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Blog 2019

2019-04-doc1 Did you say money?

Money makes the world 90 ‘round, Liza Minnelli sang in the movie Cabaret in 1973. An even greater gift has come to financial lawyers, at least that’s what Simon Gleeson writes in the preface of his book The legal Concept of Money (OUP, 2018). Gleeson is a partner at Clifford Chance London, and the gift mentioned is the creation of virtual currency. In this clear and accessible book, the author is looking for answers how to treat such virtual currencies, while underway learning more about the money as it exists in today’s world.

In the Netherlands, as in the UK, the applicable banking and civil laws leave room for payment in money types, either physical or virtual, that do not derive their existence from the State. Examples are money issued by private individuals (e.g. soccer stadiums or holiday parks) that is tolerated by the State, although these means of payment are issued by a factual authority other than the State. The monetary means of money are determined by the law of the country of the currency in question (lex monetae). Court cases re private money in the Netherlands, however, are scarce. Courts of first instance in the Netherlands have decided that bitcoins are not ‘money’ in the meaning of legal Dutch tender and are not tolerated by the State. In an insolvency case (Koinz Trading) for the court in Amsterdam, early 2018, it was decided that an obligation to pay in bitcoins is regarded as a verifiable claim within the meaning of the Dutch Bankruptcy Act.

Gleeson’s book analyses the challenge of how money (including coins, notes, credit, and virtual currency) should be defined from both a legal and an economic perspective. During his journey he introduces elements of the laws of Australia, Canada, Ireland, New Zealand and the US. He re-examines money in its fundamental characteristics in this context. That brought the author to study Roman Law and to quasi-philosophical considerations, such as ‘Does Money ‘Exist’?'. The positive answer is the result of the identification of the role it plays in various transactions and to what extent, for example, cryptocurrencies and quasi-money are interchangeable with, analogous to, or different from traditional monetary systems. Evidently, rather civil law types of questions pass on, such as virtual currency as property or as a subject of a security right. The emphasis, however, is on the role of money in the banking system and exploring how various currencies can be used as claims on financial institutions. Moreover, rather economical observations are taken into account when examining whether the systemic stability of the industry is threatened by non-traditional currency forms. In all, the book sheds light on the many intricacies of the subject the world cannot do without and is a vital contribution to the understanding money in its legal context.

Simon Gleeson, The Legal Concept of Money, Oxford University Press 2018. ISBN 978-0-19-882639-2

Book information via:

Note: this book I received free of charge from the publisher with the request to announce it or to review it on my blog at

2019-03-doc13 Looking for Rembrandt

In September last year I reported about my research into the bankruptcy (cessio bonorum) of Rembrandt. In the Netherlands, Rembrandt is hot as this year it is 350 years that he passed away. Also abroad there is interest and I was interviewed last year for a BBC programme. See Rembrandt (1606-1669) lived from 1606 till around 1631 in Leiden and the rest of his life in Amsterdam. His wife Saskia died in 1642, which was also the year for presenting his famous Night Watch (Nachtwacht). I just heard that the programma now has been fully edited (by Matchlight Ltd) and will be on TV as Looking for Rembrandt. It will broadcast in the UK on BBC Four on 9th April at 9pm, with episodes 2 and 3 weekly after that. My interview appears in the third and final episode, which makes sense as Rembrandt went bankrupt in 1956 (being 50 years of age). I was also informed that Looking for Rembrandt is due to broadcast in the Netherlands on NPO soon afterwards, likely to be in May. I am excited to see the whole series to get an idea of the tone and of course get impressions of Rembrandt's whole life. Travelling through the master's 17th century, do we get to understand his legal dealings better? That's the query for my research.

2019-03-doc12 Insolvency practitioners and Privacy codes

In our recent publication 'Cross-Border Cooperation and Communication: How to Comply with Data Protection Rules in Matters of Insolvency and Restructuring', in: 16 International Corporate Rescue 2019, 98ff (published by Chase Cambria Publishing,, Ilya Kokorin and I conclude in the following way (leaving out the footnotes):
"Insolvency practitioners – Codes of conduct
Insolvency practitioners, when processing (collecting, recording, storing, using, disclosing or transmitting) personal data and in particular special categories of personal data, should be acquainted with the GDPR and fully comply with it. Failure to do so may trigger large fines of up to EUR 20 million (Article 83(5) GDPR). Compliance with the rules and principles of data protection ensures processing that is lawful, fair and transparent, limited in purpose and scope, accurate, carried out for only as long as necessary, secure, confidential and accountable (Article 5 GDPR). Recitals 167 and 168 GDPR confer specific powers on the EC to ensure uniform conditions for the implementation of the GDPR. Recital 167 suggests that in that context, the EC should consider specific measures for micro, small and medium-sized enterprises. Recital 168 provides that an examination procedure should be used for the adoption of implementing acts on standard contractual clauses between controllers and processors and between processors; codes of conduct; technical standards and mechanisms for certification; the adequate level of protection afforded by a third country, a territory or a specified sector within that third country, or an international organisation; standard protection clauses; formats and procedures for the exchange of information by electronic means between controllers, processors and supervisory authorities for binding corporate rules; mutual assistance; and arrangements for the exchange of information by electronic means between supervisory authorities, and between supervisory authorities and the Board.
Related to this long list, Article 40 GDPR (with 11 subparagraphs) foresees the development of codes of conduct. The Member States, the supervisory authorities, the European Data Protection Board and the EC shall encourage ‘the drawing up of codes of conduct intended to contribute to the proper application of this Regulation, taking account of the specific features of the various processing sectors and the specific needs of micro, small and medium-sized enterprises’. Article 40(2) GDPR calls for associations and other bodies representing categories of controllers or processors. They may prepare codes of conduct, or amend or extend such codes, for the purpose of specifying the application of the GDPR. In essence, codes of conduct are similar to practical guides providing easily understandable interpretation of the abstract rules of the GDPR. In the world of restructuring and insolvency, national associations of turnaround managers, IPs, accountants and insolvency lawyers, as well as representative bodies, such as INSOL Europe should step forward. Data protection is certainly worth the effort and will play even bigger role in the future, with the full functioning of national insolvency registers and the establishment of a centralised search engine via the European e-Justice portal in mid-2019. Capital structures of companies in the 21st century will be starkly different from those of the past century. Once driven by hard assets, such as real estate, natural resources and machinery, modern businesses become highly dependent and valued on the basis of intangible assets – claims, licenses, know-how and goodwill. Increased value of data (e.g. customers’ databases) in debtors’ insolvency estates together with the expansive process of digitisation and data collection (big data) bring data protection issues to the forefront of legal and insolvency practice."

2019-03-doc11 Sterfhuiscontructie: paulianeus of te redden met clausules inzake herrekening of nabetaling?

Dit is de zesde en laatste uitnodiging (zie om reacties/commentaar op mijn conceptteksten voor Wessels Insolventierecht III, 5e druk, te sturen naar: Diverse commentaren heb ik met genoegen verwerkt, uiteraard onder vermelding van de naam van de auteur die reageeerde. Mijn dank daarvoor. De kopij gaat deze week naar de uitgever. verwachte verschijningsdatum: juni 2019. Dit keer het volgende onderwerp:


§ VI.2. Sterfhuisconstructies

3284 Varianten voor ondernemingscontinuïteit. De laatste drie decennia is op diverse wijzen gepoogd de continuïteit van een groep van financieel, economisch en organisatorisch met elkaar verbonden ondernemingen respectievelijk een concern voor dreigende discontinuïteit, in het bijzonder financiële ondergang, te behoeden. Diverse reorganisatie- en saneringsvarianten zijn daartoe in de praktijk ontwikkeld, waarbij de laatste als alternatief voor een surseance of een faillissement zijn toegepast. Sprekende voorbeelden daarvan zijn OGEM, Nederlandsche Heidemaatschappij, HCS Technology en Air Holland. Alle varianten hebben gemeen de aanvaarding en uitvoering van een pakket samenhangende maatregelen, in het bijzonder van vennootschapsrechtelijke en vermogensrechtelijke aard, dat ingrijpt in de vennootschapsrechtelijke structuur van (de groep van) vennootschappen met het oog op de continuering van (een deel van) de door deze gedreven onderneming(en).

3285 Rechtspraak en literatuur. Het voert in het kader van dit werk te ver dergelijke constructies uitvoerig uiteen te zetten. Zie nader Slagter (2011), p. 26 e.v. Een sterfhuisconstructie is de benaming voor de afsplitsing door middel van een verkooptransactie van de aandelen van een aantal goed renderende (‘witte’) vennootschappen uit de gehele groep, waarna in de laatste alleen de financieel noodlijdende (‘zwarte’) vennootschappen verblijven, en dit achtergebleven deel (het ‘sterfhuis’) failleert. De ziekenhuisconstructie komt in hoofdlijnen neer op het onaangetast laten van de bestaande concernstructuur, maar daarbinnen een scheiding aan te brengen tussen gezonde en noodlijdende ondernemingen. Wil de constructie slaagkans hebben, dan dienen alle belanghebbenden ten dele hun recht prijs te geven: (a) de aandeelhouders door afstempeling van hun aandelen (opdat deze de werkelijke waarde van de onderneming reflecteren; in de Air Holland-zaak vond afstempeling tot 1% van de waarde plaats), (b) de schuldeisers door hun toetreden tot een (dwang)akkoord (in de Air Holland-zaak ontvingen de schuldeisers minder dan 10%), (c) de banken door conversie van hun vorderingen in aandelenkapitaal. De constructie steunt derhalve op instemming van alle betrokkenen.
Zie voor algemene aspecten van financiële herstructurering voorts De Serière (1994), p. 71 e.v., en bijdragen in: Van Solinge e.a., Herstucturering van ondernemingen in financiële moeilijkheden, Serie vanwege het Van der Heijden Instituut, Deel 123, Deventer: Wolters Kluwer 2013. Over de problematiek van een sterfhuis- en ziekenhuisconstructie (soms ook wel overlevings-, uitvaart- of verhuisconstructie genoemd dan wel leveraged buy out) zie de navolgende literatuur, sommige met uitvoerige case-beschrijvingen ontleend aan faillissementsverslagen van de respectieve curatoren, met verwijzingen naar oudere literatuur, de vierde druk van het onderhavige Wessels Insolventierecht IV 2013/3285;  Soedira, diss. (2011), p. 39 e.v.; Bartman/Dorresteijn/Olaerts (2016), p. 22 e.v., en p. 64 e.v.; Van Oostrum, diss. (2019), p. 135 e.v.; Van den Berg, diss. (2019), par. 9.1.

3286 Voorkomen c.q. redresseren paulianeus karakter. Op het eerste gezicht lijken genoemde constructies benadelend voor schuldeisers (onder wie werknemers) en aandeelhouders. Door zorgvuldige planning van de financieringsstromen en zorgvuldige redigering van de juridische documentatie kan het mogelijk paulianeuze karakter van een dergelijk samenstel van maatregelen worden voorkomen.

3287 Benadeling. Indien de sterfhuisconstructie betrekking heeft op de aandelen in een aantal ‘witte’ vennootschappen, wordt de koopsom daarvoor door de (soms: speciaal daartoe opgerichte) overnemende koper (stichting; vennootschap; ‘SPV’: special purpose vehicle) geleend van de bank die het noodlijdende concern financierde. De koopsomvordering wordt aan de bank gecedeerd, waardoor deze rechthebbende is op een vordering ter hoogte van de koopsom van de aandelen. Deze vordering wordt door de schuldenaar (de overnemer) voldaan met het eerder geleende geld. Het pauliana-gevaar schuilt in het resultaat van deze opzet: de schuld van het noodlijdende concern (sterfhuis) bij de bank vermindert; de positie van de bank wordt versterkt doordat zij een vordering op de nieuwe vennootschap verkrijgt. Benadeling valt echter lastig aan te tonen indien een reële waarde voor de aandelen wordt betaald, maar uitgesloten is zij niet, zie HR 22 mei 1992, NJ 1992/526 (Montana), waarover par. 3098, en Rb.’s-Gravenhage 17 oktober 2001, JOR 2002/144, nt. Van Hees.

3287a. Contractuele herrekenings- of nabetalingsclausule. In de praktijk wordt getracht toepassing van het benadelingscriterium te voorkomen door de prijs van de verkoop vast te stellen op een voorlopige koopsom, met aanvullingen daarop op basis van een definitief vastgestelde koopsom, die bijvoorbeeld drie jaar later op grondslag van een onafhankelijke waardering wordt vastgesteld. Met een dergelijke contractuele herrekenings- of nabetalingsclausule wordt bereikt dat de prijs reëel is en niet beïnvloed is door het faillissement van het sterfhuis. Een dergelijke nabetalingsclausule kan ook worden overeengekomen in het geval er onzekerheid bestaat over de vraag of de prijs wel de reële waarde van het gekochte reflecteert, zie Van den Berg, diss. (2019), par. 9.2.
Indien de aandelen zijn verpand aan de bank en de bank is bereid afstand van haar pandrecht te doen onder voorwaarde van ontvangst van de opbrengst van de aandelen, kan geen benadeling worden aangenomen, aangezien (achterblijvende) schuldeisers niet de pauliana kunnen inroepen in een geval waarin hun geen nadeel wordt toegebracht maar slechts een voordeel ontgaat, vergelijk Ophof, in: Sanering en herstructurering, hfdst. 7-495; Slagter, TVVS 1983, p. 28. Vergelijk HR 22 maart 1991, NJ 1992/214, nt. PvS; AA 1992, p. 290 e.v., nt. Kortmann, waarover par. 3098; Rank, Bb 1991, p. 90 e.v.; Winter, diss. (1992), p. 238 e.v. Zie tevens Oostwouder, diss. (1996), p. 383, die ook ingaat op de vaststellingsovereenkomst die tussen de concernvennootschappen wordt aangegaan, inhoudende een aanvulling op de koopsom te betalen aan de curator van de gefailleerde vennootschappen, teneinde de laatsten hun regresrechten jegens de nieuwe groep te ontnemen. Over het op voorhand voorkomen van regresaanspraken, op te nemen in de hoofdelijke aansprakelijkstelling: Winter, diss. (1992), p. 47 e.v. en p. 217 e.v.
Een van de bezwaren tegen de sterfhuisconstructie is dat de oude (achtergebleven) aandeelhouders niet meedelen in de toekomstige winsten van de nieuwe groep; een ziekenhuisconstructie kan aan dit bezwaar tegemoetkomen, maar daarbij geldt dat veelal de tussen de onderling verbonden vennootschappen aanwezige onderlinge regresrechten blijven bestaan. Prima facie lijkt het resultaat van een sterfhuisconstructie benadeling op te leveren: de ‘nieuwe’ groep kan een groot deel van de bedrijfsactiviteiten continueren; in de ‘oude’ groep zijn schuldeisers en aandeelhouders achtergebleven. Afgezien van meer omvangrijke wetsvoorstellen tot verbetering van het Nederlandse concernrecht of omtrent de specifieke bescherming van bepaalde belanghebbenden (zie de wetgeving inzake splitsing, par. 3288 e.v.), dient een mogelijk paulianeus karakter van een dergelijke constructie door zorgvuldige planning van de financieringsstromen en redigering van de juridische documentatie te worden voorkomen. Vergelijk Rb. Utrecht 10 mei 2006, TvI-N 2006, p. 40 e.v. (vervolg op tussenvonnis van Rb. Utrecht 24 augustus 2005, JOR 2006/134), oordelend dat indien in een (activa-)overeenkomst een clausule wordt opgenomen die verplicht tot nabetaling wanneer blijkt dat de koopprijs te laag is, benadeling niet kan worden aangenomen. Kennelijk anders: Abendroth, Ondernemingsrecht 2009-5/53, die een dergelijke clausule zinloos acht.  
Ik gaf in par. 3102b al aan dat ik meen dat een nabetalingsclausule de benadeling (rechtens) kan opheffen. Abendroth is dan ook terecht bestreden door Vermunt, annotatie onder Rb. Oost-Brabant (vzr.) 5 november 2014, ECLI:NL:RBOBR:2014:6666; JOR 2015/120. Andere rechtspraak over nabetalingsclausules: Hof ‘s-Hertogenbosch 2 februari 2016, ECLI:NL:GHSHE:2016:296; JOR 2016/143, nt. Vermunt; Rb. Oost-Brabant 29 april 2016, ECLI:NL:RBOBR:2016:2173; RI 2016/79. Hierover uitvoerig de beschouwing van Mulder (2017), p. 38 e.v. en voorts Van den Berg, diss. (2019), par. 9.2, die tevens uit de literatuur de conclusie trekt dat van benadeling geen sprake kan zijn indien de nabetalingsclausule ertoe leidt dat de verkoop tegen uiteindelijk een reële prijs plaatsvindt, de gezamenlijke schuldeisers niet anderszins benadeeld worden en de opbrengst uiteindelijk voor de gezamenlijke crediteuren beschikbaar komt.


2019-03-doc10 The full version of my reply to professor De Weijs et al

On my blog 2019-03--doc9 for some odd reason my full reply, as pdf, was not attached/visable. Therefor the cut & past full version follows below, with the footnotes at the end.

A reply to professor De Weijs et al.

22 March 2019, Dordrecht, The Netherlands, by Bob Wessels

(professor em. University of Leiden, The Netherlands).

In a letter, dated 20 March 2019, to the European Parliament (EP) (1) University of Amsterdam scholars R. de Weijs, A. Jonkers and M. Malakotipour, criticize heavily the introduction of a Relative Priority Rule (RPR) as currently proposed in the draft Directive on preventive restructuring frameworks (Directive) (2) Professor De Weijs et al argue that the introduction of an RPR in the EU, as an alternative to the Absolute Priority Rule (APR), would amount ‘… to a Teutonic shift within private law, company law and insolvency law’. These scholars suggest that the EP – when having their vote on 26 March 2019 – should decide not to include such an RPR in the Directive.

In their letter, the authors detail their argument by referring to academic research they have conducted (3) They invite further debate, as expressed in a Belgian law blog, and pull into the debate an article written in German by professor Madaus. (4)

Their public call cannot be left unanswered. (5)

These scholars’ call should be set aside by the EP for at least five reasons.

1. Support for RPR

To understand the dynamics of the proposed Directive, professor De Weijs at al refer on the Belgian blog to ‘two underlying reports of hundreds of pages’ and the fact that just a few pages that are devoted to Relative Priority. That’s insufficient to decide to include RPR in the Directive, they argue. They make a reference to the study by the European Insolvency Institute (ELI) in its Report on the Rescue of Business in Insolvency Law, including over 100 recommendations, written by prof. Madaus and me.(6)

The authors clearly have misunderstood the independency, the goal and the impact of this study, which was published in September 2017.

It has been written for ELI, an independent non-profit organisation in the field of European development. The Report’s goal is straightforward:

‘If the reports and the recommendations are formally approved by ELI, they can be commended for use by the European institutions active in this field, Member States, organisations and associations of turnaround managers, insolvency practitioners and judges, and other groups across Europe, in the meaning of the terms of our initial engagement.’(7)

With the approval of the ELI Council Madaus and I, as authors, have not integrated specific rules of the European Commission’s Proposal for a Directive on preventive restructuring. In the Report, the law as it is on 28 February 2017. The period between March 2017 and September 2017 was necessary for the adoption and finalisation of the Report, being subject to the process of discussion and approval by bodies within ELI.(8)

The text of the Report has been endorsed by 14 independent experts (judges, academics and practitioners) from nearly as many countries, and after a lengthy discussion was unanimously adopted during ELI’s General Assembly in September 2017 in Vienna.

As to the aspect of Relative Priority, particularly in the EU context, early Autumn 2018 the idea developed in the ELI Report has been supported in a joint study, called Best Practices in European Restructuring, written by professors from Italy, Germany, Spain and the UK.(9)

2. Overestimation of secured classes of creditors and underestimation of European business realities

Professor De Weijs et al are not fully accurate in their presentation of the APR-rule, isolated from other norms and tools proposed for business rescue, and present European business realities. They clearly seem to overlook the fact that most EU countries have more preferential creditors than secured classes. Such preferential creditors may include employees, revenue (tax) authorities (e.g. in the Netherlands), tort victims, environmental claims, etc. (10) Taking into account the rigidity of the APR and the large number of preferential creditors, the adoption of a restructuring plan, fully satisfying such creditors would be highly unlikely. Essentially, any ‘privileged’ class of creditors could frustrate (veto) an otherwise value-creating restructuring plan. Thus, enforcing the APR may encourage hold-out behaviour of these objecting  ‘privileged’ creditors.

May I add that APR has attracted criticism from its early days. The Commission tasked with reviewing the bankruptcy law in the USA, concluded that ‘…the rigidity of the [absolute priority] rule has frequently resulted in the destruction rather than the protection of interests of public investors. [These investors] are frequently eliminated from participation in a reorganization by reason of the strict application of a statute designed primarily for their protection.’ (11)

We argue that precisely because of this that the adoption of a more flexible and business-sensitive RPR is fully justified.

The legitimate interests of secured lenders are protected by a best interest test that guarantees that they will receive in a restructuring at least as much as they would be able to realize when enforcing their rights.

3. The debtor under the Directive

De Weijs et al fail to appreciate that a debtor (a business) under the proposed Directive is not insolvent. This follows directly from Article 1(a), stating that ‘[t]his Directive lays down rules on: preventive restructuring frameworks available for debtors in financial difficulty when there is a likelihood of insolvency [my italics] with a view to preventing the insolvency and ensuring the viability of the debtor.’ This is why applying the logic and rules of insolvency law, including the APR, is not justified. In the absence of insolvency, the arguments for changing the capital structure of the debtor (e.g. by wiping out shareholders and (as the case may be) junior creditors) are unconvincing.

4. Singling out one aspect, missing the broader picture

Although I understand the criticism by professor De Weijs et al, in the gamut of proposed rules and tools, the RPR is seen and analysed as one isolated aspect. The authors are rather silent on the possibility that the RPR will create incentives for early restructuring. In case of the application of the stern APR, the debtor’s company shareholders have very limited incentives to pursue restructuring as their equity will be fully wiped out. One of the major thrusts behind the proposed Directive is to ‘…enable the debtors to restructure effectively at an early stage’. (12) Since the introduction of the APR as the single option disincentivises the debtor’s directors and shareholders to use preventive restructuring frameworks, it may hamper the early restructuring of viable debtors in financial difficulties.

Notably, the US Commission cited above has also proposed that equity owners should be able to participate ‘…if their future contributions, e.g., continued management, [were] essential to the business.’ (13) I share this approach and believe that incentivizing the debtor’s directors and shareholders to use preventive restructuring frameworks as early as possible fully complies with the objectives and spirit of the proposed Directive.

This is particularly so for small and medium-sized enterprises, in which the skills, the connections of management and shareholder(s) and their understanding of (regional) circumstances play a crucial role. The proposed Directive highlights that ‘[f]or the purposes of its implementation, the restructuring plan should make it possible for holders of equity in micro, small and medium-sized enterprises to provide non-monetary restructuring assistance by drawing on, for example, their experience, reputation or business contacts’ (Recital 29a of the proposed Directive). When, as a result of the APR, equity is wiped out, this objective will never be achieved.

5. It is not about insolvency law as we know it

Professor De Weijs et al’s contention is that a drastic move to include the RPR is (thus the Belgian blog) ‘… to jettison the most fundamental rule of reorganization from the future EU framework of reorganization.’ With all respect, this observation is based on a misconception of what actually happens in business reality. An absolute norm, such as the APR, cannot serve as a starting point for discussion on what is necessary for a balanced system of business restructuring. It is a specific (be it an important) ’insolvency’ norm which has value in a specific market and under specific circumstances. Such an uncompromising norm, however, should not hijack a debate which in the end is not about (or not only about) protecting strong vested rights (of banks or certain categories of investors), but one giving chances to viable businesses.  

This all is not an alleged ‘… Teutonic shift within private law, company law and insolvency law’ (letter to the EP) or  ‘… a takeover of all other fields by European (Pre-) Insolvency Law’ (blog), rather it is a search for a new balance between insolvency law, company law and contract law, also based on societal desiderata related to, inter alia, protection of employment and maintenance of business activity. Where restructuring and insolvency laws legislate for business rescue, a careful balancing exercise will still need to take place between the interests of all of the various parties involved: the debtor, its creditors, its members or shareholders, with a view to the broader interests of society and the economy as a whole.(14)

Evidently, the cited scholars acknowledge that in the proposal, the aspect of the RPR is indeed an option. Therefore, we would argue, if Member States believe that it is not a good option, they are free to choose the APR. I fail to see any role of the European Parliament in this respect. Having two options (APR and RPR) creates regulatory competition between the Member States and should ultimately lead to the best results in terms of efficiency. Leaving just one option (ie APR) might impose an inefficient procedure upon all Member States without the business market itself having a chance of operating as a potential corrective.

The authors’ public call to the European Parliament to reconsider the EU adopting the RPR is unavailing in at least two ways: (i) EU politicians should not be consulted nor be invited to intervene in a legal academic debate, and (ii) if choices are to be made, the ball is in the park where it belongs, that of the EU Member States.


1 Available at

2 Proposal for a Directive of the European Parliament and of the Council on preventive restructuring frameworks, second chance and measures to increase the efficiency of restructuring, insolvency and discharge procedures and amending Directive 2012/30 - Confirmation of the final compromise text with a view to agreement, Dec. 17, 2018, Council Paper 15556/18, available at

3 See R. de Weijs, A. Jonkers and M. Malakotipour, “The Imminent Distortion of European Insolvency Law: How the European Union Erodes the Basic Fabric of Private Law by Allowing ‘Relative Priority’ (RPR).” Available on:

4  A reply to professor Madaus “The new European Relative Priority from the Preventive Restructuring Directive – The end of European Insolvency Law?”, 15 March 2019, available at

5 De Weijs et al. draw heavily on academic research of US professor Baird and they attach to their letter a letter of Baird, who concludes that the proposed European Directive seems to have profoundly misunderstood the essence of relative priority. With respect, but I fail to see the relevance of an academic debate in light of this letter to the EP. 

6 Bob Wessels and Stephan Madaus, Instrument of the European Law Institute – Rescue of Business in Insolvency Law (September 6, 2017). Available at

7 ELI Business Rescue Report, p. 8.

8 ELI Business Rescue Report, p. 5ff.

9 Available at, see at p. 45ff.

10 For more on the diversity of ranking of claims in the European context, see Study on a new approach to business failure and insolvency: Comparative legal analysis of the Member States’ relevant provisions and practices, University of Leeds, 2016, p. 112.

11 Bankruptcy Commission of the United States, Report of the Commission on the Bankruptcy Laws of the United States, H.R. Doc. 137, 93d Cong., 1st Sess. (1973) at 256. Discussed in B. Markell, Owners, Auctions, and Absolute Priority in Bankruptcy Reorganizations, Articles by Maurer Faculty. Paper 2061, p. 87.

12 Recital 2 of the proposed Directive.

13 Bankruptcy Commission of the United States, Report of the Commission on the Bankruptcy Laws of the United States, H.R. Doc. 137, 93d Cong., 1st Sess. (1973) at 258.

14 See ELI Business Rescue Report, p. 103.