Eurofenix Spring Final

euro enix
f
The journal of INSOL Europe
ISSN 1752-5187
9 771752 518006
3 9
Spring 2010
Academic Forum
Conference Previews
Lehman Collapse
The UK Administrators perspective
Dubai World
Restructuring and Insolvency
UK Bankruptcy Tourism
Stephen Baister looks at the issues
Issue 39 30
Eurofenix Spring 2010:Layout 1 8/4/10 14:36 Page 1
EDITORS COLUMN
Spring 2010 3
Welcome
Annerose Tashiro Guy Lofalk
Bine ai venit
What is the culture in
rescue culture?
This magazine gives us an
overview of the impact of the
financial crisis in Dubai that
apparently all of a sudden
happened to hit the world at
the end of last year.
Culture is about tradition,
identity, symbols, common
sense, values and also pride:
intangible assets. Rescue is
about financial data, risk
analysis, legal scrutiny, core
businesses and finally future
profits: very tangible things,
hard facts. Are not in many
peoples mind the tough
decisions around a company
rescue the complete opposite
to whatever one imagines as
culture?
Burj Dubai was planned
and projected to be the pride of
Dubai: a symbol to show the
world the power and
dominance of the financial
strength of Dubai the tallest,
biggest and most amazing
project ever. The worldwide
financial crisis seemed not to
have touched the United Arab
Emirates. Dubais banking
sector could and did compete
with London and New York.
Then, in December 2009
Dubais near-default on $36
billion in debt shook the world.
The capital markets began to
see the next big clash after
Lehman. Dubais real estate
bubble burst and Dubai World
and Dubai Holding were at the
top page of every financial
paper for some time. The
construction at the two palm
trees and many other projects in
Dubai were stopped. It was
dangerous.
Abu Dhabi, the oil-rich
neighbour has helped Dubai in
the past and stepped up with
some $10 billion to rescue its
sister state in mid December.
On 4 January 2010, at its
official launch ceremony, the
worlds tallest man-made
structure, originally known as
Burj Dubai, was renamed Burj
Khalifa, in honor of the
president of the United Arab
Emirates and emir of Abu
Dhabi, Sheikh Khalifa bin
Zayed Al Nahayan. This great
project deserves to carry the
name of a great man said
Sheikh Mohammed Bin Rashid
Al Maktoum, Prime Minister
and Vice President of the
United Arab Emirates (UAE),
and Ruler of Dubai.
Finally the pride of Dubai
is named after that person
who helped to safeguard its
completion and to rescue the
overall projected goal of the
emirate Dubai.
At the beginning of this
decade, the tallest monument
is a momentum of rescue that
even needed to overcome
peoples feelings, pride and
identity. We shall see whether
this is the theme for this decade.
Lucky that the arab emirates
are united emirates. Would a
project in France be renamed
after Queen Elizabeth II?
Ce este culture n
rescue culture ?
Prezentul numr al publicaiei
noastre ofer o perspectiv de
ansamblu asupra unor
neateptate consecine ale
crizei financiare din Dubai,
care, aparent fr vreun semn
prevestitor, a surprins lumea la
sfritul anului trecut.
Culture presupune
tradiie, identitate, simboluri,
discernmnt, valori, dar i
demnitate: bunurile intangibile.
Rescue presupune informaii
financiare, analiza riscurilor,
examinarea minuioas a
aspectelor legale, definirea
activitii eseniale a
ntreprinderilor, n sfrit
profituri viitoare: bunuri ct se
poate mai tangibile, fapte,
fapte concrete. Nu cumva oare
deciziile dure privitoare la
salvarea ntreprinderilor sunt
pentru muli oameni contrarii
felului n care concepem
cultura?
Burj Dubai a fost planificat
i proiectat s devin mndria
Dubaiului : un simbol care s
arate lumii puterea i
caracterul dominator al
finanelor Dubaiului, cel mai
nalt, cel mai mare i cel mai
uimitor proiect conceput
vreodat. Criza financiar
mondial prea s nu fi atins
Emiratele Arabe Unite. Bncile
din Dubai aveau suficiente
resurse i concurau din plin cu
cele din Londra i din New
York.
Apoi, n decembrie 2009,
lumea ntreag a fost zguduit
la aflarea vetii privitoare la
incapacitatea aproape total a
emiratului de a ndeplini
obligaii de plat n valoare de
36 de miliarde de dolari.
Pieele de capital se pregteau
s ntmpine urmtoarea mare
prbuire financiar dup
Lehman. Bica de spun
imobiliar a Dubaiului s-a
spart, iar Dubai World i Dubai
Holding au fost pentru o vreme
pe prima pagin a fiecrui
ziar financiar. Lucrrile de
construcie ale insulelor
artificiale de forma a doi
palmieri, precum i multe alte
proiecte din Dubai au fost
oprite. Primejdia era prea
mare.
Abu Dhabi, vecinul bogat
n petrol, dduse i n trecut
o mn de ajutor emiratului
Dubai, iar la jumtatea lunii
Decembrie a contribuit la
salvarea statului fresc cu
aproximativ 10 miliarde de
dolari. La 4 ianuarie 2010, la
ceremonia oficial de
inaugurare, cea mai nalt
construcie din lume,
cunoscut pn atunci drept
Burj Dubai, a primit numele
Burj Khalifa, n onoarea
preedintelui Emiratelor Arabe
Unite, emirul statului Abu
Dhabi, eicul Khalifa bin Zayed
Al Nahayan. Se cuvine s i
se dea acestui mare proiect
numele unui mare om, a spus
emirul Dubaiului, eicul
Mohammed Bin Rashid Al
Maktoum, prim ministru i
vicepreedinte al Emiratelor
Arabe Unite.
Astfel, acea mndrie
arhitectonic a Dubaiului a
primit numele celui care n-a
pregetat s pun umrul la
desvrirea ei i, totodat,
la salvarea proiectului de
ansamblu al emiratului.
La nceputul acestui
deceniu, cea mai semea
construcie furit de mna
omului poate fi socotit un
simbol al elanului salvrii
celorlali, pentru c a trebuit s
depeasc egoismul, orgoliul
i temerile de pierdere a
identitii. Vom vedea n ce
msur este aceasta tema
deceniului.
Din fericire emiratele arabe
sunt emiratele unite. Ar fi oare
cu putin ca un proiect
francez s fie redenumit
Regina Elisabeta a II-a?
4 Spring 2010
Contents
REGULARS
Editors Column
Annerose Tashiro & Guy Lofalk
Executive Column
Marc Udink
Book reviews
New publications
Presidents Column
Patricia Godfrey
Technical Column
Myriam Mailly & Emmanuelle Inacio
News round-up
Time for Timisoara
US Column
Centre of main interests
Country reports
Government response to the financial crisis
Dates for your diary
INSOL Europe contacts
INSOL EUROPE
Academic Forum conference previews
Leiden & Vienna
Turnaround Wing
Successful restructuring of an ailing business
Judicial Wing
Report from Stockholm
3
6
7
8
10
11
36
20
26
38
44
44
Government
response to the
financial crisis
11
INSOL Europes 6th EECC
Conference will be held
this year in Timisoara,
Romania, 7-8 May
46
Spring 2010 5
12
16
18
22
24
28
30
32
34
40
FEATURES
UK Bankruptcy Tourism
Dubai World
The new restructuring and insolvency regime
Cross-border recognition
under the Common Law
Roundtable discussion in Russia
Investigating the affairs of an insolvent debtor
Turnaround procedures in Russia
Proposed amendments
New trends
in Estonian insolvency law
Lehman collapse
Serbian bankruptcy law
Redefined and improved
Insolvency in Romania
Practice and Theory
Spanish insolvency proceedings
Enforcement of bank guarantees
Australian insolvency law
Shareholders vs. creditors 42
34
The end of 2009
meant the beginning
of economic crisis
in Romania
12
A debtor is free to move his
centre of main interests but
how do you ascertain if they
have in fact done so?
6 Spring 2010
EXECUTIVE COLUMN
MARC UDINK
INSOL Europe Secretary General
The world is still
asking for more
F
or the last 20 months our
organisation and its
members have been in the
centre of things. The global crisis
has challenged our instincts
wherever we went. Ours is one of
the most relevant and tested
professions during these times. All
in all I feel we have been able to
bring the much needed expertise
and wisdom to the table. And we
have been instrumental in many
if not all solutions.
We should not believe this is
now coming to an end. What we
see is a prolonged period of tests
still in front of us. And we cannot
and should not run away from the
challenge. Time and time again we
see all industries asking for our
knowledge and seeking our advice.
In the last three years we have
been able to reshape ourselves
from mere technicians into elder
statesmen bringing people
together and finding the right
balance in every crisis. We have
shown our best and I see no
governments taking the
responsibilities away from us.
Apparently, the public trusts us
and entrusts huge responsibilities
to our proven and capable hands.
It is as I have often said a
privilege to assist in leading this
great organisation. I have seen the
organisation mature and I have
seen its members reach new
summits. I have seen our
ambitions expand and I have seen
us delivering on these ambitions. I
am especially proud we now have
so many leaders leading our
organisation. Over the years we
have seen great presidents doing
great things and continuing to do
so after stepping down. But we
now have a second and even a
third layer of leadership. This
shows us how we have grown and
what we have done. This is even
more worthwhile if you
acknowledge the fact that so much
of our work is done by unpaid
volunteers.
We are everywhere, the whole
year through. We are in almost
every city in Europe and many
government bodies now know our
name and what we do. We are
asked for advice by the European
Parliament. We write reports we
matter. This why we need to keep
on doing this. The world is asking
for more of what we have to offer.
We dont have to do it for free, but
we have a responsibility to give
what we have and help society
solve its problems.
We now have a
second and even
a third layer of
leadership.

Spring 2010 7
BOOK REVIEWS
Editors
Guy Lofalk,
Lofalk Advokatbyr AB (Stockholm)
Annerose Tashiro,
Schultze & Braun (Achern)
Executive Committee
Libby Elliott
elizabeth.elliott@dentonwildesapte.com
Chris Laughton
chrislaughton@mercerhole.co.uk
Guy Lofalk (Joint Chief Editor)
guy.lofalk@lofalk.se
Paul Newson (Designer & Publisher)
paulnewson@pndesign.co.uk
Giulia Pusterla
giulia@giuliapusterla.it
Dr. Annerose Tashiro (Joint Chief Editor)
ATashiro@schubra.de
Florica Sincu
floricasincu@insol-europe.org
Editorial board
Agustn Bou, abou@jausaslegal.com
Harald Buhardt, hbusshardt@schubra.de
Giorgio Cherubini
giorgio.cherubini@studiopirola.com
David Conaway, dconaway@slk-law.com
Lszl Csia, csia@csabaholding.hu
Aniek Gielen, ag@vlaskampadvocaten.nl
Siv Sandvik, Siv.Sandvik@dlapiper.com
Ana Irina Sarcane
irina.sarcane@ro.pwc.com
Caroline Taylor
carolinetaylor@insol-europe.org
Michael Thierhoff
michael.thierhoff@thierhoffilly.com
Artur Trapitsyn, trapitsyn@soautpprf.ru
Jesper Trommer Volf
Jesper.Trommer.Volf@accura.dk
Jean-Luc Vallens, jlvallens@yahoo.fr
Louise Verrill, lverrill@brownrudnick.com
Signe Viimsalu, signe.viimsalu@gmail.com
Eurofenix is published by PNDesign
on behalf of INSOL Europe.
Correspondence, including ideas
for articles, should be addressed to:
Paul Newson, PNDesign, Barton House,
61 High Road, Chilwell,
Nottingham NG9 4AJ UK
Tel: +44(0)115 922 0017
Email: info@pndesign.co.uk
Web: www.pndesign.co.uk
Translation: Ana Irina Sarcane
Printed by: MRP Print
(eurofenix@mrp.uk.com)
Advertising & Sales enquiries:
Edward Taylor
MRP Print (eurofenix@mrp.uk.com)
Jubilee House, Nottingham Road,
Basford, Nottingham NG7 7BT UK.
Tel: +44(0)115 955 1000
NEXT ISSUE PUBLISHED: June 2010
Copy deadlines available on request
from Paul Newson, email:
Disclaimer: No responsibility (legal or otherwise) is accepted by
the publisher, the editor, the executive panel of INSOL Europe or
the contributors for any errors, omissions or otherwise. The
opinions expressed in the articles that appear are not necessarily
shared by the editor or publisher or any representative of INSOL
Europe, or by the firms or organisations of which the authors are
members. Copyright: INSOL Europe 2010. No part of this
magazine may be reproduced, or transmitted, in any form or by
any means, without the prior permission of INSOL Europe.
Images iStockphoto.com or Fotolia.com
(unless specified otherwise)
Spring 2010
euro enix f
Book Review
Directors Disqualification and Insolvency Restrictions (3rd edition)
Authors: Adrian Walters, Malcolm Davis-White QC) (2010, Thomson/Sweet
& Maxwell) 1072pp, 180. ISBN 978-1-84703-333-8)
Directors disqualification
reflects the need to provide a
punishment for misconduct in
the business arena and to deter
those minded to abuse the
privilege of the incorporated
form. Its use as a regulatory
tool has been widely accepted
and has even seen extension
to the competition as well as
health and safety sectors
where it plays a role in policing
management behaviour.
This text, retitled with the
replacement of the word
bankruptcy by insolvency,
takes into account changes
in the law since the second
edition was published in 2005
including the ever-expanding
volume of case law and other
statutory developments.
The major changes have come
in part from the introduction of
debt relief orders as part of the
arsenal of personal insolvency
law measures, for which
restriction orders are also
envisaged for debtors
breaching their terms. Further
changes have resulted from the
introduction of a framework for
the recognition of foreign
disqualification orders brought
in as part of the reforms leading
to Part 40 of the Companies
Act 2006. This has
necessitated the inclusion
of an extra chapter on the
international dimension, which
also deals with the cross-
border effect of disqualifications
between the various
jurisdictions into which the
United Kingdom is divided as
well as the potential effect of
European legislation such as
the European Company Statute
and the European Insolvency
Regulation. The position in the
offshore Crown Dependencies
is also covered in this chapter.
As with previous editions, the
text contains full references to
statutory provisions in the area
together with the relevant
practice directions, guidelines
and court forms. Excerpts from
the statutory regimes before the
introduction of the Company
Directors Disqualification Act
1986 are also included. In sum,
this is an essential and useful
text for those involved with
corporate management in the
United Kingdom.
Paul Omar, Senior Lecturer at
the Sussex Law School and
Secretary of the INSOL
Europe Academic Forum
We welcome any relevant book reviews which can be added to
this page in the interests of our members. Please send your
suggestions or articles to paulnewson@pndesign.co.uk
(clearly marked eurofenix book review)
8 Spring 2010
PATRICIA GODFREY
INSOL Europe President
Although I find it difficult to believe, I am almost half way through my year as
President it is therefore a good opportunity to take stock of recent and future
highlights amongst our many activities
PRESIDENTS COLUMN
Spring brings new initiatives
Partnering and
collaborating on events
Since our annual conference in
Stockholm, INSOL Europe has
organised or partnered a number
of conferences and events. For
example, we joined forces with
The Lawyer for their annual
restructuring and insolvency
summit in Brussels in February
with a number of members
attending and speaking at this two-
day event which Council Member,
Steffen Koch, chaired. Increasingly
co-labelling with prominent
organisations is proving a good
way to get the INSOL Europe
message to a wider audience and
attract new members. I should also
mention INSOL International
where we are a member
organisation and whose annual
conference took place in Dubai in
February about which see more
below.
Over the coming months we
are pleased to be a cooperating
partner for the 6th Handelsblatt
Annual Corporate Restructuring
Conference, Frankfurt, Germany
(29-30 April), the Academy of
European Laws Cross-Border
Insolvency Conference in Trier,
Germany (20-21 May), the
Lithuanian-Germany Lawyers
Association Baltic States
Insolvency Conference, Vilnius,
Lithuania (20-21 May) and the
International Insolvency Institutes
10th Annual Conference, Rome,
Italy (78 June).
Further events are of course in
the pipeline, including the joint
R3/INSOL Europe one-day
conference in London, which is
now in its 7th year. We hope to get
a good attendance from the UK
and abroad where practitioners
from across the two memberships
will have an opportunity to share
experiences and debate topical
issues from current cross-border
cases, within Europe and beyond.
Another event in the pipeline
is the INSOL Europe Academic
Forum conference in Leiden at the
beginning of July. This is being
organised in conjunction with the
Lenders Group and we have been
working closely with Bob Wessels
and his team over recent months
to bring together a programme
which delivers an excellent cross-
section of academics, practitioners
and lenders from a number of
jurisdictions. I am delighted that
Dennis Turner, Chief Economist
at HSBC has agreed to be our
guest speaker. Based on the lenders
who have agreed to speak and
those that have indicated their
interest in attending the event, I
am confident that it will prove an
excellent platform to further
develop this relatively new group
within our organisation.
Cross-border crisis
management in the
banking sector
The financial crisis has highlighted
the importance of putting in
place effective cross-border
arrangements to handle crisis in
this sector. We are only too aware
of the high profile banking failures
over the past 18 months which
include Fortis, Lehman and the
various Icelandic banks. No one
can deny the serious shortcomings
such failures reveal in the existing
arrangements. Measures have
already been taken to upgrade
deposit insurance, strengthen
capital requirements and reform
of EU supervisory infrastructure.
The European Commission takes
the view that the existing
arrangements are clearly
insufficient to stabilise and control
the systemic impact of cross-
border financial institutions and
that a new legal framework must
be put in place. As a result it has
put forward proposals for a new
framework designed to equip
authorities with the right tools and
legal provisions to handle cross-
border banking failures. In doing
so it is keen to minimise costs to
tax payers across Europe and seeks
to manage large bank failures
without damaging financial
stability. The main focus is on
deposit taking banks and the
consultative papers currently
under review adopt a broad
ranging approach and cover the
following key issues: early
intervention, bank resolution and
the potential need to harmonise
existing insolvency procedures to
facilitate the winding-up and re-
organisation of cross-border
banking groups. The Commission
has consulted a large number of
stakeholders and a public hearing
is due to be held shortly to
publicise the results. Financial
institutions in difficulties or actual
insolvency remain a hot topic, not
least with cases such as Lehman
continuing to hit the headlines on
a regular basis.
Failures within the
banking sector
remain a hot topic,
not least with cases
such as Lehman
continuing to hit
the headlines.

PRESIDENTS COLUMN
Spring 2010 9
The next normal
banking after the crisis
If grappling with increasingly
onerous regulatory burdens wasnt
enough to ensure sleepless nights
in the financial sector, an
interesting paper has just been
published by McKinsey: The Next
Normal Banking after the Crisis
which provides an interesting
analysis of what it takes and who
will survive beyond the crisis.
Despite ongoing ambiguity about
markets, risk regulation and
demand, it warns that bank
leaders should have little doubt
about one thing: long-term
structural changes to the industry
are being forged in the crucible of
the crisis. In looking at the nature
and effect of possible permanent
changes, McKinsey conducted
research and interviews with
leading institutions throughout the
current crisis and performed an
analysis on 25 global banks to see
how they might function under
different macro and regulatory
scenarios. The results are very
interesting, not least when viewed
in conjunction with the EU
proposals for regulatory reform
across the sector. Having analysed
certain changes and disruptions
within the system which McKinsey
see as here to stay, it then goes on
to look at what leading banks will
need to do to thrive in the Next
Normal. In the short term it sees
2010 as another year of significant
uncertainty which is borne out by
market activity. It forecasts some
major regulatory changes getting
ironed out in the course of the
year, impairments likely to peak in
many markets and a wave of asset
sales gaining momentum. All in all
an interesting read for
practitioners as it presents a wider
commercial perspective on the
industry at a time where the future
focus of our profession is on
dealing with existing failures and
future legal and regulatory reform
within the sector.
Dubai a fitting location
for INSOL International
Returning to some activities and
events which have provided the
opportunity to present or to
enforce the INSOL Europe
message with a wider audience, I
should like to mention the INSOL
International conference in Dubai
in February which I and other
INSOL Europe Council members
attended. I am sure at the time
when plans were made to hold the
event in Dubai the organisers
could not have foreseen the
poignancy in the choice of venue.
In the course of the conference we
heard a lot about the financial
problems in Dubai and
neighbouring territories but also of
the huge efforts afoot to address
the problems. Both the UK and
US insolvency laws are currently
influencing the decisions in Dubai
as highlighted in an excellent
article in this edition of eurofenix
by Jane Flournoy of Denton Wilde
Sapte.
The Dubai conference
presented a further opportunity for
me to meet with Sumant Batra,
INSOL Internationals current
President and his Deputy, Gordon
Stewart. The Executive and
Council of INSOL Europe
appreciate that as an INSOL
International member
organisation we need to ensure our
membership are fully aware and
seeing value for the part of their
membership subscription which is
used to discharge our payment to
INSOL International. A number
of new ideas were discussed
including possible future projects
and a joint event with INSOL
International. I hope to report
progress on these ideas by the time
of our next edition.
Seeking greater Franco-
Anglo-North American
understanding and
cooperation
The other event I have recently
contributed to and would
specifically mention is a forum
entitled Cross Currents
Insolvency in Continental and
Common Law Context organised
by the Consul Nationale and the
Fondation pour le droit continental
in Paris in March. This event was
co-steered by the French judge,
Yves Merlat (a member of our
Judicial Wing), Marc Andr (our
Council member) and Vincent
Gladel (President of the Conseil
National des Administrateurs
judiciaries et Mandataires
judiciaries the French national
body for practitioners akin to R3
or similar organisations and other
jurisdictions). The event brought
together a delegation from the
UK, France and the US/Canada
which examined rescue
proceedings available in the
different jurisdictions, the
philosophy underlying insolvency
law and the role of the judiciary.
We then had a highly interactive
session over two days with case
studies presented by each
jurisdiction followed by a lively
debate where participants from the
other jurisdictions could cross-
examine the presenters and initiate
debate on where they saw merit
and equally where they saw
shortcomings with the approach or
proceedings in a given jurisdiction.
From a UK perspective I
presented the IMO Car Wash case
which led to an interesting
discussion on the rights and
wrongs of using majority voting to
cram down or wipe out junior
creditors and shareholders by the
use, in this instance, of a UK
Scheme of Arrangement coupled
with Administration and a Pre-
Pack. Ironically in the course of
the forum the Insolvency Service
issued a press release about
proposed future changes to the
pre-pack regime which proved
highly topical. To my mind, the
event represented an excellent
example of how we have moved
on from the early years of the
European Insolvency Regulation
where COMI disputes prevailed,
to a more mature and constructive
analysis of how a cross-border
rescue can be achieved using a
combination of procedures across
a range of jurisdictions. A major
source of consensus was a desire to
understand the finer details of
practice in the different
jurisdictions and see where we
might each learn from one another
going forward.
6th Eastern European
Countries Committee
conference, Timisoara
Our next major event is the EECC
Conference in Timisoara in May.
Much work has gone into
developing an excellent
programme which I would
strongly encourage you to support.
At the time of writing this
column there are a number of key
activities in the pipeline which I
have already mentioned. By the
time you read this edition of
eurofenix, you will also have
received details of our forthcoming
Annual Congress in Vienna and I
would strongly encourage you to
book early to avoid
disappointment!
Last but not least, I always
welcome your thoughts, views and
suggestions on current activities
and the future path for our
organisation. Therefore if you
have any burning comments you
would like to make please feel
free to email me at
p.godfrey@nabarro.com
10 Spring 2010
TECHNICAL COLUMN
MYRIAM MAILLY
INSOL Europe Co-Technical Officer
EMMANUELLE INACIO
INSOL Europe Co-Technical Officer
Harmonising
& Networking
O
ne key objective of our
current President Patricia
Godfrey was to appoint a
Technical Officer to further bolster
technical support to the members
of INSOL Europe. We are both
proud and honoured to be on
board and to serve the technical
interests of INSOL Europe.
After having the opportunity
to introduce ourselves in the
previous edition of eurofenix
(pages 8 & 9), it is now time for
us to inform all the members of
INSOL Europe of the work we
have done during the last three
months since our appointment.
Articles 21 and 22
We started our Technical Officers
functions in collecting answers to
questionnaires regarding Articles
21 and 22 of the European
Insolvency Regulation. As you all
probably know, these Articles refer
to Member States procedures for
publication and registration. As
there is no centrally coordinated
reference work enabling
practitioners to check Member
States procedures, INSOL Europe
Deputy President Chris Laughton
asked us to assist him to publish a
definitive guide by Member State.
You will find the reports under the
Technical subject section on the
INSOL Europe Website.
Regrettably, neither publication
nor registration tends to be widely
known in other jurisdictions in
spite of the fact that it is
mandatory, and we therefore hope
that the new published
contribution will help insolvency
practitioners throughout the
European Union. In this
connection, we will be grateful if
INSOL Europe members from
Bulgaria, Cyprus, Poland,
Romania and Sweden could help
with this project, as we do not
currently have authors for these
countries reports.
Harmonisation
committee
As you might have been informed,
INSOL Europe is now heavily
involved in the European Union
Institutions activities. Through our
Technical Officers functions within
INSOL Europe, we were extremely
honoured to participate, with a
leading group of experts on
insolvency matters, in this
challenging project. INSOL Europe
has now formed a Committee
which had the task to prepare a
briefing note. The Committee
consists of Neil Cooper,
Daniel Fritz, David Marks QC,
Bob Wessels, Miguel Virgs, Nora
Wouters, Guy Lofalk, Siv Sandvik,
Anna Pukszto and Robert van
Galen. The main issue of this
briefing note on insolvency law,
requested by the European
Parliament, was to assess whether
harmonisation of insolvency law at
EU level is necessary or worthwhile.
We look forward to seeing the
outcome of the INSOL Europe
contribution in the EU law-making
process!
In the next months, we will
do our best to ensure that the
glossaries of insolvency terms for all
countries will be available on our
website. In this connection, we are
proud to assist Florian Bruder,
Linda Smith and Caroline Taylor
on this committee.
Get LinkedIn
We would like also to thank all the
INSOL Europe members who
joined our INSOL Europe Group
on LinkedIn. This network is a
fantastic opportunity for all
members to exchange their views,
their contacts and to strengthen
the community of INSOL Europe
members. New discussions on
insolvency matters are sent out
every week and we will encourage
each of you to take part in these
very interesting debates. For
INSOL Europe members, who are
not yet part of this network, be
sure to join us on LinkedIn!
Last but not least, we would
like to express our warm gratitude
to Caroline Taylor who is our
indispensable coordinator for our
wide-ranging tasks.
We are of course grateful for
the support of the many
contributors to our website from
different jurisdictions over the last
few months and would be pleased
to offer guidance to any member
who feels that they may also be
able to contribute. There remains
much work to be done in order to
build on and maintain the
technical content of the site.
Please therefore do not hesitate
to get in touch by email to
technical@insol-europe.org
We look forward to
seeing the outcome
of the INSOL Europe
contribution in the EU
law-making process!

The INSOL Europe EECC
road show rolls into the
picturesque Romanian city of
Timisoara for 7-8 May 2010,
the latest in the long tour
which has taken it right
around the developing regions
of Europe including last years
highly successful meeting in
Dubrovnik.
This years conference technical
programme will focus on the
continuing efforts to drag the
economies of the CEE region
out of the worst world recession
for 80 years and the important
role that insolvency professionals
have to play in the recovery.
Our starting point will be a
session on the current financial
crisis, the action taken by
governments in the region,
modifications to bankruptcy
laws, issues with local banking
systems and the lessons to be
learnt from jurisdictions in
Western Europe and beyond.
We will have a panel session on
restructuring and turnaround in
the region and another on a
cross border insolvency
featuring Poland, the Czech
Republic and Romania. Another
session will look at the benefits
of team work, where
professionals from a range of
different disciplines will show
what they can bring to the table
to add to the basic skills of
insolvency and restructuring
experts.
We hope to shine a light on the
potential impact of US Chapter
11 cases, where the problems of
multi-national corporates from
far away across the Atlantic look
certain to create some
unexpected challenges for local
practitioners, as some very
different insolvency cultures are
forced to find ways of working
together.
Last years Richard Turton
Scholar, Yana Hankovich will
honour us with a presentation
based on her experience of
developments in the insolvency
field in Russia and we are
particularly delighted to welcome
Mr Bogdan Olteanu, the Vice
President of the Central Bank of
Romania as our keynote
speaker.
We look forward to welcoming
you to this prestigious event in
Timisoara and to the valuable
contributions the delegates will
make to turning this conference
into another great success for
INSOL Europe as it continues to
reach out to share knowledge,
experience and skills with the
EUs developing countries.
Spring 2010 11
News
EUROPEAN NEWS
Academic Forum Technical Papers
The Academic Forum is
pleased to announce that
the series of Technical
Papers, inaugurated in 2009
with volumes collecting
papers from the Leiden and
Barcelona Conferences in
2008, has now been joined by
a further volume representing
contributions at the Sussex
Conference in 2009 entitled
Insolvency Law in the United
Kingdom: The Cork Report at
30 Years.
Papers from the 2009
Stockholm Academic
Conference The European
Insolvency Regulation: An
Update will also be available
later in the year.
These and previous
publications in the series are
complimentary to members of
INSOL Europe on application
to wendycooper@insol-
europe.org; non-members
interested in purchasing copies
may do so for 20 each.
INSOL Europe reaches
out to Romania
INSOL Europe would like to thank the following sponsors
at the time of printing for their generous support of our
6th EECC Conference in Timisoara:
Supporting the event
In association
with UNPIR
Main Sponsors
www.begbiesgn.co.uk www.pluta.net
Event Sponsors
www.piperealaw.ro
www.cnajmj.fr
www.hermann-law.com www.pwc.com/ro
BANKRUPTCY TOURISM
Bankruptcy
Tourism in the UK
A debtor is free to move his centre of main interests
but how do you ascertain if he has in fact done so?
he German humourist, Kurt
Tucholsky, is quoted as having
said, Als deutscher Tourist im
Ausland steht man vor der Frage,
ob man sich anstndig benehmen
mu oder ob schon deutsche
Touristen dagewesen sind
1
. Many
German tourists visit the UK every
year. Most of them behave
properly and are welcome. Less
welcome are the considerable
numbers who come to the UK for
the sole purpose of availing
themselves of our liberal
bankruptcy regime
2
.
The scale of German
bankruptcy tourism
3
is illustrated
by the existence of companies set
up to assist German debtors to
move to the UK to seek relief here.
On 18 February 2009 Mr
Registrar Simmonds wound up in
the public interest
4
a company
called Medicon Limited and a
number of associated companies
incorporated in England but
carrying on business in Berlin.
Medicon maintained a website
and advertised in the German
press. The following advert
appeared in Die Welt:
Private insolvency in a foreign
country. Guaranteed release of
remaining debt after maximum of
15 months. Includes ALL
obligations, legal recognition in
Germany!
The principles governing
jurisdiction in bankruptcy in an
EU member state and as a matter
of English domestic law are set out
in the EC Regulation on
Insolvency Proceedings
5
and s. 265
Insolvency Act 1986. Recital 13 of
the Regulation provides that a
debtors centre of main interests
should correspond to the place
where the debtor conducts the
administration of his interests on a
regular basis. This definition is
not helpful in practice.
A debtor is free to move his
centre of main interests
6
. The
problem lies in ascertaining
whether he has done so or whether
his evidence that his centre of
main interests is in the UK is a
sham. The problems that arise
may be illustrated by two cases
involving German debtors, Official
Receiver v Eichler and Official
Receiver v Mitterfellner
7
.
12
T
Spring 2010 13
BANKRUPTCY TOURISM
14 Spring 2010
Case 1: Official
Receiver v Eichler
On 1 February 2007 a bankruptcy
order was made against Dr Eichler
on his own petition. According to
his petition his centre of main
interests was within England and
Wales and for the greater part of
six months immediately preceding
presentation he had been residing
in Hertfordshire. The affidavit
sworn in support of the petition
indicated that he was working in
the UK as a locum consultant
earning 500 per month. His
services were contracted through a
UK company of which he had
been a director (he had by then
resigned). He had no significant
assets. He had only three German
creditors totalling 206,700.
The Official Receiver applied
to the court for directions as to
whether or not the bankruptcy
order should have been made on
the basis that the debtors centre of
main interests was in fact in
Germany.
The Official Receiver relied
on the following matters.
1. The debts were incurred
entirely in Germany and the
creditors were all located there.
2. The debtor moved to England
in October 2006 and lived in
temporary accommodation
provided in connection with his
employment.
3. His locum work was by its very
nature temporary, which
pointed again against his centre
of main interests being here.
4. The debtors wife continued to
live in Germany.
5. The debtors earnings of 500
were in reality a fiction. His
services were contracted
through a company of which he
had been a director; his wife
remained a director, and the
company was taking the benefit
of his true earnings, leaving
nothing for the Official Receiver
to attach by way of income
payments. The set up was a
sham to deprive creditors of
money they might otherwise
expect to go towards the
payment of a dividend.
6. The debtor had owned a
property in Germany which had
been transferred into his wifes
name; proceedings to investigate
and undo the effects of that
transaction, if appropriate,
could more conveniently be
taken in Germany than from
here.
7. The insolvency had arisen as a
result of a judgment given
against the debtor in connection
with his business affairs in
Germany.
8. The insolvency and business
connection were with Germany
and those factors pointed to the
centre of main interests being in
Germany as opposed to here.
9. The conduct of the insolvency
here, as opposed to in Germany,
could be prejudicial to the
creditors.
Dr Eichlers submissions were very
brief. He asserted that he had
genuinely moved to England to
work there and remained working
there. To that extent his English
address was a true address. The
move was not temporary, and
there was no evidence to support
the contention that it was. It was
true that his wife remained in
Germany, but he spent more time
in England in connection with his
work than he did in Germany. He
denied that there had been any
impropriety in the transaction
transferring his property interest to
his wife. He denied that the
arrangements by which his services
were contracted were a sham: in
addition to giving him a wage, the
company paid for his
accommodation and transport; it
also arranged insurance, and there
were other expenses which had to
be covered. He submitted that, in
common with many EU qualified
doctors, he had come to England
to work as he was entitled to. His
being in England was not
temporary, as his continued
presence at the time the
application was made
demonstrated. He regarded
England as his centre of main
interests and he was entitled to
invoke the bankruptcy jurisdiction
of the courts of this country, which
is what he had done after taking
advice.
Following Shierson v Vlieland-
Boddy the court had little difficulty
in concluding that Dr Eichler was
free to move his centre of main
interests and was not fixed with
Germany for all time and for all
purposes. Moreover, the fact that
Dr Eichlers debts were all in
Germany was not a relevant factor.
Even if the location of creditors
was relevant, the EC Regulation
He denied that the
arrangements by
which his services
were contracted
were a sham.

BANKRUPTCY TOURISM
provides for the recognition of
English insolvency proceedings in
Germany and elsewhere in the
EU. There was no evidence that
Dr Eichlers creditors would be
prejudiced. The Official Receiver
or any trustee appointed would be
obliged to investigate his affairs
and realise any assets which may
be available irrespective of their
location: geographical convenience
was not a matter which could
properly be taken into account.
Nor was it appropriate to take
into account whether the basis on
which Dr Eichler was employed
was a sham. That was a matter
which could be investigated in an
English insolvency more
conveniently than in a German
one.
Even if it could be said that
Dr Eichlers presence in England
were purely temporary that would
not necessarily, of itself, prevent his
centre of main interests from being
there. There is no authority which
establishes or even considers any
minimum period of time which
a person must spend in a member
state before it can be said to have
become his centre of main
interests, although common sense
might indicate that a few days (or
even a few weeks) would be
unlikely to suffice because that
would be at odds with conducting
the administration of ones
interests in a place on a regular
basis (as well as being at odds
with the idea of an habitual
residence)
8
.
Accordingly, the court
declined to direct the Official
Receiver to apply to annul the
bankruptcy order and made no
order on the application.
Case 2: Official
Receiver v Mitterfellner
The Mitterfellner case (which was
properly argued by counsel for the
parties) was decided largely on the
facts. Mr Mitterfellner had run up
business debts in Germany and
came to England in 2007 after the
breakdown of his marriage. He
claimed to have settled in Hastings.
A bankruptcy order was made on
his own petition in the Hastings
County Court. The Official
Receiver applied to annul or
rescind the order
9
on the basis that
Mr Mitterfellners centre of main
interests was not in the UK.
Although there were facts in
favour of Mr Mitterfellners
contention (he claimed to have
lived at several places in Hastings,
which he clearly knew, he had a
bank account in Brighton and a
national insurance number) there
were considerable indications that
he had not moved to Hastings (the
purchase of return airline tickets
between Germany and England
from a travel agent in Germany
where in several cases he started
his return trip, notification to the
German authorities that he was
changing residence to live in
Ireland and an offer of a job in
Derby that was shrouded in
mystery).
The court annulled the
bankruptcy order on the basis that
the debtors centre of main
interests was not in the UK and on
the additional basis that the
petition and affidavit presented to
the county court contained false or
misleading information.
More cases in the same vein
await a hearing.
Footnotes
1. As a German tourist abroad one faces the
question whether one has to behave
properly or whether German tourists have
been there already.
2. The principal attractions appear to be
swift discharge in a year or even less (s.
279 Insolvency Act 1986) and release from
all bankruptcy debts (s. 281(1) Insolvency
Act 1986).
3. The Insolvency Service estimates that in
the 18 month period up to January 2010
approximately 150 bankruptcy orders
were made on the petitions of foreign
nationals resident in the UK for less than
12 months. The majority were either
German or Austrian.
4. See s. 124A Insolvency Act 1986.
5. No 1346/2000 (OJ L 160, 30 June 2000).
6. See Shierson v Vlieland-Boddy [2005]
EWCA Civ 974 and Re Staubitz-Schreiber
[2006] ECR I-701.
7. Respectively reported at [2007] BPIR
1636 and [2009] BPIR 1075. I heard both
cases as well as a number of other similar
cases which are unreported as they were
uncontested.
8. See on this point Re Ci4net.com Inc
[2004] EWCH 1941 (Ch) in which HHJ
Langan QC held that a centre of main
interests must have an element of
permanence.
9. See ss. 282(1)(a) and 375(1) Insolvency Act
1986.
Spring 2010 15
STEPHEN BAISTER
Chief Bankruptcy Registrar,
Royal Courts of Justice, London
There is no authority
which establishes
any minimum
period of time which
a person must spend
in a member state
before it can be said
to have become his
centre of main
interests

DUBAI WORLD
Dubai World: The new restructuring
and insolvency regime
Jane Flournoy reports on how insolvency laws of the UK and the US are influencing decisions in Dubai
O
n 25 November 2009 the
Government of Dubai
announced that it
intended to ask the financial
creditors of Dubai World (a
Government of Dubai holding
company) and Nakheel (master
developer and subsidiary of Dubai
World), to agree to a standstill on
their debts and to extend
maturities until at least 30 May
2010. The one page
announcement caused much
concern amongst creditors and
came as a surprise to most given
the various assurances that had
been made only a few weeks
earlier that all debts and liabilities,
including the Nakheel Sukuk
(amounting to US$4.1 billion)
which was due to be repaid on 14
December 2009, would be met.
Such concerns resulted in legal
practitioners throughout the
United Arab Emirates (the UAE)
racing to the books in a desperate
attempt to try and find cases where
the UAEs Federal insolvency and
restructuring laws
1
(the Federal
Laws) had been tested only to find
a notable absence of any
significant precedent.
UAE Federal insolvency
and restructuring regime
The Federal Laws currently do
not contain any provisions
encompassing rescue or
restructuring proceedings. They
do not for example include
procedures similar to those of a
UK style administration or US
chapter 11 process instead
providing for liquidation
(applicable to companies with the
main objective of terminating the
company as a corporate entity)
and bankruptcy (applicable to both
companies and sole traders with
the main objective of discharging
the trader from its debt and
liabilities). There is also the ability
for a trader to enter into a
composition with its creditors
although as with insolvency cases
in general, this is a rare
occurrence.
Partly due to the absence of
protection offered to companies
within the Federal Laws that would
allow them to restructure on a
going-concern basis, companies in
the UAE have historically
preferred to carry out restructuring
on an informal basis and outside
the legislation. As such, the Federal
Laws have not really been tested
by any major corporate insolvency
and although reports by the
Federal Government confirm that
the Federal Laws will be amended,
any form of amendment would
not have come in time in order to
deal with the current crisis. There
was therefore a great deal of
uncertainty regarding how the
situation would be resolved.
The Decree
The events of 14 December 2009
went some way towards resolving
that uncertainty and easing some
creditor concern.
Following a US$10 billion
finance injection from the
Government of Abu Dhabi, an
announcement was made by the
Government of Dubai that the
Nakheel Sukuk holders would be
repaid. In addition, the
Government of Dubai announced
that Decree No. 57 of 2009
Establishing a Tribunal to Decide
the Disputes Related to the
Settlement of the Financial
Position of Dubai World and its
Subsidiaries (the Decree) had
been issued. The effect of the
Decree was to create a new legal
framework based upon
internationally accepted standards
for transparency and creditor
protection applicable to Dubai
World and its subsidiaries (the
Group) which meant taking the
Group outside the insolvency
processes prescribed under the
Federal Laws.
Why was the
Decree needed?
Dubai World itself was established
by way of special decree by the
Government of Dubai in 2006.
Although a common method of
incorporation for entities either
associated with or owned by the
Federal Government or any one of
the emirates, it meant that the
position was unclear as to whether
Federal Laws would apply to it.
Although it is possible that a
creditor may question the
constitutional status of the Decree,
the general consensus of opinion
so far has been that the Decree, by
providing an alternative legal
framework designed to actively
deal with any future restructuring,
was welcomed.
The Law
The Decree drew heavily from the
insolvency laws of the UK and the
United States and adopted the
insolvency laws of the Dubai
International Financial Centre
(DIFC) as its basic framework
rather than the Federal Laws. It
was also passed in English. Both of
these moves were interpreted as
the Government of Dubai wanting
to use a system representing
international best practice that
would be more familiar to
international creditors in particular
thereby easing concern.
JANE FLOURNOY
Associate, Denton Wilde Sapte
LLP (Abu Dhabi)
The Federal Laws
currently do not
contain any
provisions
encompassing
rescue or
restructuring
proceedings.
16 Spring 2010
DUBAI WORLD
The Decree did however make
certain modifications to the DIFC
insolvency laws for the purposes of
dealing with the Group by way of
an attached schedule (the
Schedule). For example, the
Tribunal will not be able to
appoint a receiver over the assets
of the Group or an administrative
receiver and the Group and its
directors are excluded from the
provisions relating to Wrongful
Trading.
The Tribunal
The Decree established a new
tribunal (the Tribunal) which was
empowered to deal exclusively with
any demands and claims made
against the Group and also to
supervise any future restructuring
or insolvency proceedings. It is not
yet clear whether in practice the
Decree will operate in order to
prohibit the UAE Courts from
dealing with all claims i.e. including
contractual claims, made against
the Group or if the Tribunals
exclusivity will be restricted to
those claims associated with the
restructuring. It is doubtful whether
such a wide interpretation had
been the intention.
Chaired by Sir Anthony
Evans, a former judge of the Court
of Appeal of England & Wales and
the current Chief Justice of the
DIFC Court, the Tribunal also
consists of Michael Hwang, the
current Deputy Chief Justice of the
DIFC Court and former Judicial
Commissioner of the Supreme
Court of Singapore, and Sir John
Chadwick, another former
member of the Court of Appeal of
England & Wales and current
DIFC judge. Again, the
considerable experience of the
members of the Tribunal in
dealing with insolvency matters
together with the benefit of an
appreciation of local custom and
practice derived directly by them
from working within the UAE also
went some way to easing creditor
concern.
The Tribunal may issue
interim orders including
injunctions, although the ability to
enforce injunctions granted under
existing UAE law is uncertain given
that the remedy is only applied in
very limited circumstances in the
UAE. It is also unclear whether
enforcement of a foreign judgment
would be subject to the Decree and
if the Tribunal would have any
jurisdiction to enforce it.
The Voluntary
Arrangement
The effect of the Schedule was to
introduce a new voluntary
arrangement procedure. In order
for the Group company to enter
into a voluntary arrangement, the
Decree provided that the entity
must put proposals to its creditors
that, in addition to being approved
by certain majorities of the
creditors, must also be sanctioned
by the Tribunal.
One of the key features of the
voluntary arrangement procedure
is that upon an entity notifying the
Tribunal that it intends to make
proposals for a voluntary
arrangement to its creditors an
automatic moratorium will take
effect. No notice to creditors ahead
of the notification being made to
the Tribunal is required although
before the notification is made, the
debtor is required to appoint a
leading restructuring practitioner
as nominee. The moratorium
applies to both secured and
unsecured creditors alike and
extends to all assets of the entity
regardless of where they are
located. Accordingly therefore, it
would appear that a creditor may
be prevented, without notice, from
bringing claims or enforcing its
security wherever in the world it
may look to do so.
A unique feature of the
procedure is that upon notice to
the creditors, the Tribunal may
choose to extend the moratorium
to an affiliate of the debtor or
other entity if it is equitable to do
so, even if that other entity is not
itself seeking a voluntary
arrangement.
Another feature of the
moratorium that both surprised
international practitioners and
caused concern for creditors was
that creditors are prohibited from
exercising any form of set-off
rights once the moratorium is in
place. It will be interesting to see
whether such a prohibition will
prove workable in practice.
Conclusion
Although the appointment of an
experienced tribunal to oversee
and administer an insolvency
framework is to be welcomed,
there is clearly still a great deal of
uncertainty regarding how some
of the provisions contained within
the Decree will apply in practice
and also what the precise scope of
the Tribunals jurisdiction will be.
At the time of this writing however
no Group entity has entered a
voluntary arrangement
proceeding. Such questions
therefore could still prove
redundant as it is possible the true
value of the Decree will be the
disciplining effect it has on both
the Group and its creditors in their
approach to the discussions. As
regards informal restructuring
being the preferred practice within
the UAE it would appear that it
may be a case of old habits die
hard.
Footnotes
1. Primarily found in the UAE Commercial
Companies law (promulgated under
Federal Law No 8 of 1984) and the UAE
Commercial Code (promulgated under
UAE Federal Law No 18 of 1993).
Spring 2010 17
CROSS-BORDER
Cross-border recognition
under the Common Law
Peter Hayden reviews some interesting cases where common law decisions have been made
in jurisdictions that have not adopted the UNCITRAL Model Law on Cross-Border Insolvency
Introduction
As the fall-out from the credit
crunch continues and insolvency
proceedings gather pace, court
decisions on cross-border
recognition are coming thick and
fast. Whilst many common law
jurisdictions have adopted the
UNCITRAL Model Law on
Cross-Border Insolvency (the
Model Law), many have not,
and still rely on the common law
to address these issues.
This article reviews the key
common law decisions, including
the recent judgment of Lewison J
in In the matter of Stanford
International Bank Limited [2009]
EWHC 1441 (Ch). In particular,
it considers the rationale
underlying recognition and the test
to be applied to determine the
place of the principal liquidation.
The Stanford decision is currently
being appealed to the Court of
Appeal, so further developments
are imminent.
Cambridge Gas
Cambridge Gas Transportation
Corpn v Official Committee of
Unsecured Creditors of Navigator
Holdings plc and others [2007] 1
AC 508 was the first significant
recent case to provide clear
guidance on the common law
principles that should be applied to
determine whether foreign
insolvency proceedings should be
recognised. The issue in that case
was whether the Manx High
Court had jurisdiction to assist the
US Federal Bankruptcy Court in
relation to a reorganisation under
Chapter 11 of the US Bankruptcy
Code. The Privy Council referred
to the English common laws
traditional view that fairness
between creditors requires that,
ideally, bankruptcy proceedings
should have universal application.
Lord Hoffmann said, There
should be a single bankruptcy in
which all creditors are entitled and
required to prove. No one should
have an advantage because he
happens to live in a jurisdiction
where more of the assets or fewer of
the creditors are situated. The
Privy Council also recognised that,
whilst universality of bankruptcy
had long been an aspiration of
English law, it has not always been
fully achieved. However, it stressed
that the underlying principle was
given effect by recognising the
person empowered under the
foreign bankruptcy law to act on
behalf of an insolvent company as
being entitled to do so in England.
Accordingly, the Privy Council
held that the Manx Court had
jurisdiction to assist and could do
whatever it could have done in the
case of a domestic insolvency. It
noted that the purpose of
recognition of the foreign office
holder was to avoid parallel
insolvency proceedings. Although
the Privy Council did not dwell on
the point, the decision allowed
companies incorporated in the Isle
of Man to be subject to insolvency
proceedings in the US. The last
point is particularly significant
because the place of incorporation
had previously generally been
regarded as the seat of the
principal liquidation.
HIH
Cross-border insolvency issues
came before the House of Lords
shortly after the Cambridge Gas
case in Re HIH Casualty and
General Insurance Ltd [2008] 1
WLR 852. The issue in that case
was whether the discretion to remit
English assets to an Australian
liquidator arose under the
common law or solely under
statute. Lords Scott and Neuberger
found that the discretion to order
remission arose only under statute
(although it has since been said in
Re Swissair [2009] EWHC 2099
that their comments were not
intended to be general comments
but rather were restricted to the
facts of the case). In contrast,
Lords Hoffmann and Walker held
that the discretion also arose under
the inherent common law powers
of the court. Lord Philips
expressed no opinion on whether
the powers arose under the
common law but expressly
endorsed the principle of
universalism. Although the split in
the House of Lords in relation to
the common law position did not
matter in the context of the HIH
case, given the importance of the
common law in other jurisdictions
it is somewhat disappointing that
the opportunity was not taken to
clarify matters.
Lord Hoffmann referred back
to the Cambridge Gas case and the
principle of the universality of
bankruptcy. His Lordship then
went further, saying The principle
of (modified) universalism has
been the golden thread running
through English cross-border
insolvency law since the 18th
century. That principle requires
that English courts should, so far
as is consistent with justice and UK
public policy, co-operate with the
courts in the country of the
principal liquidation to ensure that
all the companys assets are
distributed to its creditors under a
single system of distribution. Lord
Hoffmann acknowledged that in
some cases there may be doubt
about how to determine which
PETER HAYDEN
Mourant du Feu & Jeune,
Cayman Islands
Court decisions
on cross-border
recognition are
coming thick and fast
18 Spring 2010
CROSS-BORDER
jurisdiction should be regarded as
the seat of the principal
liquidation. His Lordship noted
that the place of the companys
domicile may not be the most
appropriate jurisdiction and
referred to the COMI test applied
under the UNCITRAL Model
Law. However, he did not
elaborate on the test that should be
applied to determine these
matters.
Cayman Islands
and Bermuda
The principle of modified
universalism was subsequently
accepted in both the Cayman
Islands and Bermuda.
In re Lancelot Investors Fund,
Ltd (currently unreported), the
Grand Court of the Cayman
Islands had to determine whether
US bankruptcy proceedings should
be recognised in the Cayman
Islands or whether a Cayman
liquidator should be appointed
over a hedge fund that had lost
almost its entire investment as a
result of the Petters fraud in the
US. The Grand Court held that,
as a general principle, bankruptcy
should be unitary and universal. It
expressly adopted and followed the
Cambridge Gas and HIH cases.
The court did not elaborate on the
test to be applied at common law
to determine the place of the
principal liquidation because it
held that, whether the common
law test or the Model Law test (of
centre of main interests
(COMI)) was applied, the place
of the principal liquidation in the
case before it was clearly the US.
In assessing matters from a
common law perspective, it
appears to have had regard to all
the circumstances of the case to
ascertain the most appropriate
jurisdiction for the principal
liquidation.
Likewise, In re Founding
Partners Global Fund Ltd, the
Supreme Court of Bermuda
applied Cambridge Gas in
recognising the appointment of
Cayman Islands provisional
liquidators, and affording them
such powers as would be available
to a Bermudian liquidator under
the Bermuda Companies Act
1981. Again, the court did not
expressly address the issue of
which test should be applied to
determine the place of the
principal liquidation, but noted
that public policy issues may arise
in relation to a Bermudian
company being liquidated
elsewhere.
Stanford
In Stanford, an English court
determined competing applications
for recognition by a US receiver
and Antiguan liquidators by
applying the UK Cross-Border
Insolvency Regulations 2006 (the
Regulations), which give effect to
the Model Law. This involved the
application of the COMI test but,
since it held that the Regulations
supplemented rather than
extinguished the common law, the
court went on to consider the
common law position.
As has already been widely
reported, the court found that the
UKs implementation of the
Model Law differed from that of
the USA. The key difference
related to the presumption that the
companys registered office was the
location of the principal liquidation
(or foreign main proceeding,
using the terminology adopted by
the Model Law). The court held
that in the UK the presumption
was a true presumption because it
applied in the absence of proof to
the contrary, so that the burden lies
on the party seeking to rebut it. By
contrast, the court thought that in
the US the presumption only
applied in the absence of evidence
to the contrary and, according to
the US authorities, the registered
office has no special evidentiary
value. The English court did not
therefore follow the three well
known US decisions where the US
courts refused to recognise
Cayman insolvency proceedings as
the principal liquidation (In re
SPhinX Ltd, 371 B.R. 10
(S.D.N.Y. 2007), In re Basis Yield
Alpha Fund, 381 B.R. 37 (Bankr.
S.D.N.Y. 2008) and In re Bear
Stearns High-Grade Structured
Credit Strategies Master Fund, Ltd
374 B.R. 122 (Bankr. S.D.N.Y.
2007)).
As regards the common law,
the court accepted and adopted
the principle of universalism as set
out in Cambridge Gas. It was held
that, if liquidators had been
properly appointed in the place of
incorporation with the power and
duty to collect assets on behalf of
all creditors, then, barring
exceptional circumstances, those
liquidators should be left to get on
with the job without outside
interference from others. This
meant that the Antiguan
liquidators appointment over
Stanford International Bank
Limited was recognised, rather
than that of the competing US
receiver.
Conclusions
The principal of universalism is
increasingly widely acknowledged
and recognised as the appropriate
approach under the common law,
and there are obvious advantages
for creditors in having a single
bankruptcy proceeding which
deals with all claims.
However, the test to be applied
at common law to determine
where the principal liquidation
should be is not yet settled.
Although some of the earlier cases
suggest that the place of
incorporation may not be the most
appropriate jurisdiction of the
principal liquidation, but Stanford
suggests that there must be
exceptional circumstances before
the court will be persuaded to
refuse to recognise the
appointment of liquidators
properly appointed in the place of
incorporation. An analysis of the
facts considered in the Stanford
judgment is beyond the scope of
this article, but they provide some
guidance on the matters the court
is likely to regard as being
significant. Nevertheless, it seems
that the bar is now being set at a
high level for a party arguing
against the recognition of
liquidators appointed in the place
of incorporation.
The bar is now
being set at a high
level for a party
arguing against the
recognition of
liquidators
Spring 2010 19
This article was first published
in INSOL World
ACADEMIC FORUM
Academic Forum
Conference
Previews
Leiden & Vienna
Leiden, 1-2 July 2010
The Academic Forum is
organising its third half-year
event on 1-2 July 2010 at the
Faculty of Law of the
University of Leiden, in
collaboration with the Centre
for European Company Law,
which is a research institute of
the Universities of Maastricht,
Utrecht and Leiden.
It is the Academic Forums fifth
conference since 2008, the first of
which also took place in the
premises of the Leiden Law
School. The programme of the
Joint Insolvency Conference, titled
Towards a New EU framework
for Crisis Management in the
Banking Sector is most promising
in at least two respects. The
financial crisis has highlighted the
importance of putting into place
effective cross-border
arrangements to handle banking
crises. There have been a number
of high profile banking failures
over the past 18 months (Fortis,
Lehman Brothers, Icelandic
banks), which have revealed
serious shortcomings in the
existing arrangements. According
to the European Commissions
proposals, a new legal framework
must be put in place to equip the
authorities with the right tools and
provide legal certainty for the
handling of cross-border banking
failures, in ways that minimize
costs to taxpayers and allow even
the largest banks to fail without
damaging overall financial stability.
A broad ranging approach to
the complex and interlinked issues
surrounding crisis management
has been suggested: early
intervention, bank resolution
(including consideration of the
extension to cross-border banking
groups of the remit of Directive
2001/24/EC on the
Reorganisation and Winding up of
Credit Institutions) and
insolvency, with a binding
framework for cooperation and the
exchange of information between
courts and insolvency practitioners
responsible for proceedings
relating to affiliated entities in a
banking group. These themes are
of tremendous importance for
banks and their management, for
the insolvency profession and for
scholars, where the limits of
principles of corporate law and
insolvency law will be tested.
The topics will be discussed by
academics and practitioners from
over ten jurisdictions, including the
Czech Republic, the Netherlands,
Luxembourg, France, Germany,
Norway, the United Kingdom and
the United States.
Vienna, 13-14
October 2010
Preparations are nearly
complete for the Academic
Forums Annual Conference in
Vienna. The meeting at the
Intercontinental Hotel,
scheduled over the 2 days just
prior to the main conference
(13-14 October 2010), has
been able to attract speakers
representing some eight
jurisdictions within Europe
and elsewhere.
This early interest has enabled the
development of two major themes
for the conference: Corporate
Groups and Insolvency and
Insolvency Case Studies, both
very topical subjects indeed with
the latter focusing especially on the
problems of large-scale
insolvencies. There will also be a
session combining the two other
themes of the Call for Papers
PAUL OMAR
Senior Lecturer at the Sussex
Law School and Secretary of the
INSOL Europe Academic Forum
Topics will be
discussed by
academics and
practitioners from
over ten jurisdictions.
20 Spring 2010
ACADEMIC
FORUM
INSOL Europe
ACADEMIC FORUM
issued in February: Arbitration
and Insolvency and Banking
Regulation.
Some of the confirmed
speakers in the sessions on
Corporate Groups and
Insolvency include Alexander
Daehnert (Sussex), Dr Jessica
Schmidt (Jena), Professor
Gheorghe Piperea (Bucharest),
Alexandra Kastrinou
(Westminster), Helen Sevenoaks
(British Columbia) and Myriam
Mailly (Kent). The session on
Insolvency Case Studies will
include contributions by Dr David
Hahn (Bar-Ilan, Tel Aviv) and Dr
Tomas Richter (Charles University
Prague), while the combined
session on Arbitration and
Insolvency and Banking
Regulation will feature papers by
Cecilia Carrara (LUISS Rome)
and Luminita Tuleasca
(Romanian-American University
Bucharest).
Following a successful venture
in Stockholm 2009, place is also
being given to some of the
members of the Young Academics
Network (YAN) to present papers
on their recent research. There will
also be an update on the soon to
be completed ALI-III Project on
Global Principles in Insolvency
Law by the joint project chair,
Professor Bob Wessels (Leiden).
Furthermore, as part of the
conference schedule, there will also
be a report back on Academic
Forum activities in 2009-2010.
Members of the Management
and Supervisory Boards present at
the congress will also meet to plan
activities for 2010-2011 and
identify themes for a possible
Spring 2011 Event as well as the
Annual Conference in Venice,
Italy, later that year. Expressions of
interest and ideas for the
development of topics for these
events are also welcome from
members of the academic and
practitioner communities.
The social aspect of
proceedings will see the delegates
attend a dinner on 13 October,
usually a very convivial occasion,
thanks to Professor Bob Wessels
and his repertoire of amusing
dining customs. At time of writing,
travel and research grants are
being advertised to enable younger
scholars to carry out research
and/or attend proceedings, all of
which have been generously
sponsored by Edwin Coe LLP.
Book prizes for outstanding
contributions to insolvency law
and literature have also been
announced. The Academic Forum
is also pleased to anticipate the
presentation of the third Edwin
Coe lecture at the Vienna
Conference, with speaker details to
be announced at a later date.
Further Information
Details of the Leiden Conference
and the Vienna Annual
Conference will be published at
the Academic Forum website at:
<http://www.insol-
europe.org/academic/>, with
on-line registration for both
conferences being possible.
Information on the Vienna
Conference will also be included in
the registration brochure for the
main INSOL Europe conference.
Further information about the
travel and research grants for
scholars as well as on the work of
the Academic Forum can be
obtained via the Academic Forum
website or from the Secretary via
e-mail at: <paulo@sussex.ac.uk>.
Spring 2010 21
ROUNDTABLE DISCUSSION
Roundtable discussion in Russia:
Investigating the affairs of an insolvent debtor
Daniel F. Fritz, INSOL Europes Russian Desk, reports on the roundtable discussion jointly organised by the
Ministry of Economic Development of the Russian Federation, European Bank for Reconstruction and
Development, Russian Union of SROs of Insolvency Administrators, INSOL International and INSOL Europe
O
rganised by the European
Bank for Reconstruction
and Development, in
cooperation with INSOL
International and INSOL Europe,
a round table discussion took place
on 9 February 2010 at the Russian
Ministry of Economic
Development in Moscow, in which
high-ranking representatives of the
Russian Ministry of Economic
Development, of the Russian High
Court for Commercial Matters
and the various associations of
insolvency administrators (Self-
regulating Organisations of
Insolvency Administrators,
SROs) took part.
From the start it can be said
that this event, in which interested
Russian decision makers had the
opportunity to exchange
information at length with
European international insolvency
law experts, proved to be a
complete success. In particular, it
became clear that the Russian
legislator, represented by the
Development, is very interested in
continuously improving the
Russian insolvency system by
means of a constant exchange of
information with international
organisations and experts in
insolvency law.
Expert participants
EBRD as the organiser had given
the Russian hosts the opportunity
of bringing such experts from
various jurisdictions to one joint
roundtable, who in the opinion
of the Russian side were of
particular interest to them. To this
effect, Sumant Batra was not only
invited to participate in his
capacity as the Chairman of
INSOL International, but in
particular as an expert in Indian
insolvency law. The European
participants were Sijmen de Ranitz
(Resor N. V., Netherlands),
Gordon Stewart (Allen & Overy,
UK), Steven Speed (Chief
Executive Insolvency Service, UK),
Daniel Fritz, the author of this
article (HERMANN RWS, GER),
and, as permanent consultants to
the EBRD Neil Cooper (UK),
Melissa Burgess, Alexej Yukhnin
(RF), and Professor Ronald
Harmer (AUS). Furthermore,
Mahesch Uttamchandani had
been invited to participate in the
round table for the World Bank.
The Russian side was
represented by delegates from all-
important areas associated with
insolvency law. The participants
were, among others: INSOL
Europe member Arthur Trapitsyn
as the Vice President of the
Russian Union of SROs;
Insolvency Administrator and
Chairman of the SRO Mercurii.
The other Russian delegates
represented the Russian High
Court for Commercial Matters
(Oleg Zaytsev), insolvency
consultants such as Dmitrii
Stepanov (attorney-at-law) and
Alexander Kolchin (attorney-at-
law) and other organisations. The
roundtable was opened and
conducted by the hosts at the
Development, Ivan Oskolkov
(Director, Corporate Government
Department) and Dmitrii
Skripichnikov, (Deputy Director
Corporate Government
Department).
Detailed preparation
It was in particular the highly
professional and detailed
examinations of the EBRD team
in the run-up to the conference
which showed that in Russian
insolvency practice, obtaining
information in case of a
companys insolvency is a very
difficult but also very important
topic. During the preparation of
the event, Russian insolvency
judges and insolvency
administrators, but also consultants
involved in insolvency cases, in
particular attorneys-at-law, were
provided with questionnaires in
which they were able to give
detailed information regarding
their experience with obtaining
information in insolvency
proceedings. The results of this
survey were then summarised in a
report which was handed over to
the Russian Ministry for Economic
Development as the institution
responsible for insolvency law.
The focus points listed there
were also addressed by the various
short presentations given by the
participants of the round table,
which were followed in each case
by very lively, interesting, but also
detailed discussions. The topics on
the one hand related to a directors
duties to disclose information to an
insolvency administrator; on the
other hand the discussion referred
to whether information could also
be obtained from third parties, in
particular government authorities,
and how the assets of an
insolvency debtor could be most
effectively secured on the basis of
such information. During the
second part of the roundtable,
various concepts were presented in
order to effectively improve, in
compliance with applicable law,
the course of action taken by
insolvency administrators in order
to obtain information.
DANIEL F. FRITZ
HERMANN, Frankfurt am Main
EBRD as the
organiser had given
the Russian hosts
the opportunity of
bringing such experts
from various
jurisdictions to one
joint roundtable.
22 Spring 2010
ROUNDTABLE DISCUSSION
Regulatory bodies
As the third and last part, the role
of the insolvency professional
regulatory bodies in various other
countries, such as India and the
UK was discussed, but also the
current situation in Russia. This
was then followed by the
conclusions of the EBRD
organisers (Frederique Dahan and
Michel Nussbaumer) and the
Development (Dmitrii
Skripichnikov). The Russian
participants especially stressed that
the results of the examination,
which showed some weaknesses in
the Russian insolvency system, are
considered as a very welcome and
requested criticism, and that they
would be glad to take the
opportunity to further anchor the
concept of best practice in the
Russian insolvency sector, by
means of an exchange of
information with international
insolvency experts.
Theory in practice
The study, but also the reports
given by the Russian insolvency
practitioners, showed that whilst
there are various possibilities of
obtaining information under
Russian insolvency law in theory,
the insolvency courts frequently
handle applications filed by
insolvency administrators very
hesitantly or reject them altogether
in practice. Russian insolvency
administrators also often lack the
necessary formal
acknowledgement by the
authorities. For this reason, the
contributions made by the English,
Dutch and German experts
attracted particular attention, as
they showed that the insolvency
administrators in these
jurisdictions have very effective
means at their disposal, such as
detention of the director, in order
to obtain the necessary
information.
For the Russian side, it was
also interesting to hear that
insolvency administrators in the
past had not had the best
reputation in Europe either, but
have been able to establish their
good reputation step by step, by
means of continuous professional
handling of insolvency cases, the
rescuing of companies and thus by
building up trust amongst all
shareholders in the business
community. In this context, ethical
issues were in the foreground of
the discussion, and it was pointed
out that the acknowledgement of
an insolvency administrator is not
only a matter of the legal
framework conditions and the
insolvency judges qualification,
but also depends on the success
achieved by the insolvency
administrator for the benefit of the
companys creditors and therefore
for the benefit of society at large.
The roundtable discussions,
which were limited to a
manageable circle of 40
participants, then came to an end
at a drinks reception during which
the exciting topics of the day were
once more discussed in smaller
and more personal circles. Here,
too, the Russian colleagues stressed
their strong interest in the practical
solution concepts developed in
Europe.
Invited Practitioners
On the second day, the
international guests were once
more given the opportunity of
giving their short presentation in
front of a larger auditorium. It was
in particular those insolvency
practitioners who had taken part
in the EBRD survey who had been
invited to Moscow to listen to the
presentations given by the
international experts and to ask
questions during the following
discussions. The Russian
insolvency practitioners once more
showed great interest in the
efficient methods of obtaining
information in Europe, and in an
efficient handling of the
proceedings in the interests of the
creditors.
Positive development
Compared with other
international events related to
Russian insolvency law, it became
clear that the Russian insolvency
system has been showing a very
positive development. Whilst
during earlier debates the focus still
was on issues of the selection and
appointment of insolvency
administrators, the interests of the
Russian insolvency community has
shifted more and more towards the
topic of handling the proceedings
as efficiently as possible and in the
interests of the creditors. It is in
this context that the summary by
Ivan Oskolow, Director of the
Corporate Government
Departments of the Ministry of
Economic Development is to be
understood, who once more
described in an open and therefore
impressive manner that modern
Russian insolvency law can look
back on a mere 10 years of
tradition only. This becomes
particularly clear when considering
the fact that for many legal points
in dispute a prevailing opinion
has not yet been developed and
standing court practice has not yet
been established. The Russian
Development, but also the
representatives of the Russian
High Court for Commercial
Matters, therefore see it as their
task to address these issues and to
continuously improve the Russian
insolvency system, also through the
exchange of information with
international organisations such as
EBRD, INSOL International and
INSOL Europe, by means of a
continuous exchange of know-
how.
Modern Russian
insolvency law
can look back on a
mere 10 years of
tradition only.
Spring 2010 23
RUSSIA
Turnaround Russia
Artur Trapitsyn reports on proposed amendments aimed at increasing the use of turnaround procedures
Although the Russian Law
on Insolvency (Bankruptcy)
contains provisions on two
so-called turnaround
procedures financial
rehabilitation and external
management
(administration), they are
rarely used in practice.
In 2008 out of 27,032
insolvency procedures introduced
by the courts there have been 48
financial rehabilitation procedures
and 579 external management
(administration) procedures.
Figures for the first half of 2009
are similar. Out of the total of
16,312 procedures there have
been 25 financial rehabilitation
procedures and 395 external
management (administration)
procedures, which means that
only about 3% of all the
procedures introduced have been
turnaround procedures.
Undoubtedly, procedures like
financial rehabilitation cannot be
used in every case. The debtor
might be unable to reach an
agreement with his creditors.
There might be no third parties
willing to save the company as a
going concern, or such third
parties resources might not be
sufficient to pay off the distressed
companys debts.
Failings of the
current legislation
Still we believe there are a
number of serious issues
hindering effective use of
turnaround procedures in Russia,
that the current legislation fails to
address.
For example, the Law does
not provide the necessary
protection to the guarantor in the
financial rehabilitation procedure.
The guarantor is responsible for
the performance by the debtor of
his obligations and incurs civil
liability in case of the debtors
non-performance or insufficient
performance. Where the meeting
of creditors decides to move to a
different insolvency procedure,
the guarantor has no preference
over other creditors.
There is also a serious issue
caused by the Law on Insolvency
interlinking conditions of
restructuring of overdue
mandatory payments with the
requirements of the Tax Code of
the Russian Federation.
The Tax Code envisages that
delay or extension in relation to
unpaid taxes should not exceed
one year, which, taking into
account the maximum period of
financial rehabilitation, is clearly
not enough. Extension for a
period in excess of one year but
not exceeding three years can
only be granted by the
Government of the Russian
Federation. Adoption of such a
decision within the limited time
frame of supervision procedure is
highly unlikely.
The way to remove the
obstacles imposed by the Tax
Code is for a third party to
purchase such debts from the
state. In accordance with the
current edition of the Law on
Insolvency adopted in 2008 this
can be done at any stage in the
insolvency proceedings.
Proposed draft law
Recently the Ministry of
Economic Development has
proposed a new draft law, which
should lead to a more extensive
use of financial rehabilitation
procedure in insolvency
proceedings.
The draft introduces a
number of new provisions. Their
analysis shows similarity between
the Russian and international
approaches to the effective
implementation of turnaround
procedures.
For example, one of the most
important principles outlined by
international experts is the
principle of preferential
repayment of funds used to
finance a turnaround procedure.
The current Law on Insolvency
(Bankruptcy) does not have such a
provision which is considered one
of the main reasons for the rare
use of the financial rehabilitation
procedure. The new draft law
provides for preferential
repayment of such funds, but only
where they are made available
with the prior consent of
creditors.
Draft law provisions
Some of the other provisions of
the draft law are as follows.
The debtor has a right to
initiate financial rehabilitation
procedure.
The debtor and creditors have
a right to enter into a debt
settlement agreement prior to
commencement of insolvency
proceedings. Such an
agreement regulates the way
the parties exercise their
respective rights including the
creditors right to recover the
amounts due and the debtors
right to manage his assets.
The financial rehabilitation
procedure is introduced for
three years. If extended, the
maximum period cannot
exceed five years.
Where a debtor petitions the
ARTUR TRAPITSYN
Chairman of the Board of the
Partnership NP SOAU TPP RF
and Deputy Chairman of the
Board of the Russian Union of
Self-Regulated Organisations of
Insolvency Practitioners
The Law does
not provide the
necessary protection
to the guarantor in
the financial
rehabilitation
procedure.
24 Spring 2010
RUSSIA
court to introduce financial
rehabilitation, supervision
procedure is not introduced,
thus shortening the total length
of insolvency proceedings.
Analysis of the financial
situation of the debtor is
carried out within the financial
rehabilitation procedure.
Together with the petition, the
debtor must submit to the court
a confidential report outlining
his financial situation.
The debtor must submit to the
court a financial rehabilitation
plan approved by the creditors
meeting, and envisaging full
repayment of all debts in
accordance with an agreed
schedule.
The creditors claims can be
divided into different classes.
New definitions
The draft law also introduces a
number of new definitions.
Group of companies: two or
more legal entities controlled
by one member of the group.
Person under the debtors
control: a person who is under
an obligation to comply with
the orders issued by the debtor
or whose actions can be
influenced by the debtor in
some other way.
Controlling member of the
group: a person or entity that
is exercising control in relation
to the debtor member of the
group.
The Draft Law deals with the
specific issues of the insolvency of
members of groups of companies.
For example, a single financial
rehabilitation procedure is
introduced in relation to all
debtors members of one group
of companies. It is proposed that
insolvency proceedings must be
initiated in relation to not just the
debtor company that has been
stripped of its assets, but also the
companies directly or indirectly
connected to the debtor.
Conclusion
The draft law is more pro-debtor
with a clear emphasis on financial
rehabilitation. The only
controversial development is the
proposed increase of the total
period of financial rehabilitation
and external management to five
years. Though it might increase
the chances of saving distressed
companies, it may also lead to a
widespread insolvency of credit
institutions thus triggering a new
wave of financial crisis.
It may also lead
to a widespread
insolvency of credit
institutions thus
triggering a
new wave of
financial crisis.
Spring 2010 25
euro enix
f
Eurofenix is the official
quarterly journal of INSOL
Europe. It is essential reading
for INSOL Europe members,
licensed insolvency
practitioners and all
professionals involved in
business recovery throughout
Europe. Eurofenix is published
four times a year and is sent
to all INSOL Europe members
providing unique access to
Europes leading insolvency
business recovery
professionals and academics.
To advertise in
Eurofenix contact:
eurofenix@mrp.uk.com
Sponsorship
& Advertising
Opportunities
TURNAROUND WING
Restructuring:
In-court or out-of-court?
In-court and out of court!
INSOL Europes Turnaround Wing discusses the best options for a successful restructuring of an ailing business
Introduction
The following discussion paper is
meant to highlight the key choice
of options in a successful
restructuring of an ailing business.
It is also meant to initiate a
discussion overdue for years:
In-court restructuring
is a valuable option for a
business in trouble to achieve
the operational and the
financial turnaround.
The principal options open to
stakeholders are either an out-of-
court restructuring or an in-court
solution through an insolvency
regime. Those are superimposed
on the process of restructuring.
This process principally
encompasses operational
restructuring increasing the
efficiency of assets of the business
and financial restructuring
addressing the inadequacy of a
firms capital structure. For the
purpose of this paper, financial
restructuring also includes short-
term crisis stabilisation. The
drivers behind those two
dimensions are markedly different
yet both dimensions influence each
other in an often complex way.
The experience of the authors
of this discussion paper is that
practitioners specialising in either
out-of-court (consensual)
restructurings or in-court-
restructurings are often reluctant
to take a holistic view and draw
upon the most appropriate course
of action. Instead, they favour a
suboptimal route for a variety of
reasons. Those include (lack of)
familiarity with the alternative
process, fee and cost
considerations, or loss of control.
Whilst those reasons are
understandable from the point of
view of an individual player, the
overall outcome is usually
compromised.
This discussion paper
therefore attempts to formulate a
series of pointers and questions in
order to improve decision making
and help the parties involved in a
restructuring process identify the
optimal course of action regardless
of power considerations.
Process of restructuring
Whether or not a business has to
undergo both financial and
operational restructuring in order
to be saved from dissolution is
ultimately based on a number of
key facts and financial indicators:
Is the business profitable on the
operating (EBIT) level?
Does it generate positive cash
flow before interest and
redemption?
Does it generate sufficient risk-
adjusted return on capital?
Does it possess a sustainable
market position in the market
segments it is competing in that
will enable it to remain viable in
the future?
If the answer to all of the above
questions is Yes, it appears likely
that an operational restructuring
or a strategic redirection is not the
solution to its decline and crisis
and the business can be saved by
re-adjusting its capital structure
through financial restructuring.
This is not to say that every
business benefits from a process of
continuous operational
improvement. This, however,
should be left to operational
management as part of their daily
routine or embedded as such.
Clearly, if the above questions
remain unanswered or the answer
is No, a full programme of
operational restructuring initiative
must be developed and
implemented. This may be
supplemented by a review of its
business strategies or, indeed, a
review of its corporate strategy.
Stakeholders must then decide on
the basis of an operational
restructuring plan and its financial
ramifications, respectively, the
extent of a re-adjustment of the
capital structure of the business.
Key questions in the course of
its financial restructuring will then
be:
How much interest payment and
redemption can the restructured
business bear in terms of both
cash flow and income. In other
words, what is its debt capacity
purely on financial and
economic grounds?
Are there further legal
considerations or limits re the
shape of the restructured
balance sheets with a further
effect on its financial debt
capacity, e.g. is a balance sheet
solvency test applicable in its
jurisdiction?
Are there additional restrictions
re the deductibility of interest
payments (e.g. thin capitalisation
rules)?
Practitioners
specialising in
either out-of-court
restructurings or in-
court-restructurings
are often reluctant to
take a holistic view.
26 Spring 2010
In
-c
o
u
r
t so
lu
tio
n
O
u
t-o
f-c
o
u
r
t
so
lu
tio
n
F
in
a
n
c
ia
l
r
e
s
tr
u
c
tu
r
in
g
O
p
e
r
a
tio
n
a
l
r
e
s
tr
u
c
tu
r
in
g
STEFFEN KOCH
Co-Chair, INSOL Europe
Turnaround Wing
TURNAROUND WING
How much fresh money does the
business need and what is the
degree of urgency? Will the
lenders require an equitable
subordination report or the like
before injecting new money into
the distressed business?
In the course of the process of
financial restructuring, the
emphasis from facts and figures to
power considerations starts shifting
when addressing issues such as:
Who is going to participate in
the new money and who wants
to exit altogether?
What is the valuation for the
restructured business in order to
determine debt-to-equity
exchange ratios?
What is the impact of a financial
restructuring agreement on the
business of the debt and equity
holders? Can they afford
(additional) write-offs, whose
bonus payment would become
affected, would the agreement
contradict already publicly
announced commitments etc?
What is the threshold majority
among senior lenders for the
acceptance of waivers, release of
security etc?
Does an agreement in one
distressed situation sets
precedence for another
distressed situation, where
similar players are at the table?
It is at this junction, when the
process of financial restructuring
turns into an often sophisticated
political game of forming
coalitions, behind-the-door
bilateral negotiations, tactical
threats, parallel agendas, and
horse-trading. And it is at this
junction when the two options are
always on the table tacitly or
overtly. But which option is better
suited to achieve both an
equilibrium in the interest of the
stakeholders and to address the
actual operational and financial
problems the business is facing?
Out-of-court
restructuring or
in-court restructuring?
Whilst this question is difficult
to answer in absolute terms, a
number of factors favour one
or the other option
Out-of-court restructuring or
consensual restructuring
Relatively simple stakeholder
structure
Few or a single shareholder
Limited number of banks or a
few dominant lenders only
Easier-to-handle debt structure
Syndicated loans with similar
risk exposure of lenders
across the different parts of
the business (including
domestic and foreign
subsidiaries)
Overlap of debt and equity
holders (such that
stakeholders in their role of
debt holders may face
subordination risks)
Unsecured or largely unsecured
debt or voidance risks for debt
holders
Operational restructuring
measures resulting in an
affordable cash out flow
Severe shot gun clauses in
client or supplier contracts in
case of insolvency
Inability to win long-term
orders if business is in state of
insolvency
Prospect of long-drawn out
legal battles with administrator
once in insolvency, e.g. due to
voidance risks
Risk of a major exodus of
competent management once in
insolvency
In contrast, an in-court
solution may become the
favoured solution if the
following factors prevail
Large, fragmented shareholder
structure
Fragmented debt holders
structure; holders of debt have
different agendas such that it is
difficult to coral a sufficient
number of votes to reach voting
thresholds. As result, inability to
agree on terms of necessary
new money
Complicated debt structure with
contentious uncertainties re
their ranking
Operational restructuring that is
prohibitively expensive if
carried out as a going concern,
e.g. large scale retrenchment or
cessation of long-term
(unprofitable) contracts or
cessation of long term leases
Strong market position, clients
are strongly dependent on
deliveries of business, at least in
the short term
Strong brand, surviving the
temporary set-back of an
insolvency
Labour Law issues: better
adaption possibilities under an
insolvency umbrella
In any case, stakeholders of the
business and their advisors must
explore the ramifications of each
path. That, in practice, means that
both equity and debt holders and
the company itself, whilst still a
going concern, develop detailed
contingency plans of an in-court-
solution, which may be an outright
insolvency or a Chapter 11 style
process as, for example, Germany
and France adopted with its
insolvency plan or the Sauvegarde
procedure. Stakeholders must then
evaluate those plans in respect of
both the likely financial outcome
and their own power position
having implemented such
contingency plan. Drawing up
such plans require from the
stakeholders and their advisors in-
depth knowledge of the insolvency
or in-court-process not only in
order to produce a workable
solution but also to portrait this
option as a credible option. It is
here, where the authors of this
paper believe much more work has
to be done in order to bring about
this competence and knowledge,
which will ultimately help the
stakeholders to opt for the right
course of action.
National egoism has to be
overcome in truly international
restructuring cases!
In this context it is also
extremely important that the
appointed insolvency
administrator(s) to communicate
from the first moment with the
restructuring specialists involved
pre-court on a fair basis. It will
regularly be beneficial to make use
of their in-depth knowledge of the
companys problems and possible
solutions.
This regularly speeds up the
process of getting an overall
picture of the business in trouble
and allows the insolvency
administrator to take the decisions
necessary quicker as time is always
of the essence in the first days of
the in-court restructuring.
And of course, the out-of-
court specialists may also and
regularly should serve the
company in-court as long as they
add value to the restructuring
process, execute the new options
available in the in-court-
restructuring and can be financed
out of the estate.
There is still a long way to go,
but the authors are convinced, that
combining the expertise of in-
court and out-of-court specialists
will improve the results for all
stakeholders significantly in
distressed situations.
So let us use the Turnaround
Wing of INSOL Europe as the
platform to exchange our
perspectives and thoughts in order
to learn from each other for the
sake of the business in trouble!
Let us make together this
vision come true!
Prepared with the assistance
of Turnaround Wing members
Sven-Holger Undritz and
Wolf Waschkuhn.
Spring 2010 27
ESTONIA
New trends in Estonian
insolvency law
Signe Viimsalu discusses changes raising new questions about the bankruptcy proceedings in Estonia
1 January 2010 was the date
of entry into force of a new
Bailiffs Act which established,
for the first time in Estonia, a
joint professional chamber of
bailiffs and bankruptcy
trustees and amended, among
other acts, the Bankruptcy
Act. Some examples of the new
Bailiffs Act and the 151
amendments to the Bankruptcy
Act are presented here.
Chamber of Bailiffs and
Bankruptcy Trustees
Similar to the Estonian Bar
Association, the Chamber of
Bailiffs and Bankruptcy Trustees
has been established pursuant to
law as a legal person in public law.
In accordance with the Act the
tasks of the Chamber include, for
example, promotion of
professional activities of bailiffs
and bankruptcy trustees, including
conduct of examinations for
bailiffs assistants and bankruptcy
trustees, conduct of trainings,
organisation of in-service training
and checking the performance of
the in-service training obligation.
Earlier any issues related to
organisation of examinations were
within the competence of the
Ministry of Justice. Furthermore,
other more important
amendments related to the
competence of the Chamber
include supervision of professional
activities and dignified behaviour
of bailiffs and bankruptcy trustees
as well as checking the existence of
the professional liability insurance
of bailiffs and bankruptcy trustees.
Certain additional synergy will
hopefully be received as a result of
the Chambers activities in
organising the keeping of a joint
warehouse of movable property to
be sold in execution and
bankruptcy proceedings, the
development and management of
information systems required for
the work of bailiffs and bankruptcy
trustees and the organisation of
management of documents subject
to archiving. According to law, an
electronic auction environment
will be introduced by no later than
1 January 2013. The effective
management and cooperation of
the Chamber will be placed within
the competence of the following
eight bodies: occupational union,
professional union, council, board
of the occupational union, board
of the professional union,
examination board, audit
committee and court of honour.
According to the Ministry of
Justice, a person designated by the
Ministry of Justice will be
responsible for the management of
the Chamber until the election of
the council and the boards of the
occupational union and the
professional union of the
Chamber.
Bankrupt debtor
In accordance with amendments
to the Bankruptcy Act, a bankrupt
debtor may only be deemed to be
such a person with regard to
whom the court has declared
bankruptcy. In accordance with
the draft, the amendment was
necessary due to the fact that the
term commencement of
bankruptcy proceedings was
abolished and replaced by
appointment of an interim
trustee. The reason behind the
desire to relinquish the
commencement of bankruptcy
proceedings is to avoid the
labelling of a person as bankrupt
before the declaration of actual
bankruptcy. Such labelling may
bring along negative economic
consequences for the debtor,
particularly in cases where an
unjustified bankruptcy petition is
filed. Negative consequences arise
from the dismissive attitude of the
society to the bankrupt person
there is a strong likelihood that
most economic relations will break
off and there will be no other
possibilities for the person (who
was able to cope before the
bankruptcy petition) than to go
bankrupt.
Declaration of
bankruptcy
From this year on, instead of a
ruling made about commencing
bankruptcy proceedings, such
proceedings will now start with the
declaration of bankruptcy. The
commencement of bankruptcy
proceedings will be made equal to
the declaration of bankruptcy.
This amendment will also inter
alia remove the confusion in the
context of cross-border insolvency
proceedings where it was not quite
clear which judicial decision the
court of a foreign state had to
automatically recognise in the case
of insolvency proceedings in
Estonia.
However, in the light of the
new wording we could also look at
the applicable Reorganisation Act
which refers, in quite a lot of
important issues, to bankruptcy
proceedings commenced with
regard to an undertaking and
which, as of the entry into force of
the amendments to the
Bankruptcy Act, may take on a
different substantial and legal
effect at least as long as the
Reorganisation Act is amended in
turn.
SIGNE VIIMSALU
Lawyer and Head of the
Administrative Division at Estonian
Development Fund (EDF)
Up to now there
was a strong
likelihood that most
economic relations
will break off and
there will be no other
possibilities for the
person than to
go bankrupt.
28 Spring 2010
ESTONIA
Release from
debtor obligations
Following the example of the
German Insolvency Act (1999), for
the first time the provisions of the
proceedings for the release of a
debtor who is a natural person
from obligations (known also as
Chapter 11 of the Bankruptcy Act)
have taken effect in Estonia in
2004.
In other developed countries
the respective provisions for
alleviating the burden of debt of
natural persons had existed for a
long time, e.g. in Denmark since
1984, in France since 1989, in
Finland and Austria since 1993, in
Norway and Sweden since 1994,
in the Netherlands and Belgium
since 1998. After having waited for
six years, in January these
provisions entered into force with
regard to debtors who are natural
persons which, under certain
circumstances, also allow
proceedings for release from debt
in the case of abatement, i.e. if the
debtor is insolvent, but his/her
assets are insufficient to cover the
costs of the bankruptcy
proceedings and it is impossible to
recover or reclaim the assets or if
the satisfaction of the claims is
unlikely. Up to now the applicable
principle was are you rich enough
to go bankrupt? as in the event
that the abatement of bankruptcy
proceedings took place before the
declaration of bankruptcy, it was
impossible for a debtor who is a
natural person to get involved in
the proceedings for the release
from debt.
As a result of an amendment
to the Bankruptcy Act, the
principle prevalent in bankruptcy
proceedings that the proceedings
for the release from obligations can
only be conducted in the case of
such natural persons who have
assets that are at least sufficient to
conduct bankruptcy proceedings
will be relinquished. A petition for
commencement of proceedings for
the release from obligations may
be filed by the debtor who is a
natural person by filing a
bankruptcy petition or after a
bankruptcy petition filed by the
creditor or, in addition, before the
first general meeting of creditors
or during bankruptcy proceedings
when the court begins the
termination of bankruptcy
proceedings due to abatement.
Thus, it is possible for the
debtor to file a petition at almost
any time (before as well as after the
declaration of bankruptcy). A
positive side to proceedings for the
release from obligations applicable
up to now was the motivation of
people to deal with their debt and
file a bankruptcy petition early
enough. However, the procedure
applicable to date included a
shortcoming, as a person who no
longer has assets lacks the
motivation to strive for a new and
better life. The reason was that
within thirty years creditors could
take away all of the assets acquired
by the debtors. In accordance with
the explanatory memorandum to
the draft, the new act is based on
this value judgement. The
question which may arise here is: is
there not a danger that a person
who has caused his/her insolvency
intentionally will be released from
his/her obligations?
However, it is hoped that this
problem will be avoided via a filter
mechanism, i.e. both the
prerequisites of the regulation of
the proceedings for release from
obligations for conducting
proceedings and supervision will
be more stringent.
Up to now the
applicable principle
was are you rich
enough to go
bankrupt?
Spring 2010 29
LEHMAN COLLAPSE
on affiliate problem resolution
Tony Lomas reviews the range of material issues which challenged the appointed
office holders in the handling of the Lehman collapse
When a group of companies
with major financial and
operational interdependencies
collapses into a series of
interrelated but otherwise
independent insolvency
processes around the world, a
range of material issues will
arise to challenge the
appointed office holders. The
Lehman collapse did just that,
across and within a variety of
international boundaries.
Notwithstanding an automatic
presumption (or hope) that office
holders in each jurisdiction would
anyway work with each other
professionally and provide some
degree of cooperation, as each
considers appropriate, an initiative
was begun by the Lehman parent
company, LBHI, to codify the
standards and scope of
cooperation that it expected of
others. Encouragement was
provided by LBHIs advisers and
the USA Bankruptcy Court, the
latter at one stage seemingly
disappointed as to why the degree
of influence exercised by the
parent over its affiliates pre-
bankruptcy, hadnt continued post.
The answer was that control of
those affiliates had in many
instances passed from their
directors to a variety of insolvency
office holders or local supervisors,
each being subject to their own
local legislative and regulatory
framework.
With their duties to their
different stakeholders defined by
the laws in their own jurisdictions,
each office holder has to balance
the needs of affiliates with the
needs of others. Insofar as affiliates
are indebted to each other, almost
universally they need to be treated
pari-passu with creditors of the
same class. Insofar as affiliates have
operational inter-dependencies,
their resolution requires both a
clear understanding of the needs
of each side and robust
commercial negotiation, as would
be the case with any other third
party.
Lehman affiliate office-holders
have responded to LBHIs global
protocol initiative in different
ways, depending on the position
that each of them has found
themselves in. Some have signed
up, others are observers and
some have declined. Of the latter
group some have preferred to
pursue bilateral or multi-lateral
discussions as the means to resolve
issues at their affiliate interface. As
administrators of the principal UK
operating company, LBIE, and of
a number of affiliated UK entities,
we have preferred this latter route.
We have developed a constructive
and collaborative approach with
those affiliates with whom our
stakeholders have a common
interest. After 18 months in office
we are as confident now, as we
were at the outset, that this
approach best meets the needs of
LBIEs stakeholders.
A brief summary of the
context, should serve to illustrate
why.
The importance of
data, information
and explanation
Prior to its collapse, London and
New York were the key hubs for
Lehman. In common with many
similar organisations, Lehman
legal entities in jurisdictions other
than the UK and USA were
reliant upon expertise and
processing from these two hubs.
On 19 September 2008 LBHI
and certain of its USA affiliates
disposed of a substantial part of
their businesses and assets to
Barclays together with the critical
New York operations and
infrastructure. By contrast our
disposal of a major part of LBIEs
business to Nomura days later was
structured in a way in which we
retained LBIEs critical
infrastructure, assets and hundreds
of Lehman staff. Our deal defined
the manner in which LBIE and
Nomura would access and use
resources. This approach ensured
that we continued to control
people, data, systems and
knowledge to optimally run-off the
estates that we had assumed
responsibility for. This was a
material investment (we borrowed
$100 million to pay critical costs)
and was made to ensure the
position of LBIEs creditors was
best protected.
Being the primary, continuing
controller and custodian of
information, data and systems,
LBIE quickly became the target
for a multitude of affiliate
company requests. These demands
had to be subordinated to LBIEs
own needs as we faced
unprecedented immediate and
continuing demands on our
resource from LBIEs own
counterparties and creditors.
Inter-affiliate
cooperation in practice
As office-holders grappled with
their respective estates, the more
material financial and operational
interdependencies between
affiliates became apparent.
We quickly identified LBIEs
major affiliate relationships and
initially focused on the mutually
dependent relationship between
LBIE and LBHI. These early
TONY LOMAS
Chairman BRS UK
PricewaterhouseCoopers
This approach
ensured that we
continued to control
people, data,
systems and
knowledge.
30 Spring 2010
LEHMAN COLLAPSE
efforts concluded with a
multilateral operating agreement
essentially a deal between the UK
controlled entities and the USA
entities under Chapter 11. This
agreement was signed in
November 2008 and extensive
services have been provided
between the parties.
Another important LBIE
affiliate is Lehman Brothers Inc,
the New York based broker-
dealer which could not file under
Chapter 11. It was, instead, put
into a liquidation process in the
hands of an independent
Securities Investor Protection Act
(SIPA) Trustee on 19 September
2008, following the sale of its
business to Barclays. LBI is a very
significant debtor of LBIE and
holds billion of dollars of securities
for LBIE and LBIEs clients. We
recognised that the LBI claim
process is complex and had an
early bar date, so we immediately
began working on a protocol with
the LBI Trustee, governing the
way in which LBIE would submit
and then progress its various
claims. The first stage of our
bilateral agreement with LBI was
signed in January 2009 and
cooperation has continued
thereafter.
Lehmans Asian businesses
were based in Japan and Hong
Kong. Extensive dialogue took
place through 2009 with the
entities in these jurisdictions,
resulting in the successful exchange
of assets with Lehman Brothers
Japan during 2009. This marked
the first, substantial recoveries
between Lehman affiliates
anywhere in the world. Also,
during 2009 we entered into an
arrangement with the Hong Kong
entities, which governs the manner
in which securities held for each
other are managed for optimal
value.
As we had initially anticipated,
our focussed, bilateral approach to
affiliate problem resolution has
reaped material benefits for LBIEs
creditors, and will continue to do
so. Our approach has also
benefited the relevant affiliates
which have worked with us on this
bilateral basis. We have retained
the right to manage LBIEs
affiliates expectations and to
resolve affiliate issues, as we judge
appropriate, always in the interest
of our estates creditors. We have
not been fettered in any way, by
the aspirational and perhaps moral
obligation of cooperation that is
created by LBHIs global protocol.
Indeed, at a point in time at which
LBHIs bankruptcy judge called
upon the LBIE administrators to
account for themselves in his
Court, for their rejection of
LBHIs global protocol, we
approached our own judge for
directions on the matter and
Justice Blackburne duly approved
of our strategy.
Scope of LBHIs
global protocol
When presented with the global
protocol, we considered that some
of its components would be
extremely challenging to
implement in practice. For
example, provisions governing
communications between Courts
and between creditors committees
could be cumbersome, onerous
and intrusive and likely to heighten
the risk of misunderstanding and
misinformation. Undertakings to
maximise aggregate asset
realisations could conceivably
compromise the interests of an
individual estate, and the search
for a coordinated exit, whilst
admirable, could create
expectations of inappropriate
compromises. Furthermore,
information and data sharing
aspirations promised to impose a
particular burden on LBIE. By
virtue of LBIEs central position as
a hub in the former Lehman
organisational structure, these
protocol provisions brought with
them the prospect of material
demands (and costs) being placed
on the LBIE administration, which
would be difficult to accommodate
in light of the scale of the issues to
be addressed. Indeed some of the
protocol aspirations seemed more
fitting to a case of substantive
consolidation than to the
coordinated wind-down of a group
of companies for the benefit of
their respective stakeholders.
Estate progress to date
Eighteen months into the case we
have realised more than $10bn
(net of costs) for the benefit of
unsecured creditors and have a
host of initiatives underway to
recover more. Over $14bn of
assets have been restored to their
rightful owners and a Claim
Resolution Agreement has been
designed, negotiated and
implemented with the community
of clients who have assets held by
LBIE and should enable up to
another $11bn of assets to be
returned. We have gained control
of $billions of securities from
various depots around the world
and have commenced processes to
determine legal ownership. Where
affiliates are involved we have
adopted a constructive approach
by using a number of directions
applications to the UK Court and
invited the affiliates to be
respondents to ensure that the
correct ownership to such assets
can be determined.
We have filed multi-$bn claims
in a number of affiliate estates and
have constructive dialogue on
multiple affiliate fronts, aimed at
reconciling accounts and proving
claims. Material information and
cooperation has been provided to
many of LBIEs affiliates, but
always on the basis of sound
commercial principles rather than
a sense of moral obligation.
Inevitably the scale of this case
means many complex issues
remain to be resolved between the
various affiliates. Our issues-
focused, proactive approach to the
resolution of these matters, and
our active and professional
dialogue with fellow office-holders
around the world will ensure that
resolution of disputes on this
landmark case is conducted in a
manner befitting our respective
firms and our profession.
We have gained
control of $billions
of securities from
various depots
around the world.
Spring 2010 31
SERBIA
Serbia moves forward
Jelena Marjanovic brings news of changes to Serbian bankruptcy law
which aim to make the process more efficient in terms of cost and time
The establishment of a
modern insolvency system in
Serbia started in 2005. Since
then, Serbia got a new modern
law
1
and subsidiary
legislation; important state
institutions were founded (the
Bankruptcy Supervision
Agency, charged with
licensing and supervising
bankruptcy administrators,
and the Privatization Agency
Bankruptcy Unit, as
bankruptcy administrator in
social and state owned
companies); and the
development of the
bankruptcy administrators
profession has started.
From the beginning of that
difficult task, Serbia fortunately
had and still has the very
significant help and support of
Serbian government authorities
and experienced professionals
from USAID (BES project),
EBRD, World Bank, and GTZ.
Some of the outcomes have
been:
wider rights for creditors,
including constitution of
creditors bodies;
licensed bankruptcy
administrators that werent
solely under the supervision of
judges (both Agencies are under
the jurisdiction of the Ministry
of Economy and Regional
Development);
shortened length and more
transparency of insolvency
procedure; and
reorganisation was introduced
as institute.
After few years of application, it
was noticed that law had not been
fully applicable on the quite fragile
Serbian economy and not fully
consistent with other relevant laws.
From the start in 2005, there have
been only a small number of
insolvency cases, which havent
provided the needed practice for
380 licensed bankruptcy
administrators.
Redefined and improved
At the end of 2009, two important
insolvency laws were adopted the
Law on Bankruptcy and the Law
Amending the Law on Bankruptcy
Supervision Agency
2
. After more
than a year of cooperation
between the Ministry of Economy
and Regional Development,
judges, insolvency professionals,
Privatization Agency, Bankruptcy
Supervision Agency and
bankruptcy administrators, and
many public presentations and
discussions, Serbian insolvency law
was redefined and improved.
One of the legislators
intensions for the adoption of a
new law was to provide, during the
financial crisis, a simpler and a
faster mechanism for financial
recovery of companies whenever
possible and where there is more
to speed up the process of
returning the re-use of funds and
property. Despite the improved
public opinion, bankruptcy is still
considered as bugaboo. The
intention was to make bankruptcy
more suitable and used for timely
response to financial difficulties in
business.
Practice has proved that there
were a relatively small number of
bankruptcies opened in Serbia,
given the level of liquidity in the
economy. According to National
Banks data from April 2009, there
were around 6,500 insolvent
companies for more than three
years, and only around 1,500
started bankruptcies since 2005.
Reduction of costs
The new law prescribes that the
petitioner is obliged to pay an
advance to cover the costs of
advertisements and of notifying
the creditors, the cost of engaging
a bankruptcy administrator, as well
as the funds necessary to secure the
assets, in the amount set by the
bankruptcy judge. The advance is
considered an expense of the
bankruptcy proceeding and it has
the priority settlement from the
bankruptcy estate. The reason why
this is defined in detail is the need
for advanced costs reduction. The
previous high and uneven costs are
probably one of the reasons why
there were only 270 new cases in
2009 (similar situation in previous
years).
Special procedures
The new law has a chapter which
deals with special procedure in
case of long-term insolvency. An
organisation conducting the
enforced collection is obliged to
notify all courts, once every
month, with the overall status of
all legal entities
3
in their
jurisdiction that have suspended all
their payments for a consecutive
period of at least one year
4
. The
notification will be published in a
high-circulation daily newspaper
distributed to the entire territory
of the Republic of Serbia and on
the website of this organisation.
Upon the receipt of the
notification, the bankruptcy judge
issues, ex officio, a decision to open
the preliminary bankruptcy
proceeding. If none of the
creditors pay the set advance for
opening bankruptcy within, the
bankruptcy judge will render a
decision which will, at the same
time, open the bankruptcy
JELENA MARJANOVIC
Director of Supervision and
Bankruptcy Profession
Development Department
The intention was
to make bankruptcy
more suitable and
used for timely
response to financial
difficulties in
business.
32 Spring 2010
SERBIA
proceeding against the debtor,
establish that long-term insolvency
as a reason for bankruptcy exists,
establish that there is no legal
interest of creditors and the
bankruptcy debtor in conducting
the bankruptcy proceeding and
close the proceeding. This decision
is delivered to the appropriate
body keeping the register of
business entities and presents the
basis for striking off the register.
The ownership rights over the
property of the bankruptcy debtor
are transferred to the Republic of
Serbia.
In order to remove the
previous passivity of creditors, the
new legal solutions will continue to
encourage the creditors to initiate
the opening of bankruptcy
proceedings for debtors who
suspended all their payments in a
short period. Although the
previous law allows them to initiate
bankruptcy against the debtor,
after a month of payment
suspension, creditors rarely used
that possibility.
Efficient reorganisation
In order to create a more direct
incentive for the debtor to signal
that there are problems in business
and to try to negotiate with the
majority of creditors on how to
overcome them, the new law
introduces an institute of a pre-
packaged reorganisation plan.
Opening the procedure with a pre-
packaged plan is a shorter process,
which ends the adoption or
rejection of the plan within at least
30 and up to 60 days. This special
procedure is considerably cheaper
the costs are minimal and
primarily intended to ensure the
protection for creditors. The law
introduces a number of provisions
which aim is to determine and
confirm the data from the plan
and to provide adequate security
to all the creditors.
The new Law brings many
provisions that will make the
process of reorganisation more
efficient which will serve as a basis
for redefining the quality of
debtor-creditor relations, with the
simultaneous survival of a
bankruptcy debtor in the market
and the preservation of its
business.
Appointment of
administrator
Besides the abolition of the
bankruptcy panel, giving greater
powers to the bankruptcy judge,
the news is that the bankruptcy
administrator will be appointed by
random computer selection from
the list of active administrators
that is regularly updated by the
Bankruptcy Supervision Agency.
The new law introduces the
compulsory professional liability
insurance for the administrator a
minimum amount of 30,000,
plus additional insurance at the
expense of the bankruptcy estate.
Accelerated proceedings
One of the incentives given in the
new law is the acceleration of the
bankruptcy proceedings. The
impact of creditors whose claims
are disputed will be prevented, and
if the creditor does not initiate the
lawsuit to establish his claim, his
membership in the committee is
ceased. Silence will be treated as
consent and considered that the
creditors committee agrees with
the proposal of a bankruptcy
administrator if the creditor did
not react in due course.
New provisions of the Law
Amending the Law on Bankruptcy
Supervision Agency regulate the
issue of professional supervision of
bankruptcy administrators, among
other things, authorised persons
and bodies for conducting the
professional supervision, as well as
the imposition of measures
(reprimand, public reprimand,
monetary fine and de-licensing).
Cross-border bankruptcy
Concerning the cross border
bankruptcy, the entire chapter is
modified in terms of precise
translation of UNCITRAL Model
Law and adjusting with national
regulative techniques.
It is expected that the new
regulation should be more efficient
in terms of length of the process,
height of creditors settlement and
expenses reduction. The challenge
is in front of Serbia, or in more
appropriate words, we will
continue to develop our insolvency
system, which in the past few years
we have proved we can do well.
Footnotes
1. The Law on Bankruptcy Proceedings,
Official Gazette of the Republic of
Serbia, No. 84/ 04.
2. Published in Official Gazette of the
Republic of Serbia No 104 of 16.12.2009.
3. This shall not be applied to companies
undergoing restructuring procedure under
the regulations governing the
privatization.
4. According to transitional provisions, from
the day the Law becomes applicable (23rd
January 2010) to 31 December 2010, this
shall be applied to legal entities that have
suspended all their payments for a
consecutive period of three years, from 1
January 2011 to 31 December 2011 two
years.
Spring 2010 33
ROMANIA
34 Spring 2010
The end of 2009 meant the
beginning of economic crisis in
Romania; a phenomenon
originating in US, which rapidly
spread across the entire Europe.
After successfully functioning in
Romania between 1929 and 1938,
the Preventive Concordat Law
covered a similar period of
economic crisis, of a different
nature, of course, between 1929
1933. The new law fills a vacuum
in the Romanian legislation, after
the legal reorganisation institution
had shown its inefficiency for a
good time.
The voluntary insolvency
phenomenon in many companies
inevitably led to the prevention
phenomenon, followed by many
debates in Parliament about the
preventive concordat and ad-hoc
mandate institution that started as a
legislative initiative some four years
ago.
The effects of preventive
concordat, although not currently
verified by judicial practice, will be
known only after their enforcement
for a time, now, when the shortage
of liquidities on the market will
prompt creditors to appeal as often
as possible to this solution, hoping
that the debtors will prefer the
concordat solution to bankruptcy.
Unlike the bankruptcy
procedure that causes a series of big
inconveniences for both debtors and
creditors the debtors can continue
to lead their activity unhindered,
and the creditors, especially those
unsecured, are more interested in
other conditions enabling them to
reclaim their debts than in
bankruptcy itself.
The novelty in the field of
legislation is the extremely small role
of the law court in this procedure,
stipulated by the late provisions of
Law 85/2006 on insolvency
procedure, with respect to the
limited attributions of the syndic
judge and increase in the role,
attributions and responsibilities of a
conciliator in procedure. The law
enables the companies in economic
difficulty to avoid insolvency
through a contract with debtors.
The difference between
preventive concordat and ad-hoc
mandate consists in the strictly
confidential and extra-judicial
character of the latter, and in the
nine-month finalisation deadline of
the ad-hoc mandate. The
prevention mechanism generated by
this law will inevitably lead to the
reduction in the extremely high
number of bankruptcy cases.
After four years of work and
many amendments to legislation, I
wish the law, the preventive
concordat and ad-hoc mandate
contracts to be a success. They very
much depend on the professional
abilities of the conciliator who
undertakes the success to a large
extent, being the one who will
supervise and guarantee the
optimum unfolding of the
obligations undertaken, through
contract signing, by the parties in
the agreement.
MIRCEA GROSARU
Romanian Parliament
Law Commission
Romania:
The Regulators view
Mircea Grosaru of the Romanian Parliament Law Commission, initiator of the new law, gives his viewpoint
For many years, the theoreticians
and practitioners in the insolvency
area have brought to attention the
total lack of an insolvency
prevention mechanism in the
Romanian legislation. Naturally,
the debtors facing financial
difficulties can opt for the classical
means for solving litigations, such
as conciliation, mediation,
arbitration but none of them offers
an organised framework that
would be able to give a chance to
the debtor facing a remediable
financial crisis and to prevent that
it enters the insolvency state.
The legislative void has been
filled by the coming into force of
Law no. 381 / December 10, 2009
on introducing the composition
with creditors and the ad hoc
mandate.
This laws purpose is to
protect legal persons, companies
facing difficulties, in order for them
to continue their activity, to
maintain the jobs and to cover the
claims on the debtor by amicable
renegotiation procedures
concerning the claims or their
conditions or by concluding a
composition with creditors.
The ad hoc mandate is a
confidential procedure initiated
upon demand of the debtor by
which an ad hoc agent appointed
by the court of law negotiates with
the creditors in order to reach an
agreement between one or several
creditors and the debtor with the
purpose of surmounting the
difficulties faced by the company
of the latter. The confidentiality of
this procedure is mandatory for all
persons and institutions involved.
The object of the ad hoc mandate
will be to conclude an agreement,
within 90 days after the ad hoc
agent, the insolvency practitioner,
was appointed, between the debtor
and its creditors in order to surpass
the difficulties faced by the debtors
company, to recover the company,
to pay the claims to the creditors
and maintain the jobs.
The preventive
composition with creditors is
an agreement concluded between
the debtor, on one hand, and the
creditors that hold at least two
thirds of the value of claims
accepted and unchallenged, on the
other hand. By this agreement, the
debtor proposes a plan for its
company recovery and for
covering the claims these creditors
have against it, and the creditors
consent to support the debtors
efforts for surpassing the difficulties
faced by the debtors company. In
this procedure, the debtor will
lodge a petition to the court of law
for composition with creditors and
will propose a conciliator among
the insolvency practitioners. The
debtor and the conciliator will
draft the offer of preventive
composition with creditors that
will be communicated to the
creditors. The composition with
creditors offer will comprise the
composition with creditors draft
and the debtors statement on the
financial difficulty state it faces.
The draft of the composition with
creditors will comprise:
The status of the debtors assets
and liabilities;
The causes of the financial
difficulties faced;
A projection of the financial-
accounting evolution for the
next six months; and
A recovery plan which will
comprise the measures
considered by the debtor to
reorganise the activity, the
manners it takes into account
for surpassing the financial
difficulties, as well as the
percentage for paying the claims
that cannot be lower than 50%
as a consequence of
implementing the recovery
measures.
The deadline for paying the claims
set out in the preventive
composition with creditors is of a
maximum of 18 months starting
on the date of its conclusion, with
the possibility to extend this term
for six more months.
For the approval of the
preventive composition with
creditors, the acceptance vote for
two thirds of the value of claims
accepted and unchallenged is
necessary. If this majority is not
obtained, the debtor may make a
new tender after at least 30 days
have passed.
The composition with
creditors approved by the creditors
will be found by the decision of the
syndic judge. After the date when
the decision is notified, the
individual prosecutions, the
interest accrual and penalties of
signatory creditors on the debtors
are suspended.
In order for the composition
with creditors to become
mandatory also for the non-
signatory creditors, the syndic
judge may be requested to
homologate it if certain conditions
are met (the debtor is facing
financial difficulties; the value of
claims challenged and / or
litigated does not surpass 20% of
the statement of affairs; the
composition with creditors was
approved by at least 80% of the
total value of claims).
From a practical point of view,
the recent coming into force of
these legal provisions, on 13
January 2010, renders us unable to
quantify the real impact this law
has on companies facing financial
difficulties.
From a theoretical point of
view, there must be noticed, on
one hand, expanding the
attributions range of the
insolvency practitioner that
acquires the negotiator position
between the debtors interests and
those of the creditor and, on the
other hand, creating some
negotiation procedures for helping
the debtor facing difficulties that
may take place in a relaxed
environment lacking the rigors of
the court of law.
Finally, I believe that this law is
part of the modernisation process
of the insolvency domain in
Romania, the need for
implementing some insolvency
prevention measures being very
acute on a market demoralised
by the effects of the world
economic crisis.
ROMANIA
LAVINIA IANCU
SCP MIRIANA MIRCOV
RELICONS SPRL
Timisoara, Romania
Spring 2010 35
Romania: Implementing the
composition with creditors
Lavinia Iancu reports on present day efforts made for implementing the composition with creditors in Romania
US COLUMN
36 Spring 2010
COMI in the US
Our US correspondent David Conaway contrasts two
cases involving the determination of centre of main
interests (COMI) with different outcomes
T
he United States
Bankruptcy Court in
Delaware recently entered
an order that impacts international
insolvency cases. When foreign-
based debtors file for creditor
protection in their home
jurisdiction, they may also need to
protect any US assets from claims
of creditors. Chapter 15 was added
to the US Bankruptcy Code as a
vehicle for foreign debtors to file for
insolvency in their home
jurisdiction, but also have a
secondary bankruptcy proceeding
in the US. Foreign debtors often
find it necessary to invoke certain
benefits of the US Bankruptcy
Code, including for example the
automatic stay which enjoins
actions of creditors against the
debtor or its assets.
Foreign main proceeding
On 3 February 2010, the Delaware
Bankruptcy Court in Saad
Investments Finance Company (No.
5) Limited (SIFCO No. 5), entered
an order recognising SIFCOs
Cayman Island winding up
proceeding as a foreign main
proceeding. The Delaware
Bankruptcy Courts decision in
SIFCO stands in contrast to the
New York Bankruptcy Courts
prior ruling in Bear Stearns, where
the Bankruptcy Court denied a
Chapter 15 proceeding filed by two
Bear Stearns funds that were also
in winding up proceedings in the
Cayman Islands.
In the Bear Stearns cases, two
Bear Stearns hedge funds,
registered as exempt companies
under the laws of the Cayman
Islands, and with their primary
operations apparently in New York,
filed winding up proceedings in
the Cayman Islands. The winding
up proceedings were filed in the
Cayman Island since the funds
were registered in the Cayman
Islands. In response to investor
lawsuits arising from sub-prime
investments filed against the Bear
Stearns funds in the United States,
the Bear Stearns funds needed
creditor protection in the United
States. The administrators of the
Bear Stearns funds winding up
proceedings in the Cayman Islands
thus filed Chapter 15 petitions in
New York seeking recognition of
the Cayman Islands proceedings as
foreign main proceedings or in
the alternative as foreign non-
main proceedings. Without
recognition of the Cayman Islands
winding up proceeding by the
US Bankruptcy Court as the
primary insolvency proceeding, a
Chapter 15 petition will not be
granted, and the debtor cannot
invoke the debtor protections of
the US Bankruptcy Code.
In Bear Stearns, even though
no party objected to the Chapter
15 petitions, the US Bankruptcy
Court for the Southern District of
New York refused to recognise the
Cayman Islands proceedings as
either foreign main or foreign
non-main proceedings since the
Court found that the Cayman
Islands was neither the place of
Centre of Main Interests (COMI)
nor of an establishment. Rather,
the Court concluded that the Bear
Stearns funds operated in New
York. In so ruling, the Bear Stearns
court effectively ignored Chapter
15s presumption that an entitys
COMI is where it is organised.
The effect of this ruling is that to
obtain the protections of the US
Bankruptcy Code, the Bear Stearns
funds would be required to file
Chapter 11 proceedings in New
York. The Court also suggested
that involuntary proceedings might
be filed against the Bear Stearns
funds in New York.
Establishing the centre
of main interests
COMI is a key concept in Chapter
15, the UNCITRAL Model Law
and the European Union
Insolvency Regulation, all of which
presume COMI is where an entity
has its corporate registration.
COMI impacts where the main
proceeding is deemed to be
located, based on where a business
has its centre of main interests,
DAVID H. CONAWAY
Shumaker, Loop & Kendrick,
LLP (USA)
Spring 2010 37
US COLUMN
which is analogous to the principal
place of business. Thus, if COMI
exists in a foreign country, a US
Bankruptcy judge should recognise
a foreign insolvency proceeding as
the foreign main proceeding and
the US Chapter 15 proceeding as
an ancillary proceeding. If a
debtor does not have COMI in the
country where it files its insolvency
proceeding, but has an
establishment in such country, the
US Bankruptcy Court should
recognise the foreign proceeding as
a foreign non-main proceeding.
If the foreign insolvency
proceeding is recognised as a
foreign main proceeding, the
approval of the Chapter 15
proceeding will invoke the
automatic stay. If the foreign
insolvency proceeding is recognised
as a foreign non-main
proceeding, the Chapter 15
proceeding will not invoke the
automatic stay protections.
In both Bear Stearns (NY) and
SIFCO (Delaware), the debtor
funds were registered (organised) as
exempt as companies under the
laws of the Cayman Islands. Many
have suggested that the
presumption should be
determinative, absent substantial
contrary evidence that the debtors
operations, or centre of main
interest was somewhere else. In
Bear Sterns, in the absence of any
creditor objection, the New York
Bankruptcy Court virtually ignored
the presumptive location of the
Cayman Islands and examined
where the Bear Stearns funds
business operations were truly
conducted, which it found to be in
New York. The result was the
Chapter 15 proceeding was denied,
and the assets of the Bear Stearns
funds in the US were subject to
creditor claims.
It appears that in SIFCO, as in
Bear Stearns, much of the business
activity of SIFCO occurred outside
the Cayman Islands, where SIFCO
was registered as an exempt
company. Unlike the New York
Bankruptcy Court in Bear Stearns,
the Delaware Court largely ignored
this fact and focused on the
location of the business activities at
the time of the filing of the
Chapter 15 petition. At that time,
SIFCO was in the Cayman Islands
winding up proceeding, with
Cayman Islands representatives
appointed to effect the winding
up of SIFCO. The Delaware
Court also appeared to be more
willing to recognise the
presumptive COMI, SIFCOs
place of registration in the
Cayman Islands.
Based on this, the Delaware
Bankruptcy Court found that
SIFCOs COMI at the time of the
Chapter 15 filing was in fact in the
Cayman Islands. As such, the
SIFCOs Cayman Islands
winding up proceeding was
deemed to be a foreign main
proceeding giving rise to a
successful Chapter 15 filing in the
US. Once in Chapter 15, SIFCO
was able to invoke the automatic
stay to enjoin all creditor action
against SIFCO in its assets in the
US.
The Bear Stearns
court effectively
ignored Chapter
15s presumption
that an entitys
COMI is where it
is organised

JUDICIAL WING
Re The Snitch Group of Companies
and Hgsta domstolen
Heinz Vallender reports from the INSOL Europe Judicial Wing meeting in Stockholm
15 judges from 13 different
countries met on the occasion
of INSOL Europes Annual
Congress on 1 October 2009
in order to discuss elementary
questions of the judicial
cooperation in cross border
insolvency cases.
The Judicial Wing members
were welcomed by Marc Udink.
The chair of the judicial wing,
Professor Heinz Vallender, replied
proposing a vote of thanks for
INSOL Europes hospitality, duly
given by all present. The meeting
thanked their members Anna
Hrycaj (Poland), Andrea Cske
(Hungary) and Inese Belicka
(Latvia) for their work in preparing
the problem, Re The Snitch Group
of Companies which formed the
centrepiece of the mornings
discussion. This problem was
designed to accumulate a number
of difficulties that had been or
might be encountered in the
application of Council Regulation
1346/2000 on Insolvency
Proceedings (EC Regulation) in
practice. Anna Hrycaj introduced
the problem with the aid of a
diagram prepared to show the
various companies in the Snitch
Group and their coherence.
Discussion points
The meeting discussed the
different approaches adopted in
EC Regulation countries in regard
to the question whether particular
proceedings were main or
secondary/territorial proceedings.
The following points emerged:
several countries remain possessive
as to their jurisdiction, and a
stricter and uniform approach to
determining the COMI of an
insolvent was required for the
proper operation of the EC
Regulation. The Orders made in
several EC Regulation countries
do not state whether proceedings
have been opened as main or
If the terms of the Order, or any
judgment accompanying the
Order, did not make it plain
whether the court making the
Order considered it was opening
main or secondary proceedings it
would not be right to presume that
the proceedings were main
proceedings.
The meeting strongly
approved the suggestion that every
Order opening insolvency
proceedings should state in terms
whether the proceedings being
opened were main or
There was a discussion about
the difficulties some judges had
with becoming involved in Co-Co
protocols (particularly in
Germany) because of the fact that
any individual judge might be held
liable in damages for an
inappropriate decision. Judges
from jurisdictions where judges
have immunity from suit were
aghast at the prospect of judicial
liability, even though it appears
that in Austria at least the
difficulties inherent in any suit
against a judge were such that
insurance cover could be obtained
at very modest premiums.
One agreed that it was not
necessary to find a foreign element
in a case before involving the
jurisdictional provisions of Art 3
EC Regulation, and noted that a
court might well not be aware of
all the relevant facts surrounding
an insolvent when opening
proceedings. Accordingly, if it was
plain that an insolvents COMI
was or was not in the courts
jurisdiction the effect of Art 3 EC
Regulation should be noted on the
Order opening proceedings. It was
agreed that it was simply not open
to a court to refuse recognition of
a foreign courts decision under the
EC Regulation on the grounds of
public policy because of the
concern that the nature of the
proceedings in the foreign court
was incompatible with the
provisions of Art 1(1) EC
Regulation. Whatever views
individual judges took about the
French sauvegarde proceedings,
which was introduced by Judge
Yves Merlat from France, or the
English Voluntary Arrangement
proceedings (whether CVA or IVA)
the fact remained that these
proceedings appeared in Annex A
to the EC Regulation and were
therefore insolvency proceedings
for the purposes of Article 1(1) by
definition. Decisions of some
courts to the contrary were plainly
wrong.
The meeting discussed the
difference between territorial and
secondary proceedings, and the
effect of the provisions of the EC
Regulation that once main
proceedings have been opened
against a debtor in one Member
State proceedings against the same
debtor in another Member State
had to be secondary proceedings.
There was a lengthy discussion as
to the difficulties judges could have
in ascertaining whether
proceedings against a particular
debtor had been opened in other
jurisdictions. The absence of a
European Insolvency Register was
regretted. Consideration was given
to making representations that
insolvency decisions might appear
on Network or e-justice, but until a
comprehensive register was
developed it was necessary for
individual judges to learn where to
PROF DR HEINZ VALLENDER
Practising Insolvency Judge
and chair of INSOL Europes
Judicial Wing
Decisions of some
courts to the contrary
were plainly wrong.
38 Spring 2010
JUDICIAL WING
find national registers to search for
proceedings that might have been
opened against particular debtors.
It was suggested that individual
judges might helpfully provide
such information for dissemination
on the INSOL Europe website.
Appointment of
liquidators
The responsibility for the
appointment of liquidators placed
on judges in most countries of the
EU (England and Ireland were the
exceptions) was discussed. There
can be advantages in judges having
this responsibility, as made clear by
contributions from several judges.
In those countries where the
creditors have the right to change
the judicially-appointed liquidator
it was noted that this power was
rarely, if ever, used. It was noted
that the English system of leaving
the appointment of the liquidator
to the creditors only worked
because of the existence of the
Official Receivers department (a
section of the Department of
Trade). This enabled the
automatic appointment of the
Official Receiver to take control of
the assets immediately on the
making of an insolvency order in
every case, with the creditors
appointment of a liquidator taking
place some months into the
proceedings.
The meeting appreciated that
some judges were constrained by
their national law from speaking to
third parties about cases before
them, and foreign judges would be
third parties for this purpose.
Liquidators are not similarly
constrained however. Indeed
Article 31 EC Regulation imposes
a specific duty on liquidators in
main and secondary proceedings
to cooperate and communicate.
EB suggested that judges who felt
unable to communicate with their
judicial brethren in other Member
States might usefully make
representations to the appropriate
judicial or ministerial body in their
countries to abrogate the rule as to
non-communication in the case of
the insolvency of a debtor where
cross-border issues arose. It might
only be the occasional case where
communication was advantageous
before the appointment of a
liquidator, but the obvious reasons
behind a non-communication
with third parties rule do not arise
with inter-judicial communication
around the time of the opening of
insolvency proceedings.
Swedish Supreme Court
The meeting closed with the
attendees joining representatives
from the Academic Forum for
lunch before meeting two Swedish
Supreme Court judges for a tour
of the Swedish Supreme Court
and a talk about their work, in
particular in the field of insolvency.
This tour was one of the
highlights of the Judicial Wing
meeting in Stockholm. The
Supreme Court of Sweden
(Swedish: Hgsta domstolen) is the
supreme court and the third and
final instance in all civil and
criminal cases in Sweden. Before a
case can be decided by the
Supreme Court, leave to appeal
must be obtained, and with few
exceptions, leave to appeal can be
granted only when the case is of
interest as a precedent. The
Supreme Court consists of 16
Councillors of Justice or justitierd
which are appointed by the
government, but the court as an
institution is independent of the
Riksdag, and the government is
not able to interfere with the
decisions of the court. The court
has been situated since 1949 in
Bonde Palace. It is, arguably, the
most prominent monument of the
era of the Swedish Empire (1611-
1718), originally designed by
Nicodemus Tessin the Elder and
Jean De la Valle in 1662-1667 as
the private residence of the Lord
High Treasurer Gustaf Bonde
(1620-1667).
The year ahead
The preparations for the Judicial
Wing during the 2010 Annual
Congress in Vienna are already in
full swing. One topic will be
measures of protection in the
opening procedure of insolvency.
A visit to the High Court of
Austria is also planned stay
tuned for further information.
Spring 2010 39
The Supreme
Court of Sweden
is, arguably, the
most prominent
monument of
the era of the
Swedish Empire

SPAIN
Enforcement of bank
guarantees in Spain
Marina Bugallal and Mariano Jimnez discuss what happens when a debtor or guaranteed party goes insolvent
What happens if the
beneficiary of a bank
guarantee or other surety
decides to enforce it in respect
of a payment default by a
debtor who has been declared
insolvent? This is a crucial
question not only for the
beneficiary of the guarantee
but also the guarantor itself
in many cases a financial
institution. Both parties
should be aware of the
consequences if the debtor
is declared to be insolvent.
In the interests of the utmost
clarity the guarantor will be called
herein the guaranteeing party.
The debtor involved in the
insolvency proceedings, for its part,
will be called the debtor, while
the surety beneficiary will be called
the the secured creditor.
1. The general rule
of article 87.6 of the
Spanish Insolvency
Proceedings Act (Ley
Concursal, LC)
This article lays it down that the
claims for which the creditor has the
benefit of a third-party surety will
be recognised at their face value
with no limitation whatsoever and
regardless of any change in the
credit holder in the event of
payment by the guarantor.
This means that, after
declaration of the insolvency, the
guaranteeing party will remain the
bound party vis--vis the secured
creditor, benefited by the
remaining term until the
obligation falls due. Should this
term run its course during the
insolvency proceedings and the
secured creditor enforces the
guarantee, the guaranteeing party,
will then, by virtue of the
payment, become the holder of
the claim against the debtor, being
entitled to take over the original
creditors payment demand right.
Royal Decree Law (Real
Decreto-ley) 2/2009 of 27 March
has added the following rider to
article 87.6: Whenever the
payment-driven subrogation
should occur, these claims will then
be classified in such a way as may
be least onerous for the insolvency
proceedings, between those
corresponding to the creditor or
guarantor.
2. The case of only
partial payment by the
guaranteeing party after
enforcement of the
guarantee
Article 87.7 of the LC states as
follows: at the behest of the creditor
that has received payment of part of
its claim from a guaranteeing party,
guarantor or joint and several
debtor of the insolvency proceedings,
the list of creditors may include not
only the rest of the unpaid claim but
also the total sum corresponding to
whoever made the partial payment,
by reimbursement or the part
corresponding to a joint and several
debtor
This law enshrines the general
principle that the right of the
secured creditor to be compensated
for the unpaid part of the claim
overrides the right of the
guaranteeing party that has made a
partial payment vis--vis the same
debtor.
Pursuant to this provision
(article 87.7 of the LC), the
original creditor may be able to
recover the rest of its unpaid claim
against payment of the claim as
corresponding to the guaranteeing
party. Bearing out this idea, article
160 of the LC, in the section
dealing with payment to creditors,
lays down that any creditor who,
before declaration of the
insolvency proceedings, has
received part payment of the claim
from a guarantor or guaranteeing
party or from a joint and several
debtor will be entitled in the
insolvency proceedings to receive
the payments corresponding to the
former until such time as they add
up to the total sum of the latter.
3. Relationship of
the arrangement with
creditors and the
secured creditor
There is doubt as to whether, in
the event of the approval of an
arrangement with creditors
involving corresponding debt
reductions and postponements, the
guaranteeing party would be able
to pay the secured creditor by
applying the debt reductions and
postponements authorised by the
arrangement.
The LC rules as follows on this
point: creditors that have not
voted in favour of the
arrangement will not be bound
thereby in terms of the full
subsistence of their rights vis--vis
those joint and severally bound
with the insolvent party and vis--
vis its guarantors or guaranteeing
parties, who will not be entitled to
invoke the approval or effects of
the arrangement to the detriment
of the former (article 135.1).
This is without detriment to
whether the guarantee in question
constitutes a first-demand bank
guarantee. In such a case, it is our
opinion that the guaranteeing
party could never invoke against
the secured creditor the debt
MARINA BUGALLAL
Mariscal & Asociados (Madrid)
40 Spring 2010
MARIANO JIMNEZ
Mariscal & Asociados (Madrid)
SPAIN
reductions and/or postponements
of the arrangement with creditors,
not even if the creditor had voted
in favour of the arrangement.
Along these lines the LC lays it
down that the liability of those
joint and severally bound,
guarantors or guaranteeing parties
of the creditors that have voted in
favour of the arrangement will be
governed by the rules applicable to
the obligation they may have taken
on or by such arrangements as
may have been made thereon
(article 135.2).
4. Guarantee in
favour of the creditor
connected to the debtor
Special mention must be made of
the situation where the creditor with
guarantee is considered to be a
person especially related with the
insolvent party. Pursuant to article
93.2 of the LC, when the secured
debtor is a company, the following
persons will be deemed to be
connected:
Shareholders that, pursuant to the
law, are personally liable without
limit for company debts and those
others that, at the moment when
the credit right arises, are holders
of at least 5% of the share capital,
if the company declared to be
insolvent has securities trading on
an official secondary market, or
10% otherwise.
The directors, the liquidators and
generally empowered agents of
the company plus those who may
have been any of the above
within the two year period
running up to the declaration of
the insolvency proceedings.
The companies forming part of
the same group as the company
declared to be insolvent and the
shareholders thereof, provided
these meet the same
circumstances as under
paragraph 1 hereof.
Along these lines article 97.2 of the
LC runs as follows:
If the creditor classified in the list of
creditors as connected with the debtor
does not challenge this classification
in due time and form, the insolvency-
proceedings judge, as soon as the
deadline for doing so has passed, and
without any other requisite, will make
an order declaring any guarantees
of any sort furnished in favour of
the formers claims to be
extinguished, ordering, as the case
may be, the possessory restitution and
cancellation of the entries in the
corresponding registries.
The practical importance of
this provision is clear: does it mean
that if I have security from a
company of which I am a
shareholder (or of its group of
companies) and this is declared
insolvent, I will forfeit my guarantee?
Will I forfeit it too if I am the CEO
(general empowered agent) of a
company that owes me several sums
secured by a bank guarantee?
A strict reading of article 97.2
would disfavour the creditor with
guarantee connected to the debtor,
since it would mean that in every
case the insolvency-proceedings
judge without any other requisite
will dictate an order declaring the
guarantee granted in its favour to be
extinguished. Some writers have
criticised the mercantile judges
tendency to such strict
interpretations and claim that,
pursuant to article 97.2, the judge
should weigh up the circumstances
of the case before adopting the
drastic measure of extinguishing the
guarantee.
Unfortunately, the current
wording of article 97.2 is not
conducive to this discretionary
interpretation by the judge, so there
is a high risk of the judge simply
extinguishing the guarantee in
question without a second thought.
The judge should
weigh up the
circumstances of the
case before adopting
the drastic measure
of extinguishing the
guarantee.
Spring 2010 41
AUSTRALIA
Legislating against shareholders
rights in insolvency
Michael J P Ryan, Taylor Woodings reports from Australia on the competing interests
of shareholders vs. creditors
The proposed reform
In January 2010, the Australian
Government announced that it
would seek to pass legislation to
ensure shareholders claims against
a company in insolvency
proceedings would rank behind
creditors claims. This proposed
reform has been made necessary
as a result of an Australian High
Court decision, Sons of Gwalia
1
,
which went against the widely held
understanding that creditors rank
ahead of shareholders in an
insolvency proceeding of a
company.
This landmark case
considered the rights of
shareholders in an insolvent
company, whom acquired shares
on the basis of misleading or
deceptive information.
The Sons of Gwalia case was
brought by shareholders who
claimed they were misled when
they purchased shares in former
mining company, Sons of Gwalia,
on the basis of company
information. In a 6-1 High court
decision, the Court found that
shareholders who were misled into
buying shares in a company should
rank alongside unsecured creditors
in the distribution of any
liquidated assets.
Are the reforms yet
another reduction in
shareholder rights?
The Corporations and Markets
Advisory Committee (CAMAC)
and the Australian Securities and
Investments Commission (ASIC)
identified challenges stemming
from the decision, but both agreed
the decision was fair and should
not be overturned with specific
legislation; their argument broadly
being that shareholders should
have some redress in the event they
make investment decisions based
on misleading information.
Directors have always been, and
remain, personally liable for
providing misleading information
to the market, but this has left
shareholders out of pocket if the
directors, as is often the case, are
without means of satisfying a
judgment. The Sons of Gwalia
decision has provided shareholders
with an opportunity to regain losses
equal to the difference between the
purchase price actually paid and
the fair value of the stock.
However, the practical
application of the decision has
blurred the line of the genuinely
misled investor and those simply
looking to recoup losses. Investors
stung by losses incurred during the
GFC could use Sons of Gwalia as a
mechanism to claw back some of
their investment write-offs. A
strategy, in many cases facilitated,
and actively encouraged, by
circling litigation funders. Similarly,
companies have been forced to deal
with potential lenders and
unsecured trade creditors who are
wary of the misled shareholder X
factor.
The Government has stated
that it intends to amend the law so
that it substantially corresponds to
how it was considered to be prior
to the High Courts decision i.e.
to reverse Sons of Gwalia.
In addition the Government
has specifically said it will amend
the law so that:
the right of subordinated
shareholder claimants to vote as
creditors in insolvency
proceedings will be removed,
unless the Court permits
otherwise;
any requirement for an
administrator or liquidator to
provide reports to creditors to
such claimants will be removed,
except where a claimant makes a
specific request for a copy of a
particular report; and
the rule in the case of
Houldsworth v City of Glasgow
Bank
2
will be abrogated.
The decision in Houldsworth states
that a person who has purchased
and retains shares in a company
cannot seek damages against the
company on the grounds that they
were induced to subscribe for those
shares by fraud or
misrepresentation. Once a
company is in administration the
law prohibits the sale of shares in a
company without permission of
the administrator or the Court.
The Governments concern is
that Sons of Gwalia severely
hampers a companys ability to
raise funds on acceptable terms at
a fair price. The reforms will make
Australian debt markets more
attractive to foreign investors as the
clarification of shareholder rights
in an insolvency situation will
encourage debt investment in
Australia from overseas debt
providers who may have been
otherwise reluctant to invest in
Australia.
It is therefore not difficult to
understand the case for the
Australian Government legislating
to mitigate against these effects.
The fallout from the GFC has
provided the necessary catalyst to
move political opinion sufficiently
that the imperative of facilitating
debt investment (in an environment
of increased costs and lower
availability of company finance),
now outweighs the imperative of
protecting aggrieved shareholders.
MICHAEL J P RYAN
Taylor Woodings, Australia
The practical
application of the
decision blurred the
line of the genuinely
misled investor
42 Spring 2010
AUSTRALIA
What does this review
mean for directors,
shareholders and
financiers of Australian
companies?
For directors: the reforms mean
that refinancing options aimed at
restructuring viable businesses
become less expensive and more
readily available as certainty in
creditors rights is restored. The
reversal of Sons of Gwalia may
however expose directors to being
personally sued by shareholders in
the event of corporate collapse.
For shareholders: their position
returns to the pre-Sons of Gwalia
decision status except for the
abrogation of the rule in
Houldsworth v Glasgow Bank,
whereby they need to be vigilant in
making decisions, knowing the risk
they accept when investing in listed
companies and the lack of voting
power they will have in any
insolvency.
The governments proposal to
abrogate the rule in Houldsworth v
City of Glasgow Bank improves the
landscape for shareholders. This
rule from a House of Lords
decision which has stood the test of
time for over 120 years makes it
difficult for shareholders to claim
for damages in an insolvency of the
company.
The position for shareholders
investing in Australian companies
will be that if successful in proving
for damages, their claims will be
subordinated to other creditor
claims due to the effect of S563A
of the Corporations Act, a section
which the High Court said did not
apply in the Sons of Gwalia case.
For financiers: the reforms
reduce much of the uncertainty
about their rights when providing
finance for a restructure and re-
establish the power of their vote in
decision making in insolvency
situations.
But key questions remain
Several questions still remain and
the misled shareholder is still not
without significant avenues of
redress.
The reforms may allow
companies to more easily raise
funds at a better price for a
restructure, providing greater
flexibility in avoiding insolvency.
But could these reforms actually
increase the appetite of credit
providers to force insolvency
proceedings now there is a
smaller group of creditors,
sharing the pool of funds?
The reforms do nothing to
diminish a shareholders ability
to bring an action under
alternative legislation. Could the
reforms force shareholders to sue
directors personally rather than
pursue the companies?
The Sons of Gwalia decision
only dealt with shareholders who
have been misled by a company.
Could other shareholders
actually benefit from the greater
financial flexibility the reforms
intend?
What criteria will the Court
apply in deciding whether to
allow subordinated shareholder
claimants to vote at creditors
meetings? It may be that the
Court will consider that these
shareholders have just as much
right to vote as other creditors.
If this is the case then the
anticipated benefits hoped to be
achieved from the proposed
amendments, may be less than
hoped.
As shareholder activism, quite
appropriately, grows and becomes
more articulate globally, the Sons of
Gwalia decision and subsequent
reform, demonstrates the difficult
juggling act governments face
when considering the competing
interests of shareholders vs.
creditors.
On the one hand it seems
perfectly reasonable for a person
who has suffered loss to be able to
make a claim for damages for that
loss but on the other hand
shareholders hold a uniquely
different position from creditors in
that they have unlimited upside
associated with any monies
invested.
Footnotes
1. Sons of Gwalia Ltd v Margaretic (2007)
232 ALR 232; 60 ACSR 292; 81 ALJR
525; 25 ACLC 1; [2007] HCA 1.
2. Houldsworth v City of Glasgow Bank
(1880) LR 5 App Cas 317).
Spring 2010 43
The Sons of Gwalia
decision and
subsequent reform,
demonstrates the
difficult juggling act
governments face

FINANCIAL CRISIS
44 Spring 2010
Government Response
to the Financial Crisis
Hungary
Hungary is a small country with a
very open economy, so every
breeze from the world market, or
small problem on the big stock
exchanges shakes the Hungarian
economy more or less. This big
crisis has caused a smaller
earthquake, but the Government
has made contracts with the
European Union, the Worldbank
and the International Monetary
Fund to protect the Hungarian
financial system and national
currency (HUF), and nowadays in
the analyses of the big
international firms we can read
that Hungary is in a better
position, because we have made
restrictions all over the society and
all over the country.
The financial crisis was named
as a reason for the banks not
offering new credits to companies
and they did not prolong their old
ones. There were weeks when
entrepreneurs did not get their
usual money to pay wages or their
partners; meanwhile they were
accustomed to the system that they
get credit from the bank for a week
or two and they pay it back within
a month. The system worked for
ages, but recently there were
problems with it.
Unfortunately, in this serious
situation the government did not
have enough time to deal with the
insolvency system of Hungary. It is
true that the old Hungarian
Insolvency Act has been amended
again on 1 September 2009, but
the rules do not give a real
possibility to the debtors to escape
from closing their activity. Not only
is the text of the Act not
understandable and not
unambiguous, but also the rules do
not contain an economic
approach.
The Hungarian Insolvency
Act deals with only entrepreneurs
and companies, but a consumer
insolvency system does not exist in
Hungary (this can be a big
problem in the future).
According to the Hungarian
law there are two types of
insolvency proceedings: one for
reorganisation (csdeljrs) and
one for liquidation (felszmolsi
eljrs).
The last amendment totally
changes the rules of csdeljrs,
and while the text contains some
good rules, the imagination of the
proceeding from an economic
point of view is missing. To create
a new act it is not enough to
concentrate on the judicial process,
but the legislator should consider
the interests of the stakeholders,
because if they are not interested
in a reorganisation process, the
debtor can not do it alone.
For example, the rules do not
deal with the activity of the debtor
during the judicial proceeding.
Nobody knows how the debtor
should continue its activity,
because there are no rules about
the fresh money needed during the
proceeding and about the situation
of the new creditors who are not
paid. (After the unsuccessful
reorganisation proceeding the
liquidation starts immediately, the
judge changes the process from
one into the other.)
Without fresh money a
companys fate is dark, because
generally its creditors are as poor
as the company is and they cannot
give to the debtor other loans.
Only the banks have money,
but from a point of view of a
bank who is so brave (or so
foolish) to give money to an
insolvent (or almost insolvent)
company without demanding
security? Meanwhile the company
has no assets to offer for security
if the company had, it would not
be under insolvency proceeding.
The legislator should have
given to the new creditors
somehow a privileged place in the
liquidation creditors rank, or
other advantages, because without
this possibility the banks can not
act.
They can not act also because
the Hungarian daughter-banks
generally do not have a power to
decide about a bigger loan to a
risky debtor and by the time the
decision arrives from abroad it is
probably too late.
We can state that nowadays
the Hungarian Government does
not consider the Insolvency law as
a tool which can help in the fight
against the crisis. Probably the
success of other countries would
be a good example.
France
The CIRI
The interministerial Committee of
industrial restructuring (CIRI) is a
French governmental body which
gathers 14 administrations of the
State. The CIRI is chaired by
Minister of the Economy, Industry
and Employment. It was created in
the 80s to face the numerous
industrial restructurings led by two
big oil crises of the previous
decade. It is even today a structure
JUDGE ANDREA CSKE
CATHERINE OTTAWAY
Partner at HOCHE
Socit dAvocats, Paris
FINANCIAL CRISIS
of support and governmental
intervention to the advantage of
the firms of more than 400
employees.
The CIRI leads an action of
mediation between the company
and all economic partners, with
the aim of its financial
restructuring, and an action of
coordination of the public actors.
This support can take in particular
the shape of the help for the
negotiation and the elaboration of
a financial draft agreement or of
an audit. Besides, the CIRI can
grant public financing by granting
loans and/or recommending to
the public creditors the
implementation of plans of
discharge of public passive.
The analysis of CIRI permits
to all the public actors to be
coordinated in front of a company
in difficulties. The CIRI followed
in 2008 the evolution of 50
companies, representing more
than 80,000 jobs in France.
Mdiateur du crdit
aux enterprises
Such mediation is opened to any
director of a commercial company,
any liberal activity, and craftsmen,
merchants who encounter
difficulties with their bank or credit
insurance or financial institutions
to solve financial issues or cash
flow problems. On a national level,
this mission has been given to
Grard Ramiex, who is placed
under the authority of the
Minister of the Economy, Industry
and Employment.
On a regional level, such
device is part of a plan initiated by
each administrative department in
France ruled by the Prfet (chief
civil servant representing the State)
together with tax administration,
social security actors,
representative of the Bank of
France and of the commercial
chambers of commerce. Such
people represent more than 800
third parties involved in the
treatment of such mediation.
This mission is exercised since
October 2008 with the greatest
confidentiality in order to avoid
that any company should be let
alone with its cash difficulties and
to see that banks will respect their
undertakings within the
government plan to sustain the
French economy since the crisis of
summer 2007.
Each company eligible to
such mediation may request an
intervention of the Mdiateur du
Crdit through a website and the
file begins to be treated within 48
hours. In September 2009, 16,270
companies filed a request to the
Mdiateur du crdit and 11,114
cases have already been studied
(more than 90%) and finalised
with a 64% success rate. Amounts
involved are between 50,000-
500,000.
To date, 7,162 companies
have been reinforced in their
activities, credit for 1.47 billion
were released and 148,272 jobs
were preserved.
Spring 2010 45
How has the
Government reacted
to the current
financial situation in
your jurisdiction?
We welcome further
contributions and will
publish further
updates in future
editions.
euro enix
f
Subscribe today for only 75 or 50 for 4 issues
To subscribe, simply complete the enclosed form or contact:
Caroline Taylor, INSOL Europe, PO Box 7149, Clifton, Nottingham, NG11 6WD, United Kingdom
Tel/Fax: +44 (0) 115 878 0584 Email: CarolineTaylor@insol-europe.org
46 Spring 2010
euro enix f
DIARY & CONTACTS
INSOL Europe contacts
INSOL Europe, PO Box 7149,
Clifton, Nottingham NG11 6WD
Enquiries: Caroline Taylor
(carolinetaylor@insol-europe.org)
Tel/Fax: +44 (0) 115 878 0584
Website: www.insol-europe.org
Eurofenix Franais
Enquiries: Florica Sincu
(floricasincu@insol-europe.org)
The executive
Secretary General Marc Udink
(mcudink@insol-europe.org)
President Patricia Godfrey
(p.godfrey@nabarro.com)
Deputy President Chris Laughton
(chrislaughton@mercerhole.co.uk)
Vice President Jim Luby
(lubyj@mcstayluby.ie)
Treasurer David Buchler
(david@dbuchler.com)
Director of Administration
Caroline Taylor
(carolinetaylor@insol-europe.org)
INSOL Europe committee chairs
Membership recruitment & approval
Patricia Godfrey
Congress Technical Vienna 2010
Samantha Bewick
(Samantha.bewick@kpmg.co.uk)
Paul Oberhammer
(paul.oberhammer@rwi.uzh.ch)
Website director Chris Laughton
Sponsorship David Rubin
(david@drpartners.com)
Ottmar Hermann
(hermann@hermann-law.com)
INSOL International
Michael Thierhoff
(michael.thierhoff@thierhoffilly.com)
Constitution Jane Marshall
(jane.marshall@mccann-fitzgerald.ie)
Eastern European Countries
Committee (EECC) Marc Andr
(mandrelaw@aol.com)
Dr Carlos Mack
(cmack@whitecase.com)
EU regulation monitor Patricia Godfrey
EU political monitor Marc Udink
Neil Cooper (NCooper@ZolfoCooper.eu)
Case register Chris Laughton
Academic ForumProf Bob Wessels
(bwessels@bobwessels.nl)
Dr. Paul Omar (paulo@sussex.ac.uk)
Glossaries Marc Udink
EU Research Neil Cooper
(NCooper@ZolfoCooper.eu)
Judicial Wing Heinz Vallender
(hvallender@t-online.de)
Michael Thierhoff
(Michael.thierhoff@thierhoffilly.com)
Turnaround Wing Chris Laughton
Steffen Koch
(steffen.koch@hww-kanzlei.de)
Lenders Wing Patricia Godfrey
INSOL Europe Eastern European Countries Committee Conference
Date: 78 May
Location: Timisoara, Romania Further Information: www.insol-europe.org
7th Joint R3/INSOL Europe Seminar
Date: 11 June
Location: London, England Further Information: www.insol-europe.org
INSOL Europe Academic Forum Conference
Date: 1 & 2 July
Location: Leiden, The Netherlands Further Information: www.insol-europe.org
INSOL Europe Academic Forum Conference
Date: 1314 October
Location: Vienna, Austria Further Information: www.insol-europe.org
INSOL Europe Annual Congress
Date: 1417 October
Location: Vienna, Austria Further Information: www.insol-europe.org
INSOL Europe Annual Congress
Date: 2225 September
Location: Venice, Italy Further Information: www.insol-europe.org
Would you like to contribute to eurofenix?
Regular readers will have noticed
how eurofenix has developed and
grown over the last few years,
almost doubling in length on a
regular basis. The involvement
and interaction of INSOL Europe
members and other practitioners,
whether established experts in
their field or newly qualified
graduates has helped to make
this journal the dynamic and well
respected read that it is today.
The changes we have introduced
along the way have helped the
magazine move into different
areas, with more opportunities for
contributions of different kinds
from different jurisdictions.
All contributions are offered
voluntarily, without which we
would have nothing to publish.
So, if you would like the
opportunity to have your
work published and to get your
name known amongst your peers
and the wider readership of
Eurofenix, please do offer your
ideas and proposals for future
articles, themes, subjects
whether you have a finished
paper, or an embryonic topic
which you would like to develop
get in touch with one of us and
we will discuss your idea at one
of our regular board meetings.
For further details of copy
requirements and a production
schedule for the forthcoming year,
please get in touch with
Paul Newson,
Spring 2010 47
Main Sponsor:
For further information contact: Caroline Taylor Director of Administration
INSOL Europe, P O Box 7149, Clifton, Nottingham NG11 6WD UK
Tel/Fax: +44 115 8780584 Email: carolinetaylor@insol-europe.org
Insolvency and the State
In the era where state intervention has been necessary to prevent crisis in the
financial system and Big Government is returning, will restructuring become
a tool for social, not economic, policy? The technical session will feature:
The roles and interactions of the State with restructuring including the
effects of political aims, social policies and State aid.
Societys role on the impact of cross-border insolvencies.
investor protection, creditor representation and financing.
Break out sessions featuring a session devoted to the Turnaround wing.
In association
with UNPIR
Sponsored by:
Further information can be obtained from:
Florica Sincu c/o Cabinet I Didier,
10 Rue Bachaumont, 75002 Paris, France
Tel: +33 1 44 88 66 86
Fax: +33 1 45 08 41 55
Email: floricasincu@insol-europe.org
Sponsorship Opportunities
Please contact Linda Smith,
Email: lindasmith@insol-europe.org
The delegate brochure is available on our website at www.insol-europe.org
Details of delegate fees and early booking discounts are now available on the website
INSOL Europes
6th Eastern European
Countries Committee Conference
Timioara, Romania
78 May 2010
INSOL Europe Sponsors
Experts in all aspects of
insolvency and restructuring
2 Stone Buildings, Lincolns Inn
London WC2A 3TH T: (+44) 020 7691 4000
E: christopher.berry@edwincoe.com
www.edwincoe.com
Academic Forum Sponsors
General and Congress Sponsorship
Opportunities exist within INSOL Europe
together with advertising in our quarterly
journal eurofenix.
For a list of promotional sponsorship benefits,
please contact: David Rubin at david@drpartners.com
or Linda Smith at lindasmith@insol-europe.org

Eurofenix Spring Final

Transféré par

Informations du document

Copyright

Formats disponibles

Partager ce document

Partager ou intégrer le document

Options de partage

Avez-vous trouvé ce document utile ?

Ce contenu est-il inapproprié ?

Droits d'auteur :

Formats disponibles

Eurofenix Spring Final

Transféré par

Droits d'auteur :

Formats disponibles

euro enix

Eurofenix Spring 2010:Layout 1 8/4/10 14:37 Page 6

Eurofenix Spring 2010:Layout 1 8/4/10 14:37 Page 8

Eurofenix Spring 2010:Layout 1 8/4/10 14:37 Page 10

Eurofenix Spring 2010:Layout 1 8/4/10 14:38 Page 14

Eurofenix Spring 2010:Layout 1 8/4/10 14:38 Page 15

Eurofenix Spring 2010:Layout 1 8/4/10 14:40 Page 37

Eurofenix Spring 2010:Layout 1 8/4/10 14:40 Page 39

Eurofenix Spring 2010:Layout 1 8/4/10 14:40 Page 43

Vous aimerez peut-être aussi