Jennifer L L Gant | University of Derby (original) (raw)

Books by Jennifer L L Gant

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INSOL Europe Technical Series - Conference Proceedings IEAF Copenhagen, 2020

Edited collection of conference papers from the INSOL Europe Academic Forum conference in Copenha... more Edited collection of conference papers from the INSOL Europe Academic Forum conference in Copenhagen, Denmark, 25-26 September 2019

1. Permissibility of Contractual Opt-Out from Court-Driven Insolvency Implementation of the Restructuring Directive: Recognizing Reorganization Plans in the US
P. M. (Michael) Veder
G. Ray Warner

2. Evaluating the Policy Effectiveness of the Directive on Restructuring and Insolvency: A Question of the Framework’s Scope?
Lydia Tsioli

3. The Restructuring Directive and Its Impact on Directors’ Duties and Liabilities in the Netherlands, Germany, and the United Kingdom
Michelle van Haren

4. A New Kid on the Block: A Review of the EU DIP in the European Insolvency Regulation (Recast) and the Preventive Restructuring Directive
Gert-Jan Boon

5. Protection of Rescue Financing and Restructuring of Corporate Groups in the European Union
Ilya Kokorin

6. The Sale of Customer Data During Insolvency Proceedings in Light of the GDPR Data Protection Principles
Minke Reijneveld

7. The Cross-Class Cram-Down Mechanism in the EU Restructuring Directive between Absolute and Relative Priority Rules
Giulia Ballerini

8. Trade Credit vs New/Interim Financing in the Context of the Preventive Restructuring Directive
Flavius Motu
Andreea Deli

9. JCOERE – Judicial Co-Operation in the European Union: Insolvency and Rescue
Irene Lynch Fannon
Jennifer L. L. Gant

10. Financial Distress Resolution and the Role of Insolvency Practitioners: Unearthing Best Practices (A Cross-Country Comparative Thesis)
Surbhi Kapur
Animesh Khandelwal

11. Mediators in the EU Restructuring and Insolvency Landscape
Reinout Vriesendorp
Gert-Jan Boon
Defne Tasman
Erik Selander

12. Preventive Restructuring – Is Ireland a Leader in the EU?
Aoife Finnerty

13. Reflections on the Jurisdiction of Annex Actions in the Light of Article 6 EIR Recast and the Recent CJEU Case Law
Chiara Lunetti

14. The Eternal Struggle to Strike a Balance Between Employee and Creditor Protection in Pre-packs and Transfers of Undertakings: About Smallsteps, Plessers and Heiploeg
Frederik de Leo

https://www.insol-europe.org/publications/technical-series-publications

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INSOL Europe Technical Series - IEAF Conference Proceedings, 2019

Edited collection of conference papers from the INSOL Europe Academic Forum Conference in Athens ... more Edited collection of conference papers from the INSOL Europe Academic Forum Conference in Athens Greece, 3-4 October 2019

1. Permissibility of Contractual Opt-Out from Court-Driven Insolvency
Natalie Mrockova

2. Antipodean Lessons from Ipso Facto Law Reform
Associate Professor David Brown

3. Essential Supply Contracts and Ipso Facto Clauses: A Typical/Topical Case of English Insularity
Eugenio Vaccari

4. Third-Party Effectiveness of Retention of Title Agreements: Maintaining the Balance between Owners and other Creditors in Bankruptcy Proceedings
Melissa Vanmeenen
Inge Van de Plas

5. Accelerated Extrajudicial Collateral Enforcement for Non-Performing Loans: a Comparative Analysis of Options in Insolvency
Professor Ben Schuijling
Assistant Professor Vincent van Hoof
Tom Hutten

6. The Impact of the Second Chance Approach on the Secured Creditors’ Rights in Cross-Border Insolvencies
Judge Flavius-Iancu Motu

7. Unknown, Unloved? Towards Good Bankruptcy Governance
Frederick De Leo

8. Potential Abuse of Corporate Rescue Procedures: An Evaluation of Cyprus and the United Kingdom
Sofia Ellina
Kayode Akintola

9. Moving Shifts from COMI to Change in Governing Law: Future of Financial Restructuring? DTEK Case
Olha Stakhyeva Bogovyk

10. Limits to Absolute Priority Rule
Tereza Vodičková

11. Principles of Transactions Avoidance Laws
Professor Reinhard Bork

https://www.insol-europe.org/publications/technical-series-publications

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INSOL Europe Technical Series - IEAF Conference Proceedings, 2018

Edited collection of papers from the INSOL Europe Academic Forum Conference in Warsaw, Poland on ... more Edited collection of papers from the INSOL Europe Academic Forum Conference in Warsaw, Poland on 4-5 October 2018

1. Tripping the Light Fantastic: A Comparative Analysis of the European Commission’s Proposals for New and Interim Financing of Insolvent Businesses
Professor Jennifer Payne and Professor Janis Sarra

2. Prophesying Britain’s Future in the Balance of Social Policy and the Rescue Culture – Challenges to Post-Brexit Harmonisation
Dr Jennifer L. L. Gant

3. Does Strategic Bankruptcy Create Value? Employment Retention Post Bankruptcy
Associate Professor Rick Aalbers

4. The Position of Subordinated Creditors in Insolvency Proceedings
Niels Pannevis

5. Sandboxes for Directors: Minimizing Liability Exposure in Financially Distressed Companies
Ilya Kokorin

6. The New “Group Coordination Proceedings” in the European Insolvency Regulation to the Test of Preventive Restructuring
Nicolò Nisi

7. The Impact of Brexit on Cross-Border Restructurings
Paul Omar

8. Asset Partitioning by Means of IP Rights
Dr Janice Denoncourt

9. Preventive Restructuring Schemes: Risk of Abuse?
Christina Fitzgerald

https://www.insol-europe.org/publications/technical-series-publications

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INSOL Europe Technical Series - IEAF Conference Proceedings, 2017

Edited volume of papers from the INSOL Europe Academic Forum which took place in Cascais, Portuga... more Edited volume of papers from the INSOL Europe Academic Forum which took place in Cascais, Portugal 21 September 2017

PART I: SUBSTANTIVE HARMONISATION
1. Harmonisation of European Insolvency Law and the Influence of Stakeholders
Gert-Jan Boon
2. The Role of Judiciary for a Greater Convergence of European Insolvency Law
Judge Nastasie Nicoleta Mirela
3. Constitutions and Crises: Balancing Insolvency and Social Policy through the Lens of Comparative Legal History
Dr Jennifer L. L. Gant
4. Harmonisation and Avoidance Disputes against the Background of the European Insolvency Regulation
Professor Antonio Leandro
5. Some Comparative Aspects of “Wrongful Trading”
Zoltan Fabok
6. Directors in the Twilight Zone – Kornhaas and “Beyond” from a Dutch Perspective
Professor Loes Lennarts

PART II: CREDITOR RANKING IN INSOLVENCY: POSSIBLE APPROACHES AND OBSTACLES TO HARMONISATION

7. Banking Perspective on Creditor Ranking in Insolvency
Dr Paolo Castagna

PART III: SHAKESPEARE MARTINEAU – INSOLVENCY OFFICE HOLDERS QUALIFICATION, REGULATION AND REMUNERATION
8. Insolvency Holders’ Qualification, Regulation and Remuneration in the UK
Christina Fitzgerald
Tania Clench

PART IV: YOUNGER ACADEMICS NETWORK OF INSOLVENCY LAW

9. Ranking of Creditors in Insolvency: An Empirical Debate on Optimal Harmonisation Practices
Eugenio Vaccari
10. Time to Renew the Debate on Cross-Border Insolvency Law: Out with Theoretical Ideals, in with Pragmatism
Emilie Ghio

PART V: CHALLENGES FOR PREVENTIVE RESTRUCTURING FRAMEWORKS

11. Back to Basics: The Role of the Core Principles of Law in the Clarification and Harmonisation of Preventive Restructuring Frameworks
Professor Catarina Serra
12. Restructuring Reform with Pre-Insolvency Proceedings - Where is the EU Heading to?
Professor Bob Wessels
Professor Stephan Madaus
13. Corporate Restructuring and Corporate Dissolution of Companies in Financial Distress: From Preventing to Circumventing Bankruptcy: A Comparison of the UK and the Dutch Systems from a European Point of View
Dr Samantha Renssen
14. Benchmarking Insolvency Practice Frameworks: The Challenge of Creating Norms
Dr David Burdette
Dr Alexandra Kastrinou
Dr Paul Omar

https://www.insol-europe.org/publications/technical-series-publications

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Following the economic shocks of 2007/08 a spotlight has been thrown on how best to support effec... more Following the economic shocks of 2007/08 a spotlight has been thrown on how best to support effective business rescue and employment protection. However, business rescue and employment protection often tend to conflict in law and policy. Employees attached to the sale of a business often represent a liability by reducing the business’s intrinsic value and deterring business acquisitions in view employment liabilities that transfer by operation of the Acquired Rights Directive. As such, a balance must be sought between the conflicting policy objectives of business rescue and employment protection.

This book presents an investigation based on a comparative legal historical analysis of the approaches taken to balancing employment protection and business rescue in the United Kingdom and France, chosen due to their legal and political influence in the EU and their archetypically different legal systems. This approach is useful as a background to future reform efforts as it explains how particular jurisdictions might receive and then implement such reforms given the underlying aims of business rescue and employment protection policies.

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Articles by Jennifer L L Gant

Fizetésképtelenségi Jog, 2022

In 2019, the EU adopted the Preventive Restructuring Directive to introduce harmonisation enablin... more In 2019, the EU adopted the Preventive Restructuring Directive to introduce harmonisation enabling viable enterprises and entrepreneurs that are in financial difficulties to have access to effective national preventive restructuring frameworks a so that they can continue operating. A harmonised standard to deal with distressed debt and allow for early restructurings was seen as a key component for a competitive and integrated European capital market. In this context, the authors came together in a comparative piece entitled 'Restructuring Europe-The EU Preventive Restructuring Framework: a Hole in One?' that mapped selected jurisdictions' (Denmark, France, Germany, the Netherlands and the United Kingdom) preventive restructuring frameworks against the background of the Directive's objectives and provisions. Eighteen months later and as the implementation period is coming to an end, this article revisits those findings and offers a comparative update on the implementation process. This article also includes additional perspectives on the impact that recent events, such as the COVID-19 Pandemic, had and are having on the nature and progress of the Member States towards the introduction and improvement of preventive restructuring frameworks.

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International Insolvency Review, 2022

Between 2019 and 2022 there have been significant and rapid changes to the global economy. The wh... more Between 2019 and 2022 there have been significant and rapid changes to the global economy. The whole market was revealed to be vulnerable to the pandemic only a massive state response contained the damage. The COVID 19 pandemic has revealed many weaknesses in the approach to healthcare, social protection, and many other areas of society that can be affected by the economic shock. Particularly acute have been the issues around the financial difficulties that have beset small and medium sized companies, not to mention the individual financial impact. Not only have individuals and institutions been forced to face their own vulnerabilities, but the universal nature of vulnerability was shown by the impact of the pandemic through its effect on the fundamental pillars of societies and polities all over the world. The ability to respond to vulnerability is the relative resilience of an individual or an institution. Resilience is the key to understanding both the impacts of the pandemic and whether the insolvency and rescue system works adequately to deal fairly with the relative vulnerabilities of its various stakeholders. Modern insolvency law frameworks respond well to the vulnerability of the secured creditor, for example, as it serves to give these stakeholders power in the process while also strongly supporting the recovery of their losses; however, this responsiveness is less impressive relative to other categories of less powerful stakeholders, such as employees, tort victims, and environmental claimants. As noted in a conversation between the author and Graham Ferris, expert in the field of vulnerability theory, 'to treat major financial institution and individual creditors or employees or victims of corporate misfeasance "equally" is obviously absurd.' Financial institutions can secure their risks in lending contracts and although the state does respond to some of the vulnerabilities of employees by assigning them preferential status, this can be inadequate protection in practice, particularly in a liquidation scenario which will also leave customers, trade suppliers and tort victims to the wolves. Every insolvency stakeholder is vulnerable, but only some have their risk of harm adequately mitigated through the legal structures of insolvency law. Thus, although vulnerability is shared, the assets that support resilience, which include powers, rights and control over processes, are most unequally distributed by the current system in that it gives first priority to the already powerful financial institutions which are already more able to use their power to conclude favourable contracts and whose efforts in both litigation and lobby have been effective in maintaining a system that makes their resilience a first priority in the system itself.

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(2020) 29(10) International Insolvency Review 61, 2020

The pending spectre of Brexit and its impact on Europe and the United Kingdom (UK) along with the... more The pending spectre of Brexit and its impact on Europe and the United Kingdom (UK) along with the political uncertainty of a major world power in continuing turmoil and division (the United States), calls into question the path that many social and economic policies may take in the future in the Western World. The balance of social policy and economic efficiency is nowhere more evident than in the treatment of employees during bankruptcy/insolvency procedures, which may provide a barometer of changes yet to come.

As a member of the European Union (EU), the UK continues to be subject to Regulations and Directives that implement EU social policy objectives and influence the functioning of the rescue culture throughout the Member States, at least until 31 January 2020 as the state of play currently stands and following the most recent extension. The EU has had a significant influence on the direction the UK has taken in matters of social policy since its accession in 1973. Arguably, this has forced the UK into a socially liberal and protective framework that it might not otherwise have adopted to such a degree. EU policy has also had an influence on the UK’s adoption of the rescue culture, which is now the foundation for insolvency systems throughout the EU and in many modern world economies. However, it is possible that the UK was already on a natural path toward the development of a rescue culture within the British insolvency system.

Following the invocation of Article 50 of the Treaty of Lisbon, the UK is making its way toward a deal or no deal Brexit scenario. If and when Brexit becomes a reality, and Britain begins to untangle itself from the influence of the EU, how will the rescue culture and the social protections present within it under the current legal regime be changed? In what direction is the UK likely to go? While difficult to predict, the direction that the UK may take in the event that the European Communities Act of 1972 is eventually repealed and the UK is once again left to its own legislative devices, current conversations in Parliament give a certain flavour of potential futures. In addition, a consideration of different jurisdictions, such as America, Canada and Australia, each having a similar English common law origin and historical links to the UK, can be instructive in relation to which direction the UK may have taken had it never joined the EU. An analysis of this counterfactual position may then also provide a clue as to the direction that the UK may take.

The UK has ever been the “odd man out” in the EU, springing as it does from a significantly different legal origin than the Franco/German model at the heart of the EU. By examining the developmental path of the United States, Australia, Canada, and the UK in this area of law prior to EU accession, the behaviour and reactions of the UK during EU membership, and comparing this to similar developments in the comparator countries, it may be possible to forecast the eventual direction that the law of post-Brexit Britain may take in relation to the available social protections during insolvency procedures in the future.

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(2020) 31(2) International and Commercial and Company Law Review 65, 2020

The JCOERE project is funded by the European Commission Directorate General (“DG”) Justice and is... more The JCOERE project is funded by the European Commission Directorate General (“DG”) Justice and is part of a broader call for projects focussing on judicial co-operation in the European Union. A broad range of diverse legal issues come within this call, which prioritises judicial co-operation in civil and criminal matters; judicial training; and effective access to justice in Europe. The JCOERE project focusses on judicial co-operation in insolvency law and is focussed on judicial co-operation in the context of preventive restructuring. The project hypothesises that there will be obstacles to court co-operation that are specific to preventive restructuring. These obstacles will be classified by type; at first differentiating between substantive rules and procedural rules, and within those broad categories, there will be a further categorisation by type. The starting point is the particular obligation imposed on courts and practitioners to co-operate in insolvency matters under the Recast Insolvency Regulation 848/2015. Within this general obligation placed on courts to co-operate, our particular focus is on preventive restructuring frameworks. The JCOERE project has focussed on preventive restructuring because of the move signalled by the European Union in its policy document ‘A New Approach to Business Failure’ (March 2014) that it was anxious to introduce a restructuring process both for corporations and individual entrepreneurs. Following a range of deliberations in the intervening years there is now a fully-fledged Preventive Restructuring Directive which has been passed (Directive 2019/1023)7 and which requires all Member States to introduce a preventive restructuring process.

Many of these projects, and JCOERE is no exception, have some applied research elements. Accordingly, it was part of the initial bid that the project would engage with members of the European Judiciary and members of the European insolvency practising professions (including turnaround and rescue specialists) to assess the validity of this hypothesis, to explore attitudes to rescue or preventive restructuring across Europe, and indeed attitudes to the concept of judicial or court to court co-operation
across Europe. In that context it was also part of the project that existing guidelines relating to court co-operation would be described and judicial awareness of these guidelines together with examples of best practise would also be considered. As the project has evolved it has become apparent that issues surrounding a general awareness of rescue processes and the dynamics involved in rescue is an important matter, given the nascent character of many domestic legal frameworks in the rescue space. Accordingly, the project will certainly elucidate potential obstacles in the form of the application of substantive rules typical of rescue, together with procedural issues that may inhibit cross-border judicial co-operation in the EU.

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(2020) 29(1) International Insolvency Review 3, 2020

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(2019) 47(2) Federal Law Review 261 , 2019

Employment relations are well understood. Business format franchising is a newer and rapidly evol... more Employment relations are well understood. Business format franchising is a newer and rapidly evolving business expansion formula, also providing employment. This article compares the fates of employees and franchisees in their employer/franchisor insolvency.Whereas employees enjoy protection, franchisees continue to operate in conditions that have been described as Feudal. We identify the inherence of moral hazard, path dependency and optimism bias as reasons for the failure of policies and corporations laws, globally, to adapt to the franchise relationship. This failure comes into sharp focus during a franchisor’s insolvency. We demonstrate that the models
of participation available to employees in the United States, Australia and the United Kingdom could be used to inform a re-balancing of the franchisees’ relationship with administrators and liquidators during the insolvency of their franchisor, providing franchisees with rights and
restoring their dignity.

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(2019) 28(2) International Insolvency Review 184, 2019

The perception of insolvency and restructuring law in Europe has been subject to significant chan... more The perception of insolvency and restructuring law in Europe has been subject to significant changes in recent years; with a fresh breeze coming from national reforms, topped by a radical and substantive reform as reflected in the U Drective on restructuring and insolvency (“Directive”). For decades, the (continental) European understanding of insolvency was merciless. The troubled debtor’s directors were threatened with strict liability and, in some jurisdictions, even criminal punishment for a failure to file for an insolvency procedure. This would almost always lead to the dissolution of the debtor and the (piece-meal) liquidation of its assets. The stigma of insolvency was firmly attached to the insolvent debtor.
Compared to the United States, it has taken some time for the European paradigm of insolvency and restructuring procedures to accept that they should be a tool to facilitate a going-concern rehabilitation of the business and to grant the debtor a second chance for the benefit of value-maximization. Legal reforms in the recent years were aimed at establishing a more restructuring-friendly culture in Europe, espousing a rescue culture for insolvency frameworks. The underlying proposition is that a timely and cooperative restructuring, incentivized by carrots rather than sticks, should create a surplus in contrast to a delayed in-court insolvency procedure; a surplus that could be shared amongst the debtor and its creditors.
In this article, following a short description of the background of the Directive in section 2, an analytical overview of the state of the art of restructuring practice in five European countries (Denmark, France, Germany, the Netherlands, and the UK) will be provided in section 3, prior to which the key elements necessary for a successful restructuring will be extracted and explained. These key elements also reflect the main obstacles to be overcome in agreeing the contents and approach in the Directive and its eventual legislative counterpart as is demonstrated in a comparative review of the position in section 4. In section 5, an analysis of the findings set out herein linked to the Directive is given, followed by a brief conclusion and commentary on the issues present as seen from the authors’ points of view.

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International Insolvency Review, 2017

The financial crisis and the sovereign debt crisis have been attributed to a number of causes. Wh... more The financial crisis and the sovereign debt crisis have been attributed to a number of causes. Whether these are economic, social, cultural or legal, they are all by and large also political. The aim of this article is not to delve into the myriad of heated political arguments that continue to dominate the scene but to assess the impact of the financial crisis on the employment protection rights and the corporate rescue regimes in Greece, Portugal, France and the UK. In light of the crisis, the rights of the workforce have been severely compromised to afford financially troubled companies a greater opportunity to recover. In order to minimise the catastrophic impact of financial turmoil on their economy and society, all four jurisdictions introduced reforms to their labour codes and corporate rescue mechanisms, often in the name of austerity. This article will offer a snapshot of the changes and their effects and an assessment whether or not the reforms of pre-insolvency regimes have operated as an effective embankment for the protection of social and economic welfare. The purpose of this piece is to shed a light on the changes that have occurred and that have affected employment rights in the domestic legal systems of individual member states, as influenced to some extent by the EU in its expectations of improvements to increase labour market flexibility, and whether corporate rescue mechanisms in individual member states are able to provide some counterbalance to the erosion of employment rights generally. Copyright

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Nottingham Insolvency and Business Law eJournal, 2016

Legal systems within the EU have been on a process of slow convergence since the 1950s. However, ... more Legal systems within the EU have been on a process of slow convergence since the 1950s. However, in examining legal systems with a view to determining their core similarities, some exhibit areas of convergence while other aspects remain quite different. Even when comparing those systems that are similar, there remain distinctive characteristics distinguishing one from another. There are differences that seem irreconcilable even within legal groups such as those jurisdictions adhering to the common law or civil law systems. While certain rules and solutions may seem alike, legal cultures and traditions can differ significantly, leading to fundamental differences in approach to regulation and policy initiatives. These differences in approach are influenced by aspects of culture and history which cannot easily be separated from the legislative process. Convergence therefore becomes more difficult with culture bound areas of the law, such as labour and employment.

EU social policy has aimed to harmonise standards based on a minimum floor of rights to a level which is more reflective of what is present in the more socially progressive countries, such as France. However, lack of concrete EU wide definitions have made coordination in social policy difficult. Though similar terms to describe elements of procedure may be used, the ideologies and policies informing the objectives of those procedures create a barrier to mutual understanding and an obstacle to coordinated action. The question remains then as to how it may be possible to find a means of coordinating the law in order to create a more balanced environment for cross border business. In discovering the influences on the aims of socially oriented regulation, it may be possible to identify areas where coordination and perhaps convergence may be realistically attempted and to work around those areas in which the different social aims make such convergence impossible or at least improbable in the near future.

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Debt and credit have a long and complex history in the United Kingdom. Ecclesiastical prohibitio... more Debt and credit have a long and complex history in the United Kingdom. Ecclesiastical prohibitions of usury in the middle ages painted lending and debt with the brush of sin until the Reformation removed this religious impediment, in theory at least, conveniently making it possible for the growth of commercial enterprises and England’s march toward financial revolution. It was also during this period that the first extensive bankruptcy laws were introduced by Henry VIII in the Statute of Bankrupts 1542, which included the concept of rateable asset distribution, however this only related to personal insolvency. It was not until the passage of the Joint Stock Companies Act 1844 and its sister Winding-Up Act, passed on the same day, that insolvency law would recognise the distinction between the personal and the corporate nature of insolvency. However, a recognisable version of corporate insolvency only makes a proper appearance in the inclusion of a liquidation procedure in the Joint Stock Companies Act 1848. Since that time, both personal and corporate insolvency have been the subject of many reforms and consolidations.

The law relating to both personal and corporate insolvency is currently contained in the Insolvency Act 1986, which was the governmental response to the report and recommendations of a multi-disciplinary committee tasked with reviewing insolvency law and practice in the late 1970s. The Cork Report influenced the implementation of the IA 1986, which brought together in one statute both personal bankruptcy and corporate insolvency and at the same time effected a radical reconstruction of the law relating, including the introduction of the concept of rescue through the use of two new procedures: the corporate voluntary arrangement and administration.

During the early years following the passage of the IA 1986, a number of issues were observed relating to the underutilisation of the new procedures in preference to receivership, which was often preferred by principal creditors. This led to reforms at the turn of the millennium with the aim of abolishing receivership (with some exceptions); making the rescue procedures more efficient and beneficial to all manner of debtors; and providing greater benefits to unsecured creditors. The Enterprise Act 2002 has not been the end of reforms, however, nor should it be. As the effects of globalisation and recession have affected business practices and regulation over the period since the promulgation of the EA 2002 reforms, so too must insolvency systems evolve to meet the changing paradigm of economic recovery. In so doing, modern insolvency systems with effective forms of corporate rescue can play their part in recovering from the financial crisis by helping to create an environment where business failure and associated unemployment can be mitigated.

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Since the beginning of the financial crisis in 2007 there have been massive changes in national a... more Since the beginning of the financial crisis in 2007 there have been massive changes in national approaches to the regulation of aspects of national and supranational economies and social policies. This is particularly evident in the changes that have occurred throughout the EU in its reduced emphasis on social protections in favour instead of a more neo-liberal approach designed with the purpose of supporting its weakened economic status. Member State reforms under these revised EU policies as well as the austerity measures required in those States that are party to Memoranda of Understanding in return for financial support have seen the steady erosion of workers’ rights generally, while the “rescue culture” has been steadily infused into Member State legal systems. While the presence of good rescue mechanisms may mitigate to some extent the loss of social protection, it is questionable whether or not such reforms are capable of going far enough to protect the most vulnerable of those EU citizens affected by the financial crisis.
The United States and the European Union are often seen to conflict in their approach to social policy issues, while the United States also presents an often emulated rescue regime in Chapter 11 of the United States Bankruptcy Code. Both the EU and the US have been significantly affected by the financial crisis, but the US has been able to recover more quickly and, it could be argued, more effectively than has the EU as a type of confederation of nations, although individual EU Member States have varied in their survival and recovery. The question is, then, whether the EU can learn anything from the US handling of the financial crisis, and in particular its approach to social policy and the effectiveness of its corporate rescue regime. Given the shift in economic and social policy within the EU and its effects on the Member States, has there also been some form of convergence between the two sets of states as there has been to some extent among the Member States of the EU. The purpose of this treatise is to explore the context of the 2007-2008 financial crisis in the US and in the EU, its impact on legal reform in corporate rescue and restructuring and those aspects of social policy implicated within insolvency systems, whether or not our systems can be seen to be converging and whether or not, in view of the different socio-economic, political and cultural aspects of the US and the EU, such convergence might be helpful or, indeed, a prelude to further internal conflict within the EU.

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What is the explanation of the idiosyncratic disparities between insolvency systems and is there ... more What is the explanation of the idiosyncratic disparities between insolvency systems and is there any way that they can be aligned in spite of them? Why is it that if all Member States wish to promote effective and profitable cross-border business transactions that aligning those systems under which such transactions operate is such a difficult problem to address and resolve? This may seem a naive question, but trite answers will not assist on the way to better coordination. As such, a deeper analysis of the sources of the obstacles to legal coordination may help to elucidate the reasons why such obstacles exist and in so doing, perhaps make it possible to promote a closer alignment that can account for systemic differences when drafting or reforming coordinating legislation rather than attempting to force them into a common perspective. The jurisdiction specific characteristics that form the foundation upon which socio-economic, cultural and historical obstacles are rooted were referred to implicitly in Professor Ian Fletcher’s Edwin Coe lecture, given at the INSOL Europe Academic Forum Paris conference in 2013, out of which was borne the inspiration for this investigation. While acknowledging that obstacles exist that inhibit coordination of insolvency laws at the EU level is a starting place to a broader perspective of the problem, a deeper understanding of the path dependent legal developments of the jurisdictions that are gathered under the coordinating rules of the EIR may assist in understanding the deep culturally related obstacles preventing a more reliable form of mutual trust and, in so doing, reveal potential new paths toward more effective universalism in the coordination of insolvency proceedings.

There are complex factors that exist within the legal, political, cultural, social and economic histories of each Member State that contribute to the diversity of aims of legal regulation. These unique historical experiences influence the developmental path of individual legal systems. While insolvency laws are influenced by a myriad of historical, social, economic and political characteristics, the focus of this treatise will be the path dependent influence of social policy and regulation on the legal development of insolvency law and the aims that individual jurisdictions ascribe to it. This will provide a snapshot of a far more complex framework that can explain how along just a single thread of historical development, a whole area of law can be fundamentally affected and differentiated from parallel developments in another legal system. There is a complexity of diverse legal development in the social policies and regulation of Member States, which has an effect on the aims of insolvency law in the relative weight of protection given to creditors and employees. By way of example, the United Kingdom and France will be used as comparators.

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The issue of how companies in a financially difficult position are to be financed is an important... more The issue of how companies in a financially difficult position are to be financed is an important but delicate one. The approach to insolvency will undoubtedly require the directors to consider whether an extension to existing finance or new finance is an option. This consideration is fraught with danger, given that many of the responses directors might take, including asset disposals, payment of the most pressing demands, enhancing existing or granting further security in favour of creditors as well as entering into further funding obligations that may invite creditors to impose higher/greater than usual terms as a measure of the heightened risk of lending at the insolvency threshold, may well attract the use of transactional avoidance measures known to most insolvency systems. As an added peril, to continue trading while within sight of the moment of formal insolvency may also attract the application of wrongful or insolvent trading rules, also a feature of many developed legal systems. General misfeasance, of which the above may be particular illustrations, may also attract liability. The justification for the rules dealing with the avoidance of transactions, wrongful trading and misfeasance (more generally) is that continued trading and transacting may have a disadvantageous impact on the position of creditors overall. Thus, directors are to be encouraged to seek help at the earliest opportunity, by engaging turnaround, pre-insolvency and insolvency measures, whichever may be appropriate. Thus, they can avoid exposure to liability and the chances of litigation being brought by an insolvency office-holder keen to ensure that the estate is restored to the position it ought to have been in had these transactions not taken place.
In classic insolvency, the above measures generally do not invite consideration of the creditor’s position, except as perhaps a party from whom property (or its value) may be recovered if transactions of a claw-back type have taken place to their benefit and any incidental liability this may incur so as to restore the estate. It is less usual to discuss, in situations where financing is obtained, whether the creditors in those instances are exposed to risks other than those usually attendant on lending transactions: the possibility that their lending decision may have a detrimental impact on the position of other creditors by increasing the level of indebtedness to one creditor, which, with concomitant security, will put that creditor at a manifest advantage when compared to others. In many legal systems, lenders will have no liability provided they lend prudently and in line with rules set by those regulatory and oversight bodies that may exist or generally accepted canons of banking prevailing in the jurisdiction. However, the notion of when it may be prudent as opposed to otherwise will usually take place, just like the examination of when wrongful trading has occurred, on the basis of an ex post facto analysis. A court may well re-qualify the lending transaction as imprudent, resulting in that creditor perhaps losing the benefit of any advantage or priority gained through security. Exceptionally, a court may decide that the extent of the lending decision goes beyond the merely imprudent and acquires overtones of negligence or wilful behaviour, leading to possible liability to the debtor’s estate or other creditors. This view of a general liability for creditors arising out of the lending arrangement, as opposed to a specific liability in particularly targeted instances (usually on grounds of public policy), is not a universal one.
It is the intention in this article to look at two contrasting approaches to creditor liability, that in France, where a generalised principle exists, albeit attenuated by insolvency law reforms in the mid-2000s, and that in the United Kingdom, where contractual freedom and a robust lending culture have given less room for the development of creditor liability rules except in very limited and carefully crafted instances.