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Blog 2018

2018-01-12 Bob Wessels Insolvency Law Collection

Since the end of January 2018 the Law Library of the Leiden Law School holds one of the largest collections on insolvency (bankruptcy) law in Europe. A large portion of it contains the private library that I have been building up in over thirty years, since the early 1980s till 2016. From 2007 to 2014 I was a professor of international insolvency law at the University of Leiden. I have donated a large part of my privately held library (around 30 meters of books, reports, etc.) to the Stichting (Foundation) Bob Wessels Insolvency Law Collection. The statutory object of the Foundation is to promote the interest and knowledge of international and comparative restructuring and insolvency law and to maintain and manage the library and to promote worldwide access to it. The Foundation aims among other things, to hold public meetings and lectures, to organise courses, initiating initiatives and publishing and distributing publications. In addition, it strives to make the collection available via easy accessible, openly licensed text and other digital assets that are useful for teaching, learning, and assessing for research purposes. Donations and contributions from third parties will support the Foundation in reaching its goals. For Dutch tax purposes the Foundation is a public benefit institution (in the meaning of Dutch ANBI legislation). Its board members are
Prof. Matthias Haentjens, Professor of Financial Law, Leiden Law School, chair
Prof. Eric Dirix, Leuven, Judge Supreme Court; Professor of Private law, University of Leuven, Belgium
Prof. Ian F. Fletcher, Q.C. (hon.), Em. Professor of International Commercial Law, University College London, United Kingdom
Prof. Stephan Madaus, Professor of Civil Law, Civil Procedure and Insolvency Law, Martin Luther University Halle-Wittenberg, Halle, Germany
Prof. Reinout D. Vriesendorp, Professor of Insolvency Law, Law Leiden Law School, secretary/treasurer.

In turn, the greater part of the collection has been entrusted by the Foundation to the Leiden Law School Library. The latter will act as a prudent custodian, including activities such as conservation, having the collection catalogued, and making it available for consultation and research for the users of the Law School's library. On 26 January 2018 the official opening (symbolical, by un-flagging a show glass) of the insolvency law collection took place, by Law School dean professor Joanna van der Leun and the chairman of the Foundation, professor Matthias Haentjens. With gratitude I was able to say some words of thanks for all the effots made by everyone to have to insolvency law collection now professionaly availabe in one of the top libraries in Europe.
The Foundation can be reached via its secretary/treasurer professor Vriesendorp, r.d.vriesendorp@law.leidenuniv.nl.

2018-01-doc11 Passing away of Professor Hazard

I am saddened by the news that on 11 January Geoffrey C. Hazard, Jr., Emeritus Professor of Law at the University of Pennsylvania Law School, has passed away. He was, among many other things, also a Professor of Law at Yale, the University of Chicago, and the University of California, Berkeley. In the USA he was a leading figure in the fields of civil procedure, judicial administration, and legal ethics. He has also been Director of the American Law Institute (ALI). After he attended one of my lectures, he approached me for becoming a member of ALI. At that time, 2004, he was the champion of a project, that had started under his leadership, in the mid 90s, ALI's Transnational Insolvency project. The results of this project laid the groundwork for what we now know as the UNCITRAL Model Law. Later he was a leading figure in the collaboration of ALI with UNIDROIT on the ALI/UNIDROIT Principles of Transnational Civil Procedure. Professor Hazard introduced me at ALI to work on joint study, commissioned by the ALI and the International Insolvency Institute (III), with the central question: the recommendations in the Transnational Insolvency Project, applying to the USA, Canada and Mexico, can these be recommended all over the world? The study undertaken was conducted over a period of six years, ending in 2012, the Joint Reporters being Ian F. Fletcher (University College London) and myself. In a 300-page supportive report we delivered the ALI-III Global Principles and Guidelines 2012, reinforcing the importance of court-to-court cross-border cooperation in insolvency cases. These are 37 Global Principles for Cooperation in International Insolvency Cases, and 18 Global Guidelines for Court-to-Court Communications in International Insolvency Cases. These ALI-III Global Principles and Guidelines 2012 have been republished in 2017, see http://www.bobwessels.nl/blog/2017-09-doc1-ali-iii-global-principles-and-guidelines-2012/. I was very pleased to see Geoff's thumbs up! These principles and guidelines also have formed a basis for the EU Cross-border insolvency court-to-court cooperation principles, published in 2015. Presently, in Europe again, the European Law Institute (a 'sister' organisation of ALI) has a project ongoing as a cooperative venture of ELI and UNIDROIT. It builds upon the aforementioned ALI/UNIDROIT Principles of Transnational Civil Procedure, and aims at the regional development of those Principles. Geoff Hazard played a foundational role in the past half-century of civil procedure and legal ethics in the USA. Moreover, in Europe, in insolvency law and procedural law we stand on his shoulders. For me he was an important force in law reform efforts, pragmatic, to clarify, modernize, and improve the law. He has been instrumental in my professional development and I thank him for that.
He died at the age of 88. See http://www.legacy.com/obituaries/nytimes/obituary.aspx?pid=187830739

2018-01-doc10 The rule in Gibbs

The 'rule in Gibbs' is not well known on the European continent. In the English insolvency world, however, it’s a rule that can not be overlooked, and receives severe criticism. It goes back to over a century, but recently has kept laywyers in several parts of the world busy. The rule of Gibbs refers to the case of Gibbs & Sons v La Société Industrielle et Commercial des Métuax ((1890) 25 QBD 399). In this case the defendant, a French company, had agreed to buy copper to be delivered in England by the plaintiff. The defendant refused to accept the copper and so was liable in damages to the plaintiff. The defendant was placed in judicial liquidation in France and it was assumed that as a matter of French law, the defendant was discharged from its liability in damages. However, the English court held that French law was irrelevant because it was ‘… not a law of the country to which the contract belongs, or one by which the contracting parties can be taken to have agreed to be bound; it is the law of another country by which they have not agreed to be bound.’ Fletcher (I reviewed the latest edition of his book at http://www.bobwessels.nl/blog/2017-06-doc3-fifth-edition-fletcher-the-law-of-insolvency/) is extremely offended as English private international law in this respect ‘… is insular and xenophobic in the extreme, and plainly guilty of maintaining dual standards with regard to the principle of universality of bankruptcy’. Other parts of Fletcher’s opinions are cited, last week, by Hildyard J in Bakhshiyeva v Sberbank of Russia & Ors [2018] EWHC 59 (Ch). The High Court maintains to apply the Gibbs rule, however the judgment is an interesting read for its fundamental discussion, with references to quite some other cases and sources, ending with the conclusion that the introduction of a ‘new Model Law’ concerning the recognition and enforcement of insolvency related judgement may solve the problem. I would add, indeed, as the European Insolvency Regulation (Recast) applies to foreign discharges presented as separate judgments and to discharge judgments closely related to insolvency proceedings, see Article 1(1) and 32(1) EIR 2015 respectively.

 

2018-01-doc9 USA Shutdown. Also for US courts?

Two hours ago (Dutch time) in the USA, Congress did not pass an appropriations bill to continue funding the federal government beyond 19 January. The budget deadline has passed; there will be a government 'shutdown'. After Christmas 2017, again holidays for bankruptcy lawyers? Not in California: the Bankruptcy Court for the Central District of California announced that the federal judiciary will use other funds to allow federal courts to remain open. During that time, scheduled hearings will be held as usual, filings will be accepted, and hours of operation, availability of systems, and other services will continue as normal. The Court will remain open for approximately three weeks through 9 February 2018. In case of any change of circumstances, the Court will provide another public notice. So also judges have to worry about keeping up their pants, as we say in the Netherlands. See http://www.cacb.uscourts.gov/sites/cacb/files/documents/news/PN%2018-002.pdf

2018-01-doc9 NIKI Luftfahrt Act 4

The NIKI Luftfahrt insolvency drama was close to a legal controversy, which would have had vast proportions, with a clash between two legal systems, from Germany and Austria, see http://www.bobwessels.nl/blog/2018-01-doc7-comi-of-niki-luftfahrt-act-3/. Reuters reports, however, that both appointed IPs (in the German insolvency proceedings Lucas Flöther, in the Austrian proceedings Ulla Reisch) have settled the legal dispute: 'Airline Niki’s German and Austrian administrators agreed to cooperate to resolve the insolvent carrier’s future swiftly and guarantee legal certainty for its buyer.' My first reaction: I prefer cross-border cooperation over a legal fight, which in this case certainly would have taken considerable time, hassle and costs, probably to the detriment of creditors and the continuation of the business of NIKI. Both practitioners shoud be congratulated with the sensible view they took (although they are not there yet!). See the press release in German:
'15. Januar 2018 – Die Insolvenzverwalterin der „NIKI Luftfahrt GmbH“ in Österreich, Dr. Ulla Reisch, und der vorläufige Insolvenzverwalter des Unternehmens in Deutschland, Prof. Dr. Lucas F. Flöther, haben eine enge Kooperation beim Verkauf des Geschäftsbetriebs der insolventen Airline vereinbart.
Frau Dr. Reisch ist aufgrund der österreichischen insolvenzrechtlichen Bestimmungen und der Anordnung des Landesgerichtes Korneuburg verpflichtet, bis zum 19. Januar 2018 neue Angebote der Investoren einzuholen, die bereits an der vorherigen Bieterrunde teilgenommen haben. Außerdem können auch neue Bieter Angebote abgeben.
Anschließend werden der deutsche vorläufige Gläubigerausschuss sowie der österreichische Gläubigerausschuss binnen weniger Tage entscheiden, welcher der Bieter den endgültigen Zuschlag erhält. Die Unterschrift beider Insolvenzverwalter gewährleistet dabei dem Erwerber Rechtssicherheit für den Vollzug des Kaufvertrages. Damit werden trotz unterschiedlicher Rechtsauffassungen zur internationalen Zuständigkeit der weitere Fortbetrieb und die bestmögliche Verwertung der Vermögensgegenstände sichergestellt. Ausschlaggebend für den Zuschlag sollen unverändert der Kaufpreis, die Finanzierungsfähigkeit des Bieters sowie der Erhalt möglichst vieler Arbeitsplätze sein. Die interne Aufteilung des Kaufpreises zwischen den beiden Insolvenzmassen ist in Abstimmung, die rechtlichen Rahmenbedingungen sind beiderseits in Prüfung.
Bis zu dieser Entscheidung hat sich Prof. Flöther bereit erklärt, aus der deutschen Insolvenzmasse von NIKI die Finanzmittel zur Verfügung zu stellen, die erforderlich sind, den Basis-Geschäftsbetrieb von NIKI aufrecht zu erhalten. Dabei werden die Forderungen der österreichischen Arbeitnehmer von 1. bis 12. Januar 2018 vom österreichischen Insolvenzentgeltfonds bezahlt. Der Vollzug des Kaufvertrages („Closing“) soll nach wie vor in der zweiten Februar-Hälfte erfolgen, so dass NIKI – eine entsprechende Entscheidung des Erwerbers vorausgesetzt – spätestens im März 2018 den Flugbetrieb wieder aufnehmen kann.'
See http://insolvenzverwaltung.floether-wissing.de/news/items/niki-insolvenzverwalter-arbeiten-bei-verkauf-zusammen.html