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2015-12-doc9 Expedited corporate debt restructuring

Forthcoming in: International Company and Commercial Law Review – [2016] ICCLR , Issue 2, a short review of:

Rodrigo Olivares-Caminal (ed.), Expedited corporate debt restructuring in the EU, Oxford University Press 2015, LV + 800 pp. ISBN 9780198706502. £ 195.

In Europe, insolvency law is a restless possession. Two decades ago international and national insolvency law looked like a solid rock, certain, predictable and stable. However, the state of affairs then was not geared to upcoming international and modern business. Therefore, international insolvency opened up and developed and national insolvency laws have been disordered to look for new points of orientation. These processes have not gone parallel, but undoubtedly have influenced each other.

On a European level the Insolvency Regulation in 2002 created a breakthrough. After a discordant start (with controversial cases such as Daisytek and Eurofood), thirteen years later the Recast is published, based on the idea that the Regulation generally works well, but needs some clarifications and improvements. On a national level, with Germany (1999) many European countries found that their insolvency frameworks could not achieve economic results that are potentially better than those that might be achieved under bankruptcy liquidation.

Substantial legislative revisions in insolvency laws and related laws have taken place, starting off with England (Enterprise Act 2002) and nearly all Western European countries following, whilst Eastern European countries started their market oriented economies with more modern insolvency laws right from the beginning. In many of these countries the U.S. Bankruptcy Code’s Chapter 11 procedure has served as a model for legislators. The start of the second decennium of this century has shown an immense increase of political attention for matters of rescue and insolvency.

At the end of 2012 – in addition to the overall objective of the revision of the Insolvency Regulation to improve the efficiency of the European framework for resolving cross-border insolvency cases – a new policy was launched: harmonisation of certain aspects of insolvency law in view of ensuring a smooth functioning of the internal market and its resilience in economic crises. The idea was presented that Europe needs modern insolvency laws that help basically sound companies to survive, encourage entrepreneurs to take reasonable risks and permit creditors to lend on more favourable terms. A modern insolvency law allows entrepreneurs to get a second chance and ensures speedy procedures of high quality in the interest of both debtors and creditors. Europe – thus the idea – needs to establish conditions for the EU-wide recognition of national insolvency and debt-discharge schemes, which enable financially distressed enterprises to become again competitive participants in the economy.

In this process of harmonisation, the book shortly reviewed here, comes very timely. It contains an overview of expedited corporate debt restructuring in all 28 EU Member States and three cross-jurisdictional themes: expedited corporate debt restructuring and tax and competition law implications in the EU and procedural law implications under the EU Insolvency Regulation. All these chapters are preceded by a theoretic analysis, written by the editor, on expedited corporate debt restructuring: conceptual framework and practical issues. He engages in the challenge of defining the terms used in a non-liquidation context and distinguishing three options, court-supervised reorganisations, out-of-court mechanisms (private workouts) and the ‘hybrid approach’, being contractual arrangements supported by the intervention of courts or administrative authorities. The whole collection provides the reader with detailed analysis and information.

It should be noted however that not all chapters follow the same format, many of the chapters also provide illustrations with recent cases (e.g. Belgium: Decto Fleurus; France: Technicolor; Poland: PKM Duda; Sweden: Saab) or case hypotheticals, some provide ‘fact and figures’.

Where the book provides such a valuable source with all 28 Member States explaining their position as per early 2015, it is with some regret that I note that the book misses a concluding chapter presenting a comparison and analysis of some key questions on expedited corporate debt restructuring. The editor would most certainly be equipped to write it and thus contribute to the present harmonisation process in the EU in a distinctive way.

Be that as it is, in all the work will be very beneficial for insolvency practitioners wishing to know more about the jurisdiction they are negotiating with, for European and national legislators in further amending their legislations, as well as courts, in cases where they are dealing with two or more jurisdictions, to better understand what is required or possible under domestic law. An indispensable book for anyone interested in corporate rescue in the EU.