In a forthcoming article, with the title ‘Towards a European Code of Conduct for Creditors’ Committees‘ I argue that it is timely and necessary that a non-binding code of conduct should be drafted and used to establish a culture of trust building workout negotiations amongst repeat players (like banks, suppliers, union representatives, insurers etc.). The article will by published in International Corporate Rescue (Chase Cambria) soon.
Code of Conduct. Such a code should follow the example of existing codes and provide for standstill agreements, confidentiality agreements, the way to organise and control a full disclosure (including the flow of information), for rules how to conduct negotiations (including an option to involve third parties to act as supervisors or mediators) and rules to deal with conflicting interests (including an assessment of which ‘interest’ (financial, tactical, commercial) is being considered and what ‘conflict’ is being guaranteed against). Hardly any of these issues are addressed by the Preventive Restructuring Directive 2019/1023. To aim at a level of equal rules about creditor participation in the EU, the market should take the lead in the drafting proces, however national governments are not excluded. European Member States should ensure that the relevant professional bodies (insolvency practitioners, turn around professionals, judges) are consulted and involved in the creation of such soft law instruments. In developing a result, best practices should be taken into account as set out in principles and guidelines developed or adopted by European and international non-governmental organisations active in the area of restructuring and insolvency. Although it certainly may be the case that national legislation exists regarding the establishment and role of a creditor’s committee, as these rules are not subject to harmonisation efforts of the Restructuring Directive, it may be advisable to think about a European Code of Conduct for Creditors’ Committees. The consideration of setting up a creditor’s committee raises many questions: number of members (in connection with the representativeness of its members and effectiveness of the committee), purpose of the committee, available budget for the involvement of experts, mapping of financial, legal, strategic and tactical interests and the question of whether and, if so, in what way these contrast with each other. These matters should be taken into account when preparing and making careful and well-considered decisions.
Where to start? The article discusses developments in USA’s Chaper 11, Dutch court cases regarding Imtech on creditors’ committees and adopted recommendations of the European Law Institute (https://www.europeanlawinstitute.eu/projects-publications/completed-projects-old/insolvency/). With this guidance and some comparative research into a number of protocols used in cases all over Europe, time certainly is ripe to draft a European Code of Conduct for Creditors’ Committee.