1 / 9

International Insolvency Law 1. Insolvency law - basics

International Insolvency Law 1. Insolvency law - basics. Dr Marek Porzycki Jagiellonian University Krakow. Standard debtor-creditor relation. claim and liability relevant only for the parties – usually no effect for third persons

zoraidae
Download Presentation

International Insolvency Law 1. Insolvency law - basics

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. International Insolvency Law1. Insolvency law - basics Dr Marek Porzycki Jagiellonian University Krakow

  2. Standard debtor-creditor relation • claim and liability • relevant only for the parties – usually no effect for third persons • the creditor can take recourse to compulsory enforcement  „grab law” – „first come – first served”

  3. Insolvency • insufficiency of assets for total satisfaction of all debts • relevant for other creditors • Any payment to one creditor means less assets for covering the debtor’s liabilities towards other creditors  CONFLICT BETWEEN CREDITORS • Compulsory enforcement of a debt by one creditor harms all the other creditors • on the margin: insolvency law or bankruptcy law? cf. Latin concursus creditorum

  4. Two forms of insolvency • cash flow insolvency - the debtor has stopped to pay his debts as they fall due Attention – insolvency vs. illiquidity • balance-sheet insolvency - the debtor’s total assets are worth less than his total liabilities

  5. Traditionalfunction of insolvency law • collectivedebtenforcement: • includingallassets of the debtor ( insolvencyestate) • in the interest of allcreditors • withinorganized and orderlyproceedingsprovided for by the law, aimedatachieving a justdistributionamongcreditors • ban on individualdebtenforcement • impact on almostalllegal relations of the debtor interactions with severalbranches of law

  6. Stages of traditionalinsolvencyproceedings • takingover and assessment of the debtor’sassets by anexternal administrator/liquidator • verification of the debtor’sliabilities/admission of claims • possibility of invalidation of the debtor’s previous acts detrimental to the creditors • winding-up (liquidation) of the debtor’s estate (mostly by sale) • distribution of proceedsamongcreditors, depending on priority rules and/or collateral • effect: winding-up of the debtor’senterprise. If the debtoris a legal person, in most casesitisdissolved.

  7. Modern functions of insolvency law • rehabilitation of distressed enterprises - sale of the entire enterprise to a new investor - negotiating an arrangement between the debtor and his creditors enabling a continued functioning of the debtor’s enterprise. Varying complexity of solutions adopted. - varying extent of the debtor’s divestment – from ‘debtor in possession’ to administration by an external administrator/liquidator

  8. Insolvency of individuals • a ‘fresh start’ without debts for natural persons (consumers and/or entrepreneurs) • criticism: a breach of the basic rule „pacta sunt servanda” • justification: social and economic reasons

  9. Further reading • Th. Jackson, The Logic and Limits of Bankruptcy Law (any edition): - Introduction: The Two Roles of Bankruptcy Law - Chapter 1: The Role of Bankruptcy Law and Collective Action in Debt Collection [available on Google Books]

More Related