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Blog 2016

2016-10-doc8 Judicial Insolvency Network Initiated by Supreme Court of Singapore

Last week, in Singapore, 11 insolvency judges from 8 jurisductions met in Singapore for the inaugural Judicial Insolvency Network ('JIN'). JIN, as a network of insolvency judges from around the world, aims to encourage communication and cooperation amongst national courts by pulling together the best practices in cross-border restructuring and insolvency to facilitate cross-court communication and cooperation, which has become critical in today’s increasingly globalised economy. During the conference exchange of views took place with the idea of developing a set of guidelines conducive for communication and cooperation in cross-border restructuring and insolvency. These Guidelines will provide a framework for parties in cross-border restructuring and insolvency to customise protocols to facilitate court-to-court communication and cooperation in each case. The Supreme Court of Singapore hosted the conference, with as participants and observers: Australia (Federal Court and New South Wales), the British Virgin Islands, Canada (Ontario), the Cayman Islands, England & Wales, Hong Kong SAR and the United States (Delaware and Southern District of New York). Judicial Commissioner Aedit Abdullah and Judicial Commissioner Kannan Ramesh represent the Singapore judiciary in developing this initiative. A few weeks earlier, Mr Ramesh gave an interesting presentation during an insolvency regulatiors' conference, called 'Cross-Border Insolvencies: A New Paradigm', see http://www.supremecourt.gov.sg/news/speeches/judicial-commissioner-kannan-ramesh--international-association-of-insolvency-regulators. I note that he refers positively to my book International Insolvency Law Part I: Global Perspectives on Cross-Border Insolvency Law (2015). In their efforts, JIN may find inspiration for the so called EU JudgeCo Principles of 2015, which include principles on cross-border insolvency case management of courts and the equal treatment of creditors and principles about the judicial decisions itself, on its reasoning and for instance on providing a stay or moratorium. Several principles relate to the course of the proceedings, such as notifications and authentication of documents, and principles on the outcome of judicial cooperation, for instance cross-border sales, assistance to a reorganisation or rules for binding creditors to an international reorganisation plan. The 26 EU JudgeCo Principles are accompanied by 18 EU Cross-Border Insolvency Court-to-Court Communications Guidelines (‘EU JudgeCo Guidelines’), a set of very practical guidelines to facilitate communications in individual cross-border cases. The EU JudgeCo Principles and Guidelines will strengthen efficient and effective communication between courts in EU Member States in insolvency cases with cross-border effects. They have been produced by a team of scholars of Leiden Law School and Nottingham Law School in a period of two years (2013-2014) in collaboration with some fifty experts, including 25 judges representing just as many different countries. The EU JudgeCo Principles try to overcome present obstacles for courts in EU Member States such as formalistic and detailed national procedural law, concerns about a judge’s impartiality, uneasiness with the use of certain legal concepts and terms, and, evidently language. The texts further build on existing experience and tested resources, especially in cross border cases in North America, but are structurally set into an EU insolvency law context. See http://bobwessels.nl/2015/09/2015-09-doc7-eu-judgeco-principles-book-published/

2016-10-doc7 City Law School symposium 6-7 April 2017 - Call for papers

On April 6 and 7, 2017 an inaugural Insolvency Symposium and Conference which will be held at the City University of London. During the symposium some contributors will present the result of the national reports which were commissioned to them as part of a research project organized by the City University of London. The Insolvency Symposium welcomes submissions in all areas of Insolvency Law. Contributors to the research study 'Treatment of Executory Contracts in Insolvency Law: A Comparative Study' will be allocated 15 minutes each to present the results of their investigations. All other speakers will present their research ideas or papers for 15 minutes and a 10 minute discussion will follow. Researchers, academics, students, and industry professionals who do not wish to give a presentation are also very welcome to attend. Intending contributors and speakers should prepare an abstract (250 words) and send to City Law School PhD candidate Eugenio Vaccari (Eugenio.Vaccari@city.ac.uk). He can also deal with further enquiries.

2016-10-doc6 Droit & Croissance restructuring conference, Paris 28 October

Established in 2012, Droit & Croissance / Rules for Growth ('D& C') is an independent think tank and research laboratory aiming to foster growth in France and beyond by improving the efficiency of its laws affecting its economic environment. On 28 October 2016, in Paris, D&C organises a one-day restructuring conferences with expert speakers from France, Germany, Spain, Italy, the UK, the USA and from the staff of the European Commission. Roud table discussions include queries as (i) What has made London so unique in Europe until recently? Potential consequences of a Brexit on practices as regards financial restructuring, (ii) Which insolvency law should apply to corporates in the European Union? (iii) The advantages of an effective insolvency law to facilitate the resolution of non performing loans, and (iv) Financial restructuring and the difficulties raised by the development of bond markets in Europe. The event is free for academics and civil servants, if you are an academic or a civil servant (only), to register please contact: conference@droitetcroissance.fr. Otherwise go to http://droitetcroissance.fr/evenements/a-venir/

2016-10-doc5 Leiden Law Blog on Directors' disqualification

On 10 October 2016 published on Leiden Law Blog: On July 1 2016 an Act regarding director disqualification entered into force in the Netherlands. The Act was included in the Dutch Bankruptcy Act. The new rules, together with an act revising the law on criminal sanctions for bankruptcy fraud, are aimed at combatting bankruptcy fraud. The disqualification rules try to prevent at an earlier stage fraudulent directors (‘bestuurders’) from continuing their business by simply setting up a new company. Both an insolvency practitioner (‘IP’) (appointed by the court over the insolvent entity) and the public prosecutor may request a civil ban on directorship. They can do so if during or in the three years preceding the insolvency of a legal person: (i) the director is liable for improper management as referred to in Article 2:138 and 2:248 Dutch Civil Code, (ii) s/he has deliberately performed legal acts or has permitted or made possible these acts, whereby creditors are significantly disadvantaged and which acts have been nullified by the court in accordance with Articles 42 or 47 of the Bankruptcy Act (‘faillissementspauliana’), (iii) the director has seriously failed in the fulfillment of his or her duties to inform or to cooperate with the IP, (iv) s/he has at least twice previously been involved in an insolvency of a legal person and can be personally blamed for this, and (v) whether the director has been fined because s/he has violated applicable tax legislation and has been found to be liable. The Act descibes in quite some detail the persons to which the new rules aply, the procedure to be followed and the consequnces of any decision by the court with regard to the management of the company. The court may impose on a director (including a ‘shadow director’ or an actual company policymaker) a ban for a maximum period of five years. If the judgment has become legally binding, the respective director will be deleted from the Commercial Register and the ban will be registered for the duration for which it is given. In this way the disqualification will become public. The result is that the director during the period of the ban may not execise his duties as a director or supervisory director at all. Incidentally, a director or supervisory director may also relieve himself or herself by showing – generally - that s/he has not been negligent in taking measures. With the new rules, the Netherlands is one of the last EU Member States to include director disqualification rules. From a recent study, coordinated by Leeds University, it follows that only Greece and Italy do not have rules on the topic, whilst it also reveals that there are quite some differences in, for example, the acts that can lead to disqualification, the persons subject to it, the registration of a ban and the length of such a ban (in France, Spain and the UK up to fifteen years, in Bulgaria for an indefinite time!, see p. 65ff). Now, what would happen if a director, disqualified in the Netherlands, were to seek a similar position in, say, Germany or Sweden? This is certainly a possibility under the on-going globalisation of companies and under the freedom of persons to move to another Member State. The Leeds study (p. 75) concludes that in the EU there are ‘… only a few, if any, checks on whether a person who represents himself or herself for appointment as a director in one Member State is disqualified in another.’ Regarding the registration in the Netherlands of foreign legal entities, this will be rejected by the Chamber of Commerce if it appears that such a legal entity is controlled by a person who in the Netherlands is subject to a disqualification order. A Dutch disqualification order, however, does not stand in the way of someone becoming a director of a legal person established elsewhere in the EU. The EU does not have a system of mutual recognition of these qualification orders, unless it can be argued that the judgment of the court can be regarded as an order ‘… which derives directly from the insolvency proceedings and is closely linked with them’. However, under the new Dutch rules, there seems to be no duty for the IP to obtain recognition of such a judgement, let alone that in practice the disqualified director will not inform an IP about his whereabouts. If, under certain circumstances, the order would indeed be eligible for recognition, the next phase is execution in the Member State concerned. There is quite some uncertainly regarding this latter topic, as well as regarding ‘cross-border issues in the area of director’s liability and disqualifications’. Article 90(3) of the EU Insolvency Regulation (recast) (Regulation No. 2015/848 of May 20, 2015, OJ. L 141) provides that the European Commission shall submit a study to the Council, the European Parliament and the European and Social Committee no later than 1 January 2016. Now, more than nine months after this date, there is still the sound of silence.

2016-10-doc3 Three paradigm shifts in recent bank insolvency law

Three Paradigm Shifts in Recent Bank Insolvency Law is the title of my latest article, with Matthias Haentjens as co-author. It will be published in (2016) 31 Journal of International Banking Law and Regulation, pp. 396-400. See its proof-print as attachment. haentjens_wessels_2016_jiblr_issue_7_press_proof We identify three paradigm shifts underlying recent developments in bank insolvency law. The ‘new normal’ of bank insolvency law is characterised by public interest considerations taking precedence, by non-judicial control of bank resolution, and by a supra-national approach.