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2017-09-doc10 Launch of Asian Principles of Restructuring Project

Established in 2016, the Asian Business Law Institute (ABLI) is an Institute based in Singapore. ABLI initiates, conducts and facilitates research and produces authoritative texts with a view to providing practical guidance in the field of Asian legal development and promoting the convergence of Asian business laws. See In August 2017, ABLI in close cooperation with the International Insolvency Institute (III, see launched a joint project between ABLI and III, titled the Asian Principles of Restructuring. In summary the Project involves the formulation of principles of restructuring, both in and out of court. It is hoped that the principles will advance the convergence of philosophies and approaches to restructurings and the management of insolvencies in Asia, serving as a key reference tool for all stakeholders in Asia. Over the longer term, this will facilitate convergence of Asian insolvency laws. The Project involves two phases with a timeframe of two years. The first phase is a mapping exercise of the business reorganization regimes in select Asian jurisdictions. The second phase will involve an examination of the output of the mapping exercise to identify the areas of similarity and formulate principles for court-based and out of court restructuring that will be uniquely tailored to Asia. I am delighted to have been asked as a member of the Advisory Committee which will provide supervision and guidance to the Project. For more info on the project, see the website.

2017-09-doc9 2016 book of Look Chan Ho

With the date of this publication cited as at Buddha’s Birthday 2016, in the book ‘Cross-Border Insolvency: Principles and Practice' (Sweet & Maxwell, 2016, xlv + 351 pages), its author Look Chan Ho, discusses English cross-border insolvency law. The author is dissatisfied that this area of law lacks a solid taxonomic order and that practices relies too much on improvisation. These observations are serious as the author is a well-experienced practitioner and over the years has demonstrated to be a clever analyst of many topics of cross-border insolvency law. Improvisation, however, does not have to be a bad thing in this complex legal area. It may assist in looking for the most pragmatic solution and a fair outcome; it may rather be the arbitrariness and unpredictability that causes discontent. The author presents a unique approach in his treatment of English’ framework of rules and regimes from the perspective of conflict of laws with a view to strengthening the understanding and practice of cross-border insolvency. He analyses the whole corpus of cross-border insolvency regimes from three conflicts perspectives, namely: (i) jurisdiction to commence insolvency proceedings, (ii) recognition and enforcement of foreign insolvency proceedings, and (iii) choice of law. In such a treatment, he argues, the principles of cross border insolvency can be compared and contrasted across the whole body of cross-border insolvency law. The focus of the book is mainly English law, which offers, as the author points out, ‘… the widest and most complex range of cross-border insolvency regimes in the world’, which includes the EU Insolvency Regulation, Brussels I, UNCITRAL Model Law on Cross- Border Insolvency, European rules re the reorganisation and winding up of banks and insurers, several domestic English acts and the sheer enigma of common law, leading to the inclusion of court cases from Bermuda, Hong Kong, Singapore and South Africa. All these applicable cross-border regimes have been considered in two ways: (1) what is the law?, and (2) how best to evaluate these different rules. Under the flag of jurisdiction, a comparison is made of the jurisdiction of the English court to commence insolvency proceedings, more particularly liquidation, administration, company voluntary arrangement and scheme of arrangement. The theme of recognition and enforcement deals with the recognition and enforcement by the English court of a foreign liquidation or reorganisation proceeding and for instance foreign insolvency judgments, e.g. a foreign judgment ordering the defendant to return property on the basis of violation of foreign fraudulent conveyance law Enforcement and choice of law deal with forms of relief that may be obtained from the English court following the recognition of foreign insolvency proceedings. Choice of law issues, the author notes, have been considered fully. As this area of the law is most undeveloped, this part is organised according to the typical relief sought in cross-border cases, including such topics as discharge of debt, set-off, and avoidance of antecedent transactions. All the cross-border regimes have been compared and contrasted in order to state the current position and to offer recommendations going forward. Under the readers of the book one would expect practitioners. They will find a helpful and practical treatment of queries that often occur in practice, including a systematic clarification, e.g. nine points of view to take into account when deciding about a debtor’s COMI (although the 9th (‘the standard of proof is the standard of balance of probability’) is not easy to understand for non-English readers) and that the Chancellor’s incorrect view regarding COMI in the Stanford case had already been signalled by me in 2010 on this blog as well as in my book regarding International Insolvency Law. Another example for support in practice is Ho’s analysis of case law leading to nine propositions regarding the demarcation between the Insolvency Regulation and Brussels I. This should suffice to conclude that, given the depth and detail of the treatment and the sharp analysis presented, the readers also will be scholars. The reader should be prepared to cope with strong or pedantic views, such as that the pari passu principle is ‘often misunderstood’, that English’ state of law regarding cross-border insolvency is ‘chaotic’, that the English courts’ current approach to the extra-territorial application of insolvency provisions is ‘deeply unsatisfactory’, that the UNCITRAL Model Law is ‘a profoundly misguided document’ and that the Guide to Enactment and Interpretation of the Model Law seems misconceived and may hinder the Model Law’s cause. Nearly all chapters contain extensive footnoting with references to cases and literature, however, rather in common with all literature provided by English authors, it suffers from their unmistakable disease of mastering only one language and even within these sources limiting research to English authors. Look Chan Ho, Cross-Border Insolvency: Principles and Practice, Sweet & Maxwell, 2016, xlv + 351 pages. For ordering information, see

2017-09-doc8 Rechtsmacht rechter in faillissementszaken

De algemene benadering in zaken van burgerlijk procesrecht voor woonplaatskwesties, waarmee wordt aangesloten bij het woonplaatsbegrip in het personen- en familierecht dient ook voor het insolventieprocesrecht te gelden. Dat is de eerste van de vier conclusies die ik trek uit een korte analyse van de regeling van de rechtsmacht van de rechter in faillissementszaken. Faillietverklaring geschiedt door de rechtbank van de woonplaats van de schuldenaar, aldus de tekst van art. 2 lid 1 Fw. Art. 2 kent voor drie gevallen bijzonderheden ten aanzien van de rechtsmacht van de rechter. In Nederlands Tijdschrift voor Handelsrecht, Augustus 2017, pp. 178-182, is deze analyse opgenomen. De andere conclusies: - ten aanzien van de schuldenaar die zich buiten het Rijk in Europa heeft begeven is de rechtbank van zijn laatste woonplaats bevoegd (art. 2 lid 2). Voor de rechtsmacht van de Nederlandse rechter is het voldoende dat een schuld van deze schuldenaar voortspruit uit een ten tijde van het vertrek van de schuldenaar reeds bestaande rechtsverhouding of -betrekking, waaruit na dat vertrek de schuld is ontstaan; - de wetgever dient een consistent systeem te ontwikkelen van het materiële en processuele insolventierecht ten aanzien van (momenteel nog) drie procedures (faillissement, surseance van betaling en schuldsanering natuurlijke personen) ten aanzien van personenassociaties (vennootschap onder firma, maar ook de maatschap en de commanditaire vennootschap); - onder ‘kantoor’ in art. 2 lid 4 Fw is te verstaan elke plaats van handeling waar een schuldenaar met behulp van mensen en goederen een economische activiteit uitoefent die niet van tijdelijke aard is. Voor de drukproef van het artikel zie Proef_NTHR_2017_4_Wessels

2017-09-doc7 Next step towards a Dutch procedure to bind non-consenting creditors to a restructuring plan

Until 1 December 2017 input can be given to a public consultation in the Netherlands for an amendment of the Dutch Bankruptcy Act. The government intends to introduce the possibility of getting court confirmation for an extrajudicial restructuring plan to prevent bankruptcy (Wet homologatie onderhands akkoord ter voorkoming van faillissement; Act on confirmation of private restructuring plans to prevent bankruptcy). A draft bill was published for public consultation on 5 September 2017. The draft bill is a revision of an earlier draft bill, known as Continuity of Companies Act II. Obviously, there is also a Continuity of Companies Act I. This bill tries to lay a legislative basis under a practice developed during the last 3 or 4 years, known as the Dutch pre-pack. The Act will allow a debtor in financial distress to prepare and attempt a non-public restructuring of its businesses through a pre-pack alike procedure, allowing the debtor – who continues to have the power to dispose of its assets – and a court-appointed insolvency practitioner to jointly investigate and prepare an asset sale to be implemented immediately following the opening of formal insolvency proceedings. The labour law consequences following the CJEU's decision in the Estro or Smellsteps case are presently discussed in the Dutch Senate. The revised draft of the Continuity of Companies Act II - I am citing the site of the Dutch law firm De Brauw Blackstone Westbroek - still contains several substantial elements of a legislative proposal that De Brauw partners Ruud Hermans and Reinout Vriesendorp drew up and submitted in 2013. They were inspired by the UK scheme of arrangement and the US Chapter 11 proceedings. The revised draft introduces a brief statutory procedure to bind creditors (including preferential and secured creditors) and shareholders to a restructuring plan. This plan amends or restricts their rights - including the possibility of a cross-class cram-down - with the approval of a Dutch court. The process stays out of the formal proceedings of the Bankruptcy Act (i.e. bankruptcy liquidation and suspension of payments). Formal proceedings are not opened and no insolvency praxtitioner needs to be appointed. The debtor stays in full control during the entire process. As indicated, last week the De Brauw law firm published an article ( with the aim of giving more detailed information about the revised draft bill (see also its dedicated page with unofficial English translations of the draft bill and its explanatory memorandum). The firm still sees room for further enhancement and will therefore prepare consultation feedback once more. They invite readers to share any thoughts, so these can be incorporated in this in their submission. I am certain that the firm will also welcome comments from non-Dutch insolvency law specialists.

2017-09-doc6 Book presentation in Brussels

Yesterday, in Brussels, I was able to present the first copy of one of my new books (4th edition of International Insolvency Law: Part II European Insolvency Law, published by Wolters Kluwer) to Andreas Stein, Head of Unit Civil Justice of the Directorate-General for Justice and Consumers of the European Commission. The staff of the Unit Civil Justice are the main drafters of e.g. the EU Insolvency Regulation (recast) and the November 2016 proposal for a Preventive Restructuring Directive. The core of my book contains an extensive treatment of the EU Insolvency Regulation (2015/848) which came into effect on 26 June 2017. So one may say a meeting of minds in legislature and academy. The book will form an addition to the library of the Unit. Futher information and ordering details, see DSC00993