Harmonization of European Insolvency Law: Preventing Insolvency Law from Turning against Creditors by Upholding the Debt–Equity Divide
| Autor: | R.J. de Weijs |
|---|---|
| Přispěvatelé: | CSECL (FdR), Private and Public European Law |
| Rok vydání: | 2018 |
| Předmět: |
040101 forestry
Finance 050208 finance Insolvency Creditor Restructuring business.industry 05 social sciences Economics Econometrics and Finance (miscellaneous) Equity (finance) Going concern 04 agricultural and veterinary sciences Shareholder loan Liquidation value Shareholder Law 0502 economics and business Economics 0401 agriculture forestry and fisheries business |
| Zdroj: | European Company and Financial Law Review, 15(2). De Gruyter |
| ISSN: | 1613-2556 1613-2548 |
| DOI: | 10.1515/ecfr-2018-0007 |
| Popis: | In essence, insolvency law is collective debt collection law. By means of a collective procedure, insolvency law seeks to ensure that the going concern value is captured for the creditors. Where the shareholders possess the dominant voice outside of insolvency, in insolvency creditors take over this position and become the economic owners of the company. In three different settings shareholders can interfere with the insolvency process and try to capture all the value in the company or at least leave the creditors with the liquidation value and usurp the going concern surplus. These three settings are (i) shareholders as secured lenders, (ii) shareholders as acquirers out of pre-packs or other asset sales and (iii) shareholders under composition plans. The proposed EU Directive on Preventive Restructuring Frameworks and Second Chance (November 2016) contains measures in the field of composition plans as part of a preventive restructuring. The proposed directive addresses the potential problem that shareholders would usurp the going concern surplus by introducing the Absolute Priority Rule. The proposed directive should be considered a first step in the right direction. It should, however, be realized that the protection offered in the proposed directive could easily be circumvented by a shareholder financing not with capital but with secured shareholder loans. Also, if pre-pack sales or other sale processes do not limit interference by shareholders, shareholders will prefer the route of an asset sale above a restructuring. |
| Databáze: | OpenAIRE |
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