Dalié Jiménez, Christopher K. Odinet","doi":"10.2139/ssrn.3869961","DOIUrl":"https://doi.org/10.2139/ssrn.3869961","url":null,"abstract":"As part of federal and state relief programs created during the COVID-19 pandemic, many American households received pauses on their largest debts, particularly on mortgages and student loans. Others may have come to agreements with their lenders, likewise pausing or altering payment on other debts, such as auto loans and credit cards. This relief allowed households to allocate their savings and income to necessary expenses, like groceries, utilities, and medicine. But forbearance does not equal forgiveness. At the end of the various relief periods and moratoria, people will have to resume paying all their debts, the amounts of which may have increased to account for any missed or reduced payments. Yet in the interim months, people have faced persistent unemployment and dwindling household wealth. Many likely will be unable to resume all debt payments, leading them into formal or informal bankruptcy. Incentivizing lenders to work with people to craft successful loan modifications will stave off a swell of bankruptcy filings and economic loss. The 2008 financial crisis showed how poorly prepared creditors were to offer successful debt workouts. Now is the time for policymakers to plan for the coming crash of needed loan modifications across consumer credit products. This Essay sketches a path for how that should be done.","PeriodicalId":44862,"journal":{"name":"American Bankruptcy Law Journal","volume":"60 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-10-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"80460629","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper explores banks' behaviour in the five years prior to a firm's financial distress. We construct a model of bank competition where new banks will often refinance loans that a firm's current banks do not want to renew. The model predicts that existing banks will be more frequently able to exit their loans if the firm has collateral or a good rating. Using bank–firm level credit data we test this model and document that indeed, banks with long standing relationships strategically terminate lending relationships at losses at the expense of less informed banks, well before those firms approach default. The number of banks continuously increases until about one year before the default, allowing inside banks that have been present in the firm’s capital for a long time to reduce their exposure. As predicted this effect is stronger for firms with a good credit rating prior to bankruptcy.
{"title":"Passing the Parcel? Relationship Banking at the Onset of Financial Distress","authors":"Federica Salvadè, M. Troege, Nicolas Taillet","doi":"10.2139/ssrn.3936411","DOIUrl":"https://doi.org/10.2139/ssrn.3936411","url":null,"abstract":"This paper explores banks' behaviour in the five years prior to a firm's financial distress. We construct a model of bank competition where new banks will often refinance loans that a firm's current banks do not want to renew. The model predicts that existing banks will be more frequently able to exit their loans if the firm has collateral or a good rating. Using bank–firm level credit data we test this model and document that indeed, banks with long standing relationships strategically terminate lending relationships at losses at the expense of less informed banks, well before those firms approach default. The number of banks continuously increases until about one year before the default, allowing inside banks that have been present in the firm’s capital for a long time to reduce their exposure. As predicted this effect is stronger for firms with a good credit rating prior to bankruptcy.","PeriodicalId":44862,"journal":{"name":"American Bankruptcy Law Journal","volume":"42 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-10-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"73813976","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The introduction of the Insolvency and Bankruptcy Code, 2016 (IBC) in India as a consolidation of insolvency and bankruptcy laws has come with its challenges that have found resolution through judicial pronouncement, regulatory clarification or legislative intervention. One of the key issues in relation to process of corporate insolvency resolution has been in relation to claims against a corporate debtor and when such claims should be made – timing, validity and admission. Here, the role of the debtor, creditor and the insolvency administrator (the insolvency professional) become a subject matter of immediate discussion. In this paper, the authors seek to address the questions surrounding treatment of claims in insolvency resolution and offer next steps while tracing the jurisprudential development related to claims made in corporate insolvency under the IBC.
{"title":"Treatment of Disputed Claims in Corporate Insolvency: Evolving Jurisprudence","authors":"Sarah Gupta, Ishan Tripathi","doi":"10.2139/ssrn.3910991","DOIUrl":"https://doi.org/10.2139/ssrn.3910991","url":null,"abstract":"The introduction of the Insolvency and Bankruptcy Code, 2016 (IBC) in India as a consolidation of insolvency and bankruptcy laws has come with its challenges that have found resolution through judicial pronouncement, regulatory clarification or legislative intervention. One of the key issues in relation to process of corporate insolvency resolution has been in relation to claims against a corporate debtor and when such claims should be made – timing, validity and admission. Here, the role of the debtor, creditor and the insolvency administrator (the insolvency professional) become a subject matter of immediate discussion. In this paper, the authors seek to address the questions surrounding treatment of claims in insolvency resolution and offer next steps while tracing the jurisprudential development related to claims made in corporate insolvency under the IBC.","PeriodicalId":44862,"journal":{"name":"American Bankruptcy Law Journal","volume":"66 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"88452544","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Paper Series VII discusses Arrangement or compromise between two or more companies, the provisions applicable to schemes or contract involving the transfer of shares in a company, the provisions applicable to dissenting shareholders. Further, the Paper Series considers Arrangement on sale of company’s property during members’ voluntary winding-up, power to compromise with creditors and members and then the moratorium on creditors voluntary winding-up in a scheme of arrangement.
{"title":"Paper Series VII - Arrangements and Compromise","authors":"Ikemefuna Stephen Nwoye","doi":"10.2139/ssrn.3835864","DOIUrl":"https://doi.org/10.2139/ssrn.3835864","url":null,"abstract":"Paper Series VII discusses Arrangement or compromise between two or more companies, the provisions applicable to schemes or contract involving the transfer of shares in a company, the provisions applicable to dissenting shareholders. Further, the Paper Series considers Arrangement on sale of company’s property during members’ voluntary winding-up, power to compromise with creditors and members and then the moratorium on creditors voluntary winding-up in a scheme of arrangement.","PeriodicalId":44862,"journal":{"name":"American Bankruptcy Law Journal","volume":"36 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-04-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"89118250","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
It is widely recognized that bankruptcy law can stymie regulatory enforcement and present challenges for governments when regulated businesses file for Chapter 11. It is less-widely understood that bankruptcy law can present governments with opportunities to advance policy goals if they are willing to adopt tactics traditionally associated with activist investors, a strategy we call “government bankruptcy activism.” The bankruptcy filings by Chrysler and General Motors in 2009 are a famous example: the Federal government used the bankruptcy process to help both auto manufacturers resolve their financial distress while promoting the policy objectives of protecting union workers and addressing climate change. A decade later, the government of California applied its bargaining power in the Pacific Gas & Electric Company’s Chapter 11 case to protect climate policies and the victims of wildfires. These examples illustrate that, by tapping into the bankruptcy system, governments gain access to the exceptional powers that a debtor enjoys under bankruptcy law, which can complement the traditional tools of appropriations and regulation to facilitate and accelerate policy outcomes. This strategy is especially useful in times of urgency and policy paralysis, when government bankruptcy activism can provide a pathway around the delay and veto obstacles of the various stakeholders and players in the political system. However, making policy through the bankruptcy system presents potential downsides as well, as it may also allow governments to evade democratic accountability and obscure the financial losses that stakeholders are forced to absorb to help fund those policy outcomes.
人们普遍认为，当受监管的企业根据破产法第11章申请破产保护时，破产法会阻碍监管执法，并给政府带来挑战。人们不太了解的是，如果政府愿意采用传统上与激进投资者相关的策略，破产法可以为政府提供推进政策目标的机会，我们称之为“政府破产行动主义”。2009年克莱斯勒和通用汽车的破产申请就是一个著名的例子:联邦政府利用破产程序帮助这两家汽车制造商解决财务困境，同时促进保护工会工人和应对气候变化的政策目标。十年后，加州政府在太平洋天然气和电力公司(Pacific Gas & Electric Company)的破产法第11章案件中运用了议价能力，以保护气候政策和野火的受害者。这些例子表明，通过利用破产制度，政府可以获得债务人根据破产法享有的特殊权力，这可以补充拨款和监管的传统工具，以促进和加速政策成果。这一策略在紧急和政策瘫痪时期尤其有用，因为政府破产行动主义可以提供一条途径，绕过政治体系中各种利益相关者和参与者的拖延和否决障碍。然而，通过破产制度制定政策也有潜在的缺点，因为它也可能使政府逃避民主问责制，并掩盖利益相关者被迫吸收的财务损失，以帮助为这些政策结果提供资金。
{"title":"Government Activism in Bankruptcy","authors":"Jared A. Ellias, George G. Triantis","doi":"10.2139/SSRN.3796367","DOIUrl":"https://doi.org/10.2139/SSRN.3796367","url":null,"abstract":"It is widely recognized that bankruptcy law can stymie regulatory enforcement and present challenges for governments when regulated businesses file for Chapter 11. It is less-widely understood that bankruptcy law can present governments with opportunities to advance policy goals if they are willing to adopt tactics traditionally associated with activist investors, a strategy we call “government bankruptcy activism.” The bankruptcy filings by Chrysler and General Motors in 2009 are a famous example: the Federal government used the bankruptcy process to help both auto manufacturers resolve their financial distress while promoting the policy objectives of protecting union workers and addressing climate change. A decade later, the government of California applied its bargaining power in the Pacific Gas & Electric Company’s Chapter 11 case to protect climate policies and the victims of wildfires. These examples illustrate that, by tapping into the bankruptcy system, governments gain access to the exceptional powers that a debtor enjoys under bankruptcy law, which can complement the traditional tools of appropriations and regulation to facilitate and accelerate policy outcomes. This strategy is especially useful in times of urgency and policy paralysis, when government bankruptcy activism can provide a pathway around the delay and veto obstacles of the various stakeholders and players in the political system. However, making policy through the bankruptcy system presents potential downsides as well, as it may also allow governments to evade democratic accountability and obscure the financial losses that stakeholders are forced to absorb to help fund those policy outcomes.","PeriodicalId":44862,"journal":{"name":"American Bankruptcy Law Journal","volume":"51 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-03-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"84812843","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In this essay, we propose a principled approach for government bailouts of critical/systemic firms who find themselves in COVID-19-induced financial distress. We also demonstrate why bankruptcy is the wrong tool to address the problems of these types of firms. The current pandemic threatens lives and livelihoods across the world. A key difference compared to previous market shocks is that lockdowns and related measures have, in certain instances, made it impossible for businesses to conduct their operations. This has resulted in a very specific type of distress, one that bankruptcy is not in the best position to address effectively. If there are no revenues, the design of bankruptcy laws makes them an inadequate tool – and the sheer volume of companies going through the process may put severe stress on the system. The difficulties that the vast majority of companies are encountering may be better solved using different tools: bailouts, bail-ins or a combination thereof, deployed by the government in wide-ranging statutory schemes. However, these schemes may not adequately address the issues of all companies; and the preservation of some of them – those that we refer to as critical/systemic – may be of such significant value to society that more intense assistance from the government is justified. We engage with the characteristics of firms that should be considered critical/systemic and the principles that should guide ad hoc rescues of those companies by the government. Firms are critical/systemic if their failure imposes significant negative externalities on the economy (or, conversely, their preservation generates significant positive externalities) or if they provide the public with an “infrastructure” not otherwise provided by the private sector. If firms are critical/systemic, the government should have the ability to bail them out, going beyond applicable statutory schemes and ensuring that the relevant externalities are considered when deciding whether to keep these companies as going concerns. Bankruptcy is a private process. It is not designed to vindicate such public considerations. Government bailouts, however, should be governed by principles, as any government intervention in the economy, and its associated efficiency and distributional effects must be considered with care. The guiding principles that we propose and elaborate on are (i) proportionality, (ii) efficiency, (iii) equity and (iv) transparency. The application of these principles should ensure that, if the government takes ownership of a private firm through an ad hoc bailout, this is a tool of last resort, and not more than temporary – and that the pre-distress investors properly contribute to the necessary measures.
{"title":"Towards a Principled Approach for Bailouts of COVID-Distressed Critical/Systemic Firms","authors":"Horst Eidenmueller, Javier Paz Valbuena","doi":"10.2139/SSRN.3795942","DOIUrl":"https://doi.org/10.2139/SSRN.3795942","url":null,"abstract":"In this essay, we propose a principled approach for government bailouts of critical/systemic firms who find themselves in COVID-19-induced financial distress. We also demonstrate why bankruptcy is the wrong tool to address the problems of these types of firms. \u0000 \u0000The current pandemic threatens lives and livelihoods across the world. A key difference compared to previous market shocks is that lockdowns and related measures have, in certain instances, made it impossible for businesses to conduct their operations. This has resulted in a very specific type of distress, one that bankruptcy is not in the best position to address effectively. If there are no revenues, the design of bankruptcy laws makes them an inadequate tool – and the sheer volume of companies going through the process may put severe stress on the system. The difficulties that the vast majority of companies are encountering may be better solved using different tools: bailouts, bail-ins or a combination thereof, deployed by the government in wide-ranging statutory schemes. \u0000 \u0000However, these schemes may not adequately address the issues of all companies; and the preservation of some of them – those that we refer to as critical/systemic – may be of such significant value to society that more intense assistance from the government is justified. We engage with the characteristics of firms that should be considered critical/systemic and the principles that should guide ad hoc rescues of those companies by the government. Firms are critical/systemic if their failure imposes significant negative externalities on the economy (or, conversely, their preservation generates significant positive externalities) or if they provide the public with an “infrastructure” not otherwise provided by the private sector. If firms are critical/systemic, the government should have the ability to bail them out, going beyond applicable statutory schemes and ensuring that the relevant externalities are considered when deciding whether to keep these companies as going concerns. Bankruptcy is a private process. It is not designed to vindicate such public considerations. \u0000 \u0000Government bailouts, however, should be governed by principles, as any government intervention in the economy, and its associated efficiency and distributional effects must be considered with care. The guiding principles that we propose and elaborate on are (i) proportionality, (ii) efficiency, (iii) equity and (iv) transparency. The application of these principles should ensure that, if the government takes ownership of a private firm through an ad hoc bailout, this is a tool of last resort, and not more than temporary – and that the pre-distress investors properly contribute to the necessary measures.","PeriodicalId":44862,"journal":{"name":"American Bankruptcy Law Journal","volume":"46 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-03-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"80018869","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
To interpret the open-ended phrase “undue hardship,” courts must look not just to the goals of the nondischargeability provision in isolation, but also to the broader purposes of Title IV of the Higher Education Act (HEA), the statutory scheme governing federal student loans. Over 90 percent of outstanding student loans were made under Title IV programs, nondischargeability was originally adopted as an amendment to the HEA, and the Brunner test itself purports to be based on the “purposes of the guaranteed student loan program.” In re Brunner, 46 B.R. 752, 756 (S.D.N.Y. 1985), aff’d, 831 F.2d 395 (2d Cir. 1987). Overly stingy application of the undue-hardship provision undermines the expressly articulated overarching goals of the federal student loan programs. Fear of debt and student debt itself deter students, particularly low-income students, from starting and completing higher education. Unmanageable debt discourages borrowers from using their education for the economic benefit of society because their earnings simply go to creditors. Fear of financial distress distorts students’ career choices. Many student loans are harmful to borrowers, who would have been better off never borrowing for higher education. By denying borrowers escape from debts they cannot repay, nondischargeability exacerbates all these effects, each of which undermines a goal of Title IV. The Brunner decision imagines a harsh “quid pro quo” in which the federal government “exacts” a price of near-total nondischargeability in exchange for making student loans. Brunner, 46 B.R. at 756. Although the Brunner opinion asserts that this arrangement advances the purposes of the student loan programs, it cites no evidence of the programs’ aims and ignores their true goals. The same is true of the Fifth Circuit’s decisions adopting and applying Brunner. These decisions are thus fundamentally flawed. To be sure, Congress did limit the dischargeability of student loans, despite the tension between nondischargeability and the goals of the student loan programs. It thought doing so would combat abuse and enhance repayment. But the limit on dischargeability contains an “undue hardship” exception of uncertain scope. In applying that exception, courts should act not just to fight abuse and recover money but also to advance the education-promoting goals of the overall statutory scheme.
{"title":"Brief of Amici Curiae Consumer Bankruptcy and Student Loan Academics in Support of Petitioner","authors":"J. Hunt","doi":"10.2139/ssrn.3854213","DOIUrl":"https://doi.org/10.2139/ssrn.3854213","url":null,"abstract":"To interpret the open-ended phrase “undue hardship,” courts must look not just to the goals of the nondischargeability provision in isolation, but also to the broader purposes of Title IV of the Higher Education Act (HEA), the statutory scheme governing federal student loans. Over 90 percent of outstanding student loans were made under Title IV programs, nondischargeability was originally adopted as an amendment to the HEA, and the Brunner test itself purports to be based on the “purposes of the guaranteed student loan program.” In re Brunner, 46 B.R. 752, 756 (S.D.N.Y. 1985), aff’d, 831 F.2d 395 (2d Cir. 1987). Overly stingy application of the undue-hardship provision undermines the expressly articulated overarching goals of the federal student loan programs. Fear of debt and student debt itself deter students, particularly low-income students, from starting and completing higher education. Unmanageable debt discourages borrowers from using their education for the economic benefit of society because their earnings simply go to creditors. Fear of financial distress distorts students’ career choices. Many student loans are harmful to borrowers, who would have been better off never borrowing for higher education. By denying borrowers escape from debts they cannot repay, nondischargeability exacerbates all these effects, each of which undermines a goal of Title IV. The Brunner decision imagines a harsh “quid pro quo” in which the federal government “exacts” a price of near-total nondischargeability in exchange for making student loans. Brunner, 46 B.R. at 756. Although the Brunner opinion asserts that this arrangement advances the purposes of the student loan programs, it cites no evidence of the programs’ aims and ignores their true goals. The same is true of the Fifth Circuit’s decisions adopting and applying Brunner. These decisions are thus fundamentally flawed. To be sure, Congress did limit the dischargeability of student loans, despite the tension between nondischargeability and the goals of the student loan programs. It thought doing so would combat abuse and enhance repayment. But the limit on dischargeability contains an “undue hardship” exception of uncertain scope. In applying that exception, courts should act not just to fight abuse and recover money but also to advance the education-promoting goals of the overall statutory scheme.","PeriodicalId":44862,"journal":{"name":"American Bankruptcy Law Journal","volume":"3 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-02-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"85142109","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In Sevilleja v Marex Financial Ltd, a seven-member panel of the Supreme Court undertook a root-and-branch re-examination of the no reflective loss principle. While the Supreme Court's unanimous rejection of the unprincipled expansion of the rule to creditors represents a welcome development of the law, it was held by a bare four to three majority that a shareholder is not entitled to pursue a personal claim to recover loss flowing from the diminution in share value and a reduction in distributions which the claimant receives as a shareholder. This note questions the majority's claim that the no reflective loss principle is doctrinally rooted in the rule in Foss v Harbottle, explains why the policy considerations cited in support of the principle do not warrant a bright-line exclusionary rule, and argues that the majority's approach should - in the final analysis - be eschewed in favour of the minority's.
在Sevilleja诉Marex Financial Ltd案中，最高法院的一个七人小组对无反思损失原则进行了彻底的重新审查。虽然最高法院一致拒绝将该规则无原则地扩大到债权人，这是一项受欢迎的法律发展，但仅以四比三的多数认为，股东无权寻求个人索赔，以追回因股票价值减少和索赔人作为股东获得的分配减少而产生的损失。本文质疑多数人关于无反思损失原则在理论上根植于Foss v Harbottle案规则的说法，解释了为什么支持该原则的政策考虑不能保证明确的排除规则，并辩称，归根结底，应该避免多数人的做法，以支持少数人的做法。
{"title":"The No Reflective Loss Principle in Marex v Sevilleja: One Step Forward, One Step Back","authors":"Ivan Sin","doi":"10.2139/ssrn.3723114","DOIUrl":"https://doi.org/10.2139/ssrn.3723114","url":null,"abstract":"In Sevilleja v Marex Financial Ltd, a seven-member panel of the Supreme Court undertook a root-and-branch re-examination of the no reflective loss principle. While the Supreme Court's unanimous rejection of the unprincipled expansion of the rule to creditors represents a welcome development of the law, it was held by a bare four to three majority that a shareholder is not entitled to pursue a personal claim to recover loss flowing from the diminution in share value and a reduction in distributions which the claimant receives as a shareholder. This note questions the majority's claim that the no reflective loss principle is doctrinally rooted in the rule in Foss v Harbottle, explains why the policy considerations cited in support of the principle do not warrant a bright-line exclusionary rule, and argues that the majority's approach should - in the final analysis - be eschewed in favour of the minority's.","PeriodicalId":44862,"journal":{"name":"American Bankruptcy Law Journal","volume":"87 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2020-11-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"81377725","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
China’s Belt and Road Initiative (BRI), is having a transformative effect on infrastructure development and international trade. This strategic development reflects China’s rapid emergence as a dominant player in the new international economic order and its competition with other major powers. It also reflects China’s championing of globalization. The BRI program will inevitably affect the emerging body of international commercial law operating in the over 125 countries and 29 international organizations that have signed up to be part of the BRI. Although there are many legal issues that have been raised by these developments, this article examines the emerging shape of cross-border insolvency law on the maritime and overland ‘Silk Roads’. Solvency problems are already emerging as serious concerns arising out of debts incurred through China’s infrastructure investments under this initiative. To-date, only 24 BRI countries have to varying degrees implemented the UNCITRAL Model Law on Cross-Border Insolvency, creating a tension between territorial and more universalist approaches. In the short term, these insolvency issues are likely to be dealt with in a number of ways, such as by resort to ‘soft law’ or by using administrative or political mechanisms. Given China’s commitment to the rule of law (with Chinese characteristics), it is inevitable that efforts will be made to give some normative shape to this new global space. This article seeks to explore this emerging frontier for cross-border insolvency law.
{"title":"Insolvency Law and Debt on the Silk Road: A New Frontier for Cross-Border Insolvency?","authors":"R. Tomasic","doi":"10.2139/ssrn.3713695","DOIUrl":"https://doi.org/10.2139/ssrn.3713695","url":null,"abstract":"China’s Belt and Road Initiative (BRI), is having a transformative effect on infrastructure development and international trade. This strategic development reflects China’s rapid emergence as a dominant player in the new international economic order and its competition with other major powers. It also reflects China’s championing of globalization. The BRI program will inevitably affect the emerging body of international commercial law operating in the over 125 countries and 29 international organizations that have signed up to be part of the BRI. Although there are many legal issues that have been raised by these developments, this article examines the emerging shape of cross-border insolvency law on the maritime and overland ‘Silk Roads’. Solvency problems are already emerging as serious concerns arising out of debts incurred through China’s infrastructure investments under this initiative. To-date, only 24 BRI countries have to varying degrees implemented the UNCITRAL Model Law on Cross-Border Insolvency, creating a tension between territorial and more universalist approaches. In the short term, these insolvency issues are likely to be dealt with in a number of ways, such as by resort to ‘soft law’ or by using administrative or political mechanisms. Given China’s commitment to the rule of law (with Chinese characteristics), it is inevitable that efforts will be made to give some normative shape to this new global space. This article seeks to explore this emerging frontier for cross-border insolvency law.","PeriodicalId":44862,"journal":{"name":"American Bankruptcy Law Journal","volume":"41 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2020-10-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"73610741","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper aims to define certain rules that may accompany insolvent enterprises and over-indebted households in post-pandemic recovery. At this time, the crucial need to provide entrepreneurs, creditors, debtors, and consumers with certainties cannot be delayed. In the wake of the COVID-19 pandemic, various countries are adopting measures to change the application of their insolvency laws. The Virus was circulating in Italy before spreading to all other European countries, therefore the Italian government had to adopt urgent measures, which drastically impacted insolvency and collective procedures, inter alia. The paper focuses on the legislative provisions adopted by the Italian government as compared to the recent communication of the European Commission of 19 March 2020 ("The new temporary Framework for State aid measures to support the economy in the current COVID-19 outbreak") and to the Directive (U.E.) 2019/1023 on restructuring and insolvency. In light of the foregoing, two solutions will be formulated that may be immediately adopted in support of the debt of enterprises and households to ensure the successful recovery of solvency.
{"title":"Remedies for the Crisis and Coronavirus-Induced Insolvency: What Legal 'Weapons' Are Available to Fight This 'War'?","authors":"Maria Margherita Lazzara","doi":"10.47742/ijbssr.v1n2p4","DOIUrl":"https://doi.org/10.47742/ijbssr.v1n2p4","url":null,"abstract":"This paper aims to define certain rules that may accompany insolvent enterprises and over-indebted households in post-pandemic recovery. At this time, the crucial need to provide entrepreneurs, creditors, debtors, and consumers with certainties cannot be delayed. In the wake of the COVID-19 pandemic, various countries are adopting measures to change the application of their insolvency laws. The Virus was circulating in Italy before spreading to all other European countries, therefore the Italian government had to adopt urgent measures, which drastically impacted insolvency and collective procedures, inter alia. The paper focuses on the legislative provisions adopted by the Italian government as compared to the recent communication of the European Commission of 19 March 2020 (\"The new temporary Framework for State aid measures to support the economy in the current COVID-19 outbreak\") and to the Directive (U.E.) 2019/1023 on restructuring and insolvency. In light of the foregoing, two solutions will be formulated that may be immediately adopted in support of the debt of enterprises and households to ensure the successful recovery of solvency.","PeriodicalId":44862,"journal":{"name":"American Bankruptcy Law Journal","volume":"73 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2020-10-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"86608250","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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