Leaving the Shadows of US Bankruptcy Law: A Proposal to Divide the Realms of Insolvency and Restructuring Law

Madaus, Stephan

doi:10.1007/s40804-018-0113-7

Cited by 12 publications

(7 citation statements)

References 29 publications

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“…On the same logic, he would presumably exclude company voluntary arrangements because they neither stay nor are capable of modifying the entitlements of secured and preferential creditors without their consent: see Insolvency Act 1986, s. 4(3), (4). 116 See Madaus (2018). 117 Ibid., section 3.2.…”

Section: The 'Separate Domains/separate Normative Foundations' Theorymentioning

confidence: 99%

“…An anti-commons problem arises where ownership rights are fragmented, and value is lost because individual owners can veto coordinated use of property with the result that it is under-utilized. See Madaus (2018), section 5.1. The seminal reference on anti-commons problems is Heller (1998).…”

Section: The 'Separate Domains/separate Normative Foundations' Theorymentioning

confidence: 99%

“…See also Heller (2008). 119 Madaus (2018), section 3.2. As such, Madaus seeks to shed the influence of US law and constitutionalize restructuring law on European legal foundations, which, in contrast to US law, permit impairment of contracts at individual state level: ibid., section 4.2.5. counterfactual liquidation outcomes.…”

Section: The 'Separate Domains/separate Normative Foundations' Theorymentioning

confidence: 99%

“…For two recent important contributions seeEidenmüller (2018a);Madaus (2018).22 Eidenmüller and van Zwieten (2015), p 626.…”

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confidence: 99%

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The Characterization of Pre-insolvency Proceedings in Private International Law

Mevorach

Walters

2020

Eur Bus Org Law Rev

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The decade since the financial crisis has witnessed a proliferation of various 'light touch' financial restructuring techniques in the form of so-called pre-insolvency proceedings. These proceedings inhabit a space on the spectrum of insolvency and restructuring law, somewhere between a pure contractual workout, the domain of contract law, and a formal insolvency or rehabilitation proceeding, the domain of insolvency law. While, to date, international insolvency instruments have tended to define insolvency proceedings quite expansively, discussion of the cross-border implications of pre-insolvency proceedings has barely begun. The question is whether pre-insolvency proceedings should qualify as proceedings related to insolvency for the purpose of private international law characterization. The risk is overinclusivity of cross-border insolvency law, which, where it is based on universality and unity, might defeat contractual expectations. This article argues, however, that we should be slow to exclude pre-insolvency proceedings from cross-border insolvency law: these proceedings are initiated in the zone of insolvency, their effectiveness depends on a statutory mandate and not purely on private ordering, they interact and intersect with formal proceedings, and can benefit from the unique system developed by cross-border insolvency law. We suggest, though, that modified universalism (the leading norm of cross-border insolvency) and international insolvency instruments, should, and are able to, adjust to the peculiarities of preinsolvency proceedings to address concerns about inclusivity and accommodate preinsolvency proceedings adequately.Keywords Insolvency · Restructuring · Pre-insolvency proceedings · Cross-border insolvency · Private international law · Modified universalism All uniform resource locators cited in footnotes were live on 4 February 2020.

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Section: The 'Separate Domains/separate Normative Foundations' Theorymentioning

confidence: 99%

Section: The 'Separate Domains/separate Normative Foundations' Theorymentioning

confidence: 99%

Section: The 'Separate Domains/separate Normative Foundations' Theorymentioning

confidence: 99%

“…For two recent important contributions seeEidenmüller (2018a);Madaus (2018).22 Eidenmüller and van Zwieten (2015), p 626.…”

mentioning

confidence: 99%

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The Characterization of Pre-insolvency Proceedings in Private International Law

Mevorach

Walters

2020

Eur Bus Org Law Rev

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“…Theories were circulating among European scholars suggesting that the surplus value is not something for the creditors to start with. 71 However, these theories could not explain the legal rationale for the requirement that the surplus value is distributed marginally more (but not fully) to senior classes than to junior classes.…”

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confidence: 99%

The priorities dilemma in the EU preventive restructuring directive: Absolute or relative priority rule?

Ballerini

2020

Intl Insolvency Rev

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The EU Directive on Preventive Restructuring Frameworks gives the EU Member States (“MSs”) the choice between implementing two fairness rules in cross‐class cram‐down: the US‐style absolute priority rule (“APR”) or the newly conceived relative priority rule (“RPR”). This article argues that there is no good reason for the MSs to implement the RPR in domestic law. While the APR effectively protects the rights of the dissenting classes to get what they are entitled to, the RPR increases moral hazard and opportunism. Also, it might make debt investments in the EU unattractive. On top of that, this article shows that the RPR lacks a clear theoretical justification. One of the main reasons why the RPR was introduced in the Directive alongside the APR is that the RPR was thought to provide a solution to some of the APR's problems. This article considers three of those problems (i.e., the “valuation problem”, the “hold‐out problem” and the “problem of the relevant shareholders”) and explains the reasons why the RPR is not an appropriate solution for these. Among these three problems, the most troublesome one, from the perspective of the EU, is that the APR makes it difficult to award value to the equity of SMEs (the “problem of the relevant shareholders”). This article argues that using the RPR to deal with this problem would incentivize the shareholders to behave opportunistically and to orchestrate the restructuring. Instead of the RPR, this article suggests two alternative techniques which MSs can enact to better address the issue: the new value exception “in kind” and the disposable income method.

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Comparative collectivity: European Union and United States approaches

Warner

2022

Intl Insolvency Rev

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Leaving the Shadows of US Bankruptcy Law: A Proposal to Divide the Realms of Insolvency and Restructuring Law

Cited by 12 publications

References 29 publications

The Characterization of Pre-insolvency Proceedings in Private International Law

The Characterization of Pre-insolvency Proceedings in Private International Law

The priorities dilemma in the EU preventive restructuring directive: Absolute or relative priority rule?

Comparative collectivity: European Union and United States approaches

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