Donald S. Bernstein (ed.), The International Insolvency Review, London: Law Business Research Ltd., 2nd ed., 2014, ix + 483 pp.; ISBN 978-1-909830-25-7. The book ‘The International Insolvency Review’ in its second edition offers a very practical guide for insolvency practitioners. They will be introduced to the wide variety of approaches to matters of rescue and insolvency all over the world. The book covers 31 jurisdictions. One can only agree with the editor that the most efficient system of a set of global rules clearly can not be achieved any time soon, due to differences in local commercial cultures, in due process expectations, legal practices and local vested interests. Therefore, the book is most welcome, where practical solutions still depend largely on the working and efficiency of national insolvency systems. The book introduces its readers in a comparative snapshot of rescue and insolvency rules and its most important cases, with footnote references. For many practitioners introductory chapters on Brazil, Indonesia, Japan, China and Korea (which has enacted 15 provisions, adopting the UNCITRAL Model Law on Cross-Border Insolvency, in 2006) will be welcome. The second edition also covers Belgium, Greece, Jersey, Poland, Portugal, Singapore and South Africa (both Greece and Poland have their versions of the Model Law). Generally in all chapters the patern of treatment is similar. Attention is given to (i) insolvency law, policy and procedure, including cross-border issues, (ii) insolvency metrics, (iii) plenary insolvency proceedings, (iv) ancillary insolvency proceedings, and (v) trends. The book provides quick overviews of cases, such as Saad (Australia), Interpêdencia (Brazil), the Fairfield (Bernie Madoff) funds (BVI and USA), or Madoff’s investment securities (Cayman Islands), Nortel Networks (Canada and England). Wuxi Suntech and FerroChina (mainland China), Cœr Défense, Petroplus, Belvédère (France), Pfleiderer (Germany; the chapter still misses out on § 335-358 German Insolvency Act containing international insolvency law rules applicable outside the scope of the EU Insolvency Regulation), Indover bank (Indonesia’s treatment of the insolvency of the Netherlands based branch), Kaupthing Singer & Friedlander (Isle of Man), Japan Airlines (Japan), Elpida Memory Inc (Japan and USA), Vitro (Mexico and USA), Lehman Brothers Treasury, SNS Reaal and SNS Bank (Netherlands) and Reyal Urbis and Pescanova (Spain). In the chapters which are new to the second edition it is noted that in Belgium it seems that the 2009 Law on the Continuity of Enterprises does not seem to work well, that the Greece author understands ‘that there are suggestions’ for the improvements of its act, especially relating to rehabilitation proceedings, that Jersey is ready to introduce rescue proceedings, that in Poland a draft of a new restructuring act has been proposed and that in Portugal in 2012 three forms of proceedings indeed have been introduced. This is all a clear sign that Europe at large is in a mode of structurally changing its bankruptcy laws, with a strong focus on business rescue. The book is primary aimed at insolvency and restructuring practitioners, but with its clear style it is also useful for a larger audience, including corporate and financial practitioners.
With great pleasure I post the following announcement: BOB WESSELS MADE HONORARY MEMBER OF DUTCH INSOLVENCY ASSOCIATION At its Annual conference in Amsterdam, November 6, 2014, the members of the Netherlands Association for Comparative and International Insolvency Law (NACIIL) have unanimously elected professor Bob Wessels as Honorary Member. Prof. Wessels has countributed greatly to the success of NACIIL. Its goal is to promote the interest for and the knowledge of comparative and international insolvency law. The association has for this purpose held conferences and organised lectures and courses, initiated student initiatives and the publication and distribution of reports. As many of the initiatives are in English, the association also reaches out to professionals, scholars and students (with their COMI) outside the Netherlands in an aim to further jointly the development of comparative and international insolvency law. Until his retirement early 2014 Bob Wessels was professor of international insolvency law, University of Leiden (Netherlands), and initiator, joint-founder and the first Chairman of NACIIL (2011-2014), which presently has close to 200 members. In 2011 the Council of INSOL Europe elected professor Wessels as Honorary Member for his contributions as Chairman to the development of INSOL Europe’s Academic Forum (2007-2010), including the creation of the Younger Academics Network. As chair of NACIIL he has been succeeded by prof. Michael Veder (Radboud University, Nijmegen).
On this blog (see 2014-02-doc11 and 2014-10-doc5) I reported about a study of the World Bank to collect data on how various jurisdictions treat the legal position of shareholders of companies in the vicinity of insolvency. The purpose of the study is to identify how this position is affected in a crisis scenario and to identify the interaction between shareholder rights and the normal operations in either a liquidation or a reorganization process. The report was drafted by 4 researchers, 2 from Radboud University and form Leiden Law School Tom Dijkhuizen and myself. The results sparked interest of the Leiden Daily (Leidsch Dagblad), which led to an interview (see attached; in Dutch). 2014-10-29 Leidsch Dagblad
On July 18, 2013, the city of Detroit (USA) filed for its bankruptcy under Chapter 9 of the U.S. Bankruptcy Code. A Chapter 9 bankruptcy is not a liquidation, but the controlled development of a rescue plan. See my blog at 2012-12-doc6. Sixteen months later U.S. Bankruptcy Judges Hon. Steven Rhodes approved on November 7, 2014, such a plan intended to help Detroit escape years of financial ruin and begin the hard work of becoming viable again. Hon. Rhodes approved a plan for the city to cut itself of $18 billion in debt and to invest about $1.7 billion into long-neglected city services. The decision has been made in a remarkable short time, given all the different stakeholders involved (around 170,000 creditors), and ends a period with an accumulated debt of an enormous amount, while the city had been wrestling with annual budget deficits, miserable city services and an uninterrupted exodus of residents (in 60 years 60 percent of the population left) and investment dollars. In the US’ largest municipal bankruptcy, the plan will set aside $1.7 billion over a decade to remove blighted buildings (around 80,000!), to upgrade its emergence services (buying fire trucks, police cars and ambulances), and to modernise its antiquated computer systems. The plan requires strict oversight of the city’s finances in the years ahead by a commission that includes representatives of the state of Michigan. Judge Rhodes said in his ruling, approving the city’s restructuring plan: ‘Detroit’s inability to provide adequate municipal services runs deep and has for years. It is inhumane and intolerable, and it must be fixed.’ The handling of the different types of debt involved can be regarded as a roadmap how in future Chapter 9 cases could treat creditors and bondholders of all kinds. Oral_Opinion_on_Detroit_Plan_Confirmation_Judge_Rhodes_FINAL_for_Release (1) In European eyes, Detroit’s ‘grand bargain’ settlement, included in the decision, is written in a very clear and direct language. In terms of legal concepts the decision serves as an interesting illustration in construing the requirements of proposing a plan for debt adjustment ‘in good faith’, that a plan should be ‘in the best interest of the creditors’ and the ‘feasibility’ of a plan. Judges Rhodes supports the City’s decision not to sell the art of the Detroit Institute of Arts, as the Institute ‘… stands at the center of the City as an invaluable beacon of culture, education for both children and adults, personal journey, creative outlet, family experience, worldwide visitor attraction, civic pride and energy, neighborhood and community cohesion, regional cooperation, social service, and economic development. Every great City in the world actively pursues these values. They are the values that Detroit must pursue to uplift, inspire and enrich its residents and its visitors. They are also the values that Detroit must pursue to compete in the national and global economy to attract new residents, visitors and business.’ Long-term future revenues have been balanced against short term liquidity. Legal fees top around $140 million in October 2014 and they will continue to climb in coming weeks. Judge Rhodes wants mediators to determine whether the legal fees charged (by Jones Day and a team of consultants that worked on Detroit’s bankruptcy) are reasonable. At the end of the decision 30 odd persons are receiving gratitudes (‘This comes with thanks to many people’; follow 4 pages of thanks), which indeed makes clear that the decision would not have been possible without the hard work, compromise and sacrifice of many people and organizations that put aside their considerable differences and came together for the benefit of Detroit's future, Kevin Orr, emergency manager for the city of Detroit, said. The Judge is also a semi-reverend, asking still angry creditors to turn the page: ‘And so I ask you, for the good of the City’s fresh start, to move past your anger. Move past it and join in the work that is necessary to fix this City. Help your City leaders do that. It is your City.’ It is now time to restore democracy to the people of the City of Detroit. I urge you to participate in it. And I hope that you will soon realize its full potential.’ Judge Rodes also turns a page, as he will retire in December.
November 6, during the 4th annual conference of the Netherlands Association of Comparative and International Insolvency Law (NACIIL), I have given a short annual address, touching on the system of recognition that should be followed in the near future with regard to certain resulution measures taken outside the EU with regard to financial institutions. Not an approach to be followed by individual Member State (as now has been chosen by the Financial Stability Board (FSB) but a uniform EU system is the way to go. See for the tekst 2014-11-06 Annual address NACIIL Wessels. I am honoured to have been awarded, during the meeting, Honorary Member of NACIIL after a period of 4 years being NACIIL's Chairman.