Current Developments in International and Comparative Insolvency Law: Corporates, Financial Institutions and Sovereigns

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Annika Wolf

(MWP LAW Fellow 2013-2015)


The first conference on International and Comparative Insolvency Law took place under the scientific direction of Max Weber Fellow Annika Wolf (Department of Law) at the European University Institute on 24 July 24 2014. It was hosted by the Global Governance Programme at the Robert Schumann Centre for Advanced Studies, the Max Weber Programme for Postdoctoral Studies and the International Insolvency Institute, and brought together an outstanding cast of academics, professionals and government officials from around the world to discuss the current challenges in insolvency and restructuring law in various jurisdictions and with regard to corporates, financial institutions and sovereigns.

After a short welcome to the conference made by Hans-Wolfgang Micklitz, Dean of the Department of Law, Annika Wolf introduced the conference, explaining where the idea for such a conference had come from: a conference that took place in Toronto in 1993. While reading the contributions on current topics and challenges discussed then, she realized how much or how little progress has been made in the field of insolvency law over the last 20 years. Insolvency law has been, is and probably will be particularly susceptible to changes in business conditions and shifts in economic and social values. In times of economic decline, the attention focused on companies in financial difficulties generally increases. The economic threat caused by failing business in an already unstable environment in the aftermath of 2008 put great pressure on governments to revise their insolvency legislation to reflect contemporary conditions and save jobs by enabling insolvent businesses to reorganize themselves rather than being liquidated – and these topics were to be discussed in the one-day event.

The first session dealt with international and comparative aspects of corporates and was chaired by Annerose Tashiro. Larry Ellis from Canada presented his thoughts on the challenges of the restructuring and rescue process, presented an exemplary proceeding with the respective timeline and distinguished the Canadian proceedings from those of the U.S. Bankruptcy Code. The new legal norms in insolvency law in Columbia have not been tested yet, stated Luis Guillermo Vélez, so whether the new proceedings are fit for purpose, either rescuing a viable business or providing an effective liquidation process, remains to be seen. Look Chan Ho discussed the key changes in English Insolvency law since 1993. He focused on the scheme of arrangement as a financial restructuring tool, its nature and elements. As the Scheme of Arrangement has also proven to be an efficient tool for restructuring German companies, Stefan Sax compared the German protective shield proceeding as a restructuring mechanism to its English alternative – and though the protective shield proceeding is the right step towards restructuring in Germany, it does not yet provide an alternative to the scheme of arrangement. This was a conclusion that Johan Jol supported when he deliberated on Dutch insolvency law and the implementation of the scheme of arrangement for Dutch companies. He stressed the importance of out-of-court restructurings to preserve value to both the debtor and creditors and pointed out the European Commission Recommendation, stating that national insolvency frameworks should ensure viable enterprises in financial difficulties to be restructured at an early stage to prevent insolvency. Rita Gismondi presented an overview of the legal changes in Italian insolvency law. She questioned whether the legal reforms in recent years to insolvency law are adequate to meet the requirements of the recommendation.


Sophie Vermeille and Saliha Bardasi presented an overview of French insolvency law and the reluctance of the French government to provide adequate formal insolvency proceedings in case an out-of-court proceeding might fail. Sophie Vermeille added why harmonizing corporate insolvency law at the European level would prove to be more successful to provide for a European common market. Samuel Bufford introduced a preliminary approach for a broader use of arbitration for international insolvency cases.

The second session, chaired by Heikki Marjosola, focused on the international and comparative aspect of financial institutions and sovereigns. Stephan Madaus concentrated his presentation on the restructuring and resolution of insolvent financial institutions and whether “zombie banks” in Europe would be eligible to receive funding for going concerns from the European resolution regime. The challenge of dealing with bank insolvencies in China was discussed by Xinyi Gong. It became obvious in both presentations that the legal norms may not be as much of a detriment as the political intrusion deciding when and which banks are to be rescued or to be resolved. The impact of insolvency law on financial asset collateral in commercial transaction was discussed by Spyridon V. Bazinas while Peter Werner dealt with financial contracts in insolvency and Gerard McGormack with creditors’ security rights in Europe. The presentation shed light on issues around how to deal with financial rights in insolvency. The European and national legislators have produced an astonishing amount of regulation, especially since the onset of the financial crisis, yet, the participants discussed at length whether extensive regulation is the right means to solve this issue. The missing overlap of national insolvency laws is even more obvious when dealing with multinational enterprises acting across borders. Christoph G. Paulus discussed different strategies applied by different industries to overcome the hurdles set by national legislators in insolvency law. The final presentation by Ignacio Tirado dealt with the banking crisis and sovereign insolvency of Spain. The discussion followed on from the descriptive overview of the history, typical content, advantages, disadvantages and limitations of protocols that dealt in particular with the legal nature of the (lack of) commitment protocols and the involvement of courts.

The conference was characterized by the high level and breadth of presentations, followed by discussions that delivered vital and valuable insights towards promoting a deeper understanding of the complex issues in comparative and international insolvency law. The participants shared their ideas for progress on the challenges in law, research and practice and, as one speaker noted, it is a hot topic that will remain on the agenda for a while.