Bankruptcy regulations and the new German insolvency law from an economic point of view (original) (raw)
Related papers
Economic Considerations Regarding the Mandatory Insolvency Petition under German Law
Journal of Interdisciplinary Economics, 2010
The mandatory insolvency petition, combined with liability for delaying insolvency proceedings, represents a corner stone of German 'exit' liability which regulates the extent of management's responsibility during a crisis. 1 Since the enactment of the MoMiG (Law on Modernizing GmbH Law and Preventing Abuses) 2 , it is laid down in § 15a InsO (Insolvenzordnung). This section replaces the former provisions in § 64 Subsec. 1 GmbHG and § 92 Subsec. 2 AktG. Additional exit liability is provided in Germany by the prohibition of any payments out of the company's assets. This prohibition previously applied to stock corporations and GmbHs only during the state of insolvency (§ 64 [formerly Subsec. 2] GmbHG, § § 92 Subsec. 2 [formerly Subsec 3], 93 SubSubsec. 3 No. 6 AktG), i.e. illiquidity or overindebtedness (cp. § § 17 and 19 InsO). It has now been extended to also catch pre-insolvency payments to shareholders that were necessarily causing the subsequent insolvency. 3 The management liabilities established by the duty to file for insolvency and the prohibtion of payments are functional equivalents of other well known exit liabilities like wrongful trading and duty to creditors in England 4 or the action en comblement du passif 5 and the new obligation aux dettes sociales 6 in France. *The authors wish to thank stud. iur. Erik Kravets, M.A., Hamburg, for providing the translation of the manuscript which in a previous German version was published in: Intemationalisierung des Rechts und seine ökonomische Analyse/Internationalization of the Law and its Economic Analysis. Festschrift für Hans-Bernd Schäfer zum 65. Geburtstag (Wiesbaden 2008), pp. 605-618 (the original German title reads "Ökonomische Überlegungen zur zwingenden Insolvenzantragspflicht des deutschen Rechts").
2017
The essence of the law on bankruptcy is to collect the debt of an entity and distribute such asset among the contending claimholders. It is, also meant to resolve the broad issues of business failure in the context of the imminent or indeed the actual collapse of the indebted entity. The objective of the study is to explore relevant theories guiding the procedure of distribution or entitlement in bankruptcy among a group of agents. The study employed exploratory research method via an extended literature review, to investigate the underlying principles guiding the allocation of a given amount of a perfectly divisible good among a group of agents. The results of this extended literature review indicate that the procedure of distribution or entitlement in bankruptcy is supported by five of the theories reviewed while only value based theory posits the absence of any cogent solution to the financial distress of the debtor. The knowledge of theories is not enough for business survival, ...
2017
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2003
This paper reports an experimental study on three well known solutions for bankruptcy problems, that is, the constrained equal-awards, the proportional and the constrained equal-losses rule. To do this, we first let subjects play three games designed such that the unique equilibrium outcome coincides with one of these three rules. Moreover, we also let subjects play an additional game, that has the property that all (and only) strategy profiles in which players unanimously agree on the same rule constitute a strict Nash equilibrium. While in the first three games subjects' play easily converges to the unique equilibrium rule, in the last game the proportional rule overwhelmingly prevails as a coordination device.
NBER WORKING PAPER SERIES CORPORATE AND PERSONAL BANKRUPTCY LAW
Bankruptcy is the legal process by which the debts of firms, individuals, and occasionally governments in financial distress are resolved. Bankruptcy law always includes three components. First, it provides a collective framework for simultaneously resolving all debts of the bankrupt entity, regardless of when they are due. Second, it provides rules for determining how the assets and earnings used to repay are divided among creditors. Third, bankruptcy law specifies punishments intended to discourage debtors from defaulting on their debts and filing for bankruptcy. This review discusses and evaluates bankruptcy law by examining whether and when the law encourages debtors and creditors to behave in economically efficient ways. It also considers how bankruptcy law might be changed to improve economic efficiency. The review shows that there are multiple economic objectives of bankruptcy law, because the law affects has very diverse effects. Some of these objectives differ for individuals versus corporations in bankruptcy.
A Comparative Analysis Of Insolvency Proceedings In France, Germany And Slovak Republic
2013
This contribution aims to compare legislation adjusting the course of insolvency proceedings in France, Germany and Slovakia. On the basis of an investigation of the legislative adjustment of this problem, an attempt is made to ascertain in the given countries the extent to which the outcome of the entire proceedings is influenced by legislation and to determine the fundamental moments that influence costs, recovery rate and the duration of proceedings. A comparative analysis was utilized in order to achieve the set goal. The results of the survey could be used to improve legislation so as to lead in the best and most expedient way to a departure from the market of those subjects that are for economic reasons unable to continue with their activities whilst burdening the entire process with the lowest possible costs, which would lead to a high level of satisfaction for creditors.