Prepacks Under the IBC: A Tussle Between Speed and Fair Process

Ravi, Aparna

doi:10.1007/978-981-16-0854-4_6

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“…145 The reluctance of the bank officers in Indian public sector banks appears to be rooted in being investigated for their past conduct as they are regarded as public servants for the purpose of the Prevention of Corruption Act 1988. 146 Further, it is not uncommon for the public sector bank representatives on the creditor committees to abstain from voting on the resolution plans in the CIRP process. 147 In Mainland China, a similar story is found.…”

Section: Creditor Approvals and Adaptive Devices For Substantive Fair...mentioning

confidence: 99%

Public or private gatekeepers in non‐consensual debt restructurings in emerging jurisdictions

Wan

2023

Intl Insolvency Rev

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In advanced jurisdictions, the choice of a non‐consensual debt restructuring is between a public or a private gatekeeper model where either the court or the licensed insolvency professional respectively approves a restructuring plan that binds dissenting creditors. In the United States, the only gateway is found in Chapter 11 of the Bankruptcy Code 1978, which requires court approval and gives the debtor a significant say in the outcome. In contrast, in the United Kingdom, there exist four gateways, only two of which require court approval (scheme of arrangement and restructuring plan), while the remaining two (administration and company voluntary arrangement) give significant powers to the insolvency practitioner to decide on the outcome. In emerging jurisdictions such as Mainland China and India, due to path dependency and lack of institutional capacity, the court‐supervised model is chosen as the only or primary gateway to legitimise non‐consensual restructurings though the insolvency practitioner has an important statutory role. Using the two jurisdictions as case studies, this article argues that such a choice has several initial benefits but also leads to several problems, including delays in the restructuring, does not necessarily improve substantive outcomes and does not adequately address the shareholder–creditor and creditor–creditor agency costs. This article proposes that for debt restructuring that involves the sale of the business as a going concern, the private gatekeeper should be able to decide on the sale and the distributions following pre‐bankruptcy entitlements. Recourse to the court as a public gatekeeper should only be used for reorganisation proceedings.

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Section: Creditor Approvals and Adaptive Devices For Substantive Fair...mentioning

confidence: 99%

Public or private gatekeepers in non‐consensual debt restructurings in emerging jurisdictions

Wan

2023

Intl Insolvency Rev

View full text Add to dashboard Cite

show abstract

Prepacks Under the IBC: A Tussle Between Speed and Fair Process

Cited by 1 publication

References 1 publication

Public or private gatekeepers in non‐consensual debt restructurings in emerging jurisdictions

Public or private gatekeepers in non‐consensual debt restructurings in emerging jurisdictions

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