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Blog 2014

2014-01-doc17 Stagemogelijkheden voor Masterstudenten Ondernemingsrecht

Aan de Leiden Law School kunnen masterstudenten Ondernemingsrecht (van de Leidse universiteit, maar ook van andere universiteiten) meewerken aan internationaal georiënteerde research op het terrein van Turnaround, Rescue & Insolvency. Veel van het onderzoek gaat in het Engels. Medio december plaatste ik documenten ter verdere informatie op post 2014-01-doc4 van dit blog. Ik herhaal de korte omschrijving: The Leiden Law School is very active in international and comparative research in the area of turnaround, rescue and insolvency of (cross-border) businesses, including the roles and responsibilities of key role players, such as insolvency administrators, courts and legislature. These fields of research are sponsored by for instance the European Commission (Action grant programme), the European Law Institute, Insol Europe, the American Bankruptcy Institute, the International Insolvency Institute and the World Bank and include well structured and substantial cooperation between researchers of the Leiden Law School (five, including myself) and universities in Amsterdam (UvA), London (University College London), Nijmegen, Nottingham, Regensburg and Oxford. Zie hier hoe u uw beschikbaarheid onder onze aandacht kunt brengen stage-ondernemingsrecht-fdr-universiteit-leiden

2014-01-doc18 Specialisatieopleiding Ondernemingsrecht PAO-Leiden

Begin maart start, voor het 2e jaar, de Specialisatieopleiding Ondernemingsrecht, waarbij in 10 middag/begin avond sessies personen met 3 jaar of meer ervaring in de juridisch praktijk weer up to date worden gebracht. Het programma wordt georganiseerd door Juridisch Post Academisch Onderwijs van de Universiteit Leiden en staat onder leiding van mijn collega's mw. prof. Wuisman en mr. dr Wolf. Zie het bijgaande programma flyer specialisatieopleiding Ondernemingsrecht 2014

2014-01-doc16 High Court of Ireland on parallel US and Irish insolvency proceedings

Can a voluntary bankruptcy under Chapter 7 U.S. Bankruptcy Code and a bankruptcy proceeding in Ireland co-exist in parallel? That is the question decided by the High Court of Ireland in its judgment of 6 December 2013 [2013] IEHC 583 (In the matter of Dunne (a bankrupt)). McGovern J [72] starts his analysis from the angle that it is a general principle of private international law and the common law that bankruptcy should be unitary and universal. References are made to well known English cases, such as Cambridge Gas Corporation v. Unsecured Creditors [2007] 1 AC 508, and In Re HIH Casualty and General Insurance Ltd. [2008] 1 WLR 582, in which Lord Hoffmann said (para. 6 of his speech): ‘Despite the absence of statutory provision, some degree of international co-operation in corporate insolvency had been achieved by judicial practice. This was based upon what English judges have for many years regarded as a general principle of private international law, namely that bankruptcy (whether personal or corporate) should be unitary and universal. There should be a unitary bankruptcy proceeding in the court of the bankrupt’s domicile which receives world-wide recognition and it should apply universally to all the bankrupt's assets’, and his famous ‘golden thread’ direction in two centuries of English cross-border insolvency law (para 30): ‘The primary rule of private international law which seems to me applicable to this case is the principle of (modified) universalism, which has been the golden thread running through English cross-border insolvency law since the eighteenth 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 company's assets are distributed to its creditors under a single system of distribution. That is the purpose of the power to direct remittal’. After having acknowledged that the EU Insolvency Regulation nor an enacted version of the Model Law apply, McGovern J has to fall back on such assistance as can be obtained from the Bankruptcy Act of 1988 in Ireland and ‘… the common law, including, where applicable, principles of comity.’ The starting point in the court's approach [79] is that the Irish Bankruptcy Act does not preclude a dual bankruptcy: ‘There is a broad equivalence between the bankruptcy regimes of Ireland and the United States in that both strive to achieve the same objective, namely, an orderly gathering in and distribution of the assets of an insolvent person who has been adjudicated a bankrupt’. Personally I feel that dual bankruptcy proceedings also can exist without there being a ‘broad equivalent’ requirement between two insolvency regimes. The court continues: ‘While there are differences in terms of practice and procedure and timescales, the broad objectives of the two bankruptcy regimes are similar and there is no evidence that there is anything in the US bankruptcy regime which would be contrary to public policy in this jurisdiction’. Although I understand the cited consideration, my understanding of the public policy exception is that it can only apply in a concrete case, taking into account the specific circumstances. McGovern J, however, seems to use it in a general way, unrelated to specific circumstances. Whilst giving much weight to the US trustee’s statement that Irish proceeding would be beneficial to the US proceedings [80] and ‘… an Irish bankruptcy case is necessary in this matter for an expeditious, economical and just liquidation of the bankruptcy estate and distribution of its property’ [83], McGovern J observes that ‘[T]he courts in this jurisdiction must have regard to principles of comity and should be slow to ignore the express wishes of the US trustee which were accepted by the US court in granting the stay which was sought’. McGovern admits that the principle of unitary bankruptcy is one that should be followed, save in exceptional circumstances. He admits however that in this particular case, there are exceptional circumstances [85]. The solution is, that there are two parallel insolvency proceedings in which the American trustee supports the Irish bankruptcy co-existing with the Chapter 7 bankruptcy in the US ‘… and proposes that a protocol be set up to ensure the efficient administration of the bankrupt’s estate’. [86]. In this case, the court also seems to invite the courts to communicate: ‘… although the US and Irish courts will have to determine what laws govern the rights of creditors and priorities. But the US bankruptcy trustee has already stated that Irish law will govern significant issues in the bankruptcy and will have a significant impact on the validity and allowance of priority claims against the estate so it would appear that, on a practical level, there is likely to be little disagreement as to what law will apply to many of the issues in the bankruptcy’ [87]. Therefore a ‘dual bankruptcy’ in this case [90], which is more common than the Irish judge seems to think, e.g. under the EU Insolvency Regulation main insolvency proceedings in one Member State and secondary proceedings in other Member States or under German law non-German proccedings and a separate Particularverfahren in Germany. The court stresses its reliance on the integrity of the US trustee: ‘I am quite satisfied that it is proper in this case for the Adjudication to stand, having particular regard to the views of the US Bankruptcy Trustee. I can see no impediment to such an arrangement in Irish law, or based on the principle of comity, which might move me to exercise my discretion to set aside the Adjudication on that basis…’.  

2014-01-doc15 High Court of Justice: Swiss liquidation proceedings excluded from Lugano Convention

In a decision of 16 January 2014 of the High Court of Justice in London [2014] EWHC 34 (Ch) (Fondazione Enasarco v Lehman Brothers Finance S.A. and Anthracite Rated Investments (Cayman) Ltd) the court is confronted with the matter whether Swiss insolvency proceedings dealing with a certain claim fall within Article 1(2)(b) Lugano Convention (a parallel provision mirroring Article 1(2)(b) of the Brussels I Regulation). The Article provides that said Convention does not apply to: ‘…  bankruptcy, proceedings relating to the winding-up of insolvent companies or other legal persons, judicial arrangements, compositions and analogous proceedings’. In short: the claim relates to a termination payment of $61.5 million plus interest under a derivative agreement to be calculated by reference to an ‘Early Termination Cash Settlement Account’. The claim has however been included in a formal schedule of creditors’ claims as published by the liquidators in the Swiss liquidation proceedings concerning Lehman Brothers Finance S.A., ordered by the Swiss Banking Commission and leading to the entrance into bankruptcy proceedings in Switzerland. Richards J decides that the Swiss proceedings determining the claim entitlement and its rank clearly are insolvency proceedings falling within the exclusion contained within Article 1(2)(b), because (i) they are proceedings which can only arise under Swiss insolvency law, (ii) they form an integral part of the liquidation proceedings, designed to achieve the primary purpose of such proceedings, which in this case is the distribution of the assets available to the liquidators among those creditors whose claims are admitted and which proceedings must take place in the court dealing with the liquidation, whilst (iii) the purpose of the proceedings is to determine the amount and the ranking of the claim for the purposes of the liquidation; the ranking of claims is a matter arising exclusively under the relevant insolvency law. Richards J concludes after an historical analysis of said Artcie 1(2)(b) and recent case law that the Swiss proceedings meet the criteria laid down in Gourdain v Nadler (C-133/78) of deriving directly from the liquidation and being closely connected with the liquidation proceedings: ‘The Swiss proceedings could not exist, nor have any relevance, outside the Swiss liquidation’. This sometimes so called 'annex'-proceeding therefore is excluded from the Lugano convention. The judgment deserves attention also for other reasons: (i) Article 4(2)(h) and (g) of the Insolvency Regulation and the Virgós/Schmit Report (para. 196) are used to support the argument that Swiss proceedings (not a subject of the Regulation) are determinative for actions relating to the admission or the ranking of a claim. (ii) in para. 34 Richards J is critical about the way expert evidence is given (‘I do not regard this way of putting expert ‘evidence’ before the court as satisfactory’ and ‘It is also helpful to have experts who are independent of the parties, a point illustrated by the somewhat argumentative character of the letters of advice exhibited in this case’). (iii) Finally, the judgment is interesting as Richards J demonstrates a cooperative spirit towards the Swiss court ‘… when refusing a stay of English proceedings in favour of insolvency proceedings in Switzerland, it is likely that the Swiss court will be greatly assisted by having the judgment of the English court on the rights and liabilities of the parties under the Derivative Agreement, given that it is governed by English law’ as it appears to Richards J ‘…unlikely that in reality the issue would be determined by any court other than the English court’, whilst on the other hand expecting the Swiss court to act in the same mode (‘… I would have thought it not improbable that the Swiss court would delay its decision until the English court had given judgment’). 2014-01-16 High Court Fondazione Enasarco v Lehman

2014-01-doc14 Choice of Law in Cross-Border Bankruptcy Cases

On Friday 7 March, the Brooklyn Law School organises its Brooklyn Journal of Corporate, Financial and Commercial Law Symposium, with the topic 'Choice of Law in Cross-Border Bankruptcy Cases'. I will be speaking in the morning in a Forum on Choice of Law in Cross-Border Bankruptcies: A Multilateral Perspective. My topic is related to one of the amendments in the December 2012 proposals for changing the EU Insolvency Regulation. Article 18 (suggested version) allows a liqidator in main insolvency proceedings to make an undertaking, '... that the distribution and priority rights which local creditors would have had if secondary proceedings had been opened will be respected in the main proceedings. Such an undertaking shall be subject to the form requirements, if any, of the State of the opening of the main proceedings and shall be enforceable and binding on the estate.' Is the Rome I Regulation applicable? If so, what would be the consequences? Should the December 2012 proposal include its own autonomous conflict of law rules for such an undertaking? Papers will be discussed, revised after the symposium and published in said Brooklyn Journal. For information about the program: http://www.brooklaw.edu/en/newsandevents/events/2014/03-07-2014.aspx?