COVID-19 placed a special role on fiscal policy in rescuing companies short of liquidity from insolvency. In the first months of the crisis, SMEs as the backbone of Germany's economy benefited from ...large and mainly indiscriminate aid measures. Avoiding business failures in a whatever-it-takes fashion contrasts, however, with the cleansing mechanism of economic crises: a mechanism which forces unviable firms out of the market, thereby reallocating resources efficiently. By focusing on firms' pre-crisis financial standing, we estimate the extent to which the policy response induced an insolvency gap and analyze whether the gap is characterized by firms which were already struggling before the pandemic. With the policy measures being focused on smaller firms, we also examine whether this insolvency gap differs with respect to firm size. Our results show that the COVID-19 policy response in Germany has triggered a backlog of insolvencies that is particularly pronounced among financially weak, small firms, having potential long-term implications on entrepreneurship and economic recovery. Plain English Summary This study analyzes the extent to which the strong policy support to companies in the early phase of the COVID-19 crisis has prevented a large wave of corporate insolvencies. Using data of about 1.5 million German companies, it is shown that it was mainly smaller firms that experienced strong financial distress and would have gone bankrupt without policy assistance. In times of crises, insolvencies usually allow for a reallocation of employees and capital to more efficient firms. However, the analysis reveals that this 'cleansing effect' is hampered in the current crisis as the largely indiscriminate granting of liquidity subsidies and the temporary suspension of the duty to file for insolvency have caused an insolvency gap that is driven by firms which were already in a weak financial position before the crisis. Overall, the insolvency gap is estimated to affect around 25,000 companies, a substantial number compared to the around 16,300 actual insolvencies in 2020. In the ongoing crisis, policy makers should prefer instruments favoring entrepreneurs who respond innovatively to the pandemic instead of prolonging the survival of near-insolvent firms.
As it is known, the court is the body that administers justice. Georgia has a system of general courts, including District, Appeal, and Cassation courts. The district court is a court of first ...instance covering the entire territory of Georgia. Considering the specificity of insolvency, its cases are considered only by the city courts of Tbilisi and Kutaisi. The powers assigned to the insolvency court include reviewing the application, opening the rehabilitation regime, appointing a manager/supervisor, etc. The activity of a judge often goes beyond the scope of civil law and Civil Procedure Code. Accordingly, the rights and obligations established by other branches of law apply to him/her. One is the law of insolvency, which mainly has independent general and procedural norms. The current law envisages the court’s involvement in such a regime as rehabilitation. In the work, the role of the court is considered within the framework of the regulation of the law of insolvency, the rehabilitation regime, which is regulated by the law of insolvency. And the research revealed that certain issues need to be regulated at the legislative level. Due to the fact that the role and rights, and duties of the court in the rehabilitation regime have not been elaborated in accordance with the new law by the researchers, the research topic is relevant and interesting. To properly discuss the topic provided by the article, the law “On Rehabilitation and Collective Satisfaction of Creditors’ Claims”, insolvency proceedings, and bankruptcy proceedings are compared. The normative acts in force in Georgia are used in the work, which regulates the rights and duties of the judge. In addition, various international acts are cited in the article for comparison and strengthening of the position.
How insolvency courts handle conflicts is an important aspect of the Directive on preventive restructuring frameworks and it has become more important in the current COVID‐19 crisis, as a result of ...which insolvencies are or will be on the rise. Insolvency courts are one of the key actors that can impact the length and costs of conflicts, and, consequently, the effectiveness and efficiency of insolvency proceedings. However, there is a lack of empirical research that examines when, why and how insolvency courts prevent actual or potential conflicts. This article reports the results of an empirical study that explored the strategies used by insolvency judges in the Netherlands to resolve conflicts and to prevent a dispute from becoming one. The results show that insolvency courts deploy “under the radar” mediation‐like strategies to prevent actual and potential conflicts involving insolvency practitioners, enhancing the speed and cost‐effectiveness of the winding‐up of cases in the perceptions of stakeholders. Consequently, insolvency judges do not only act as adjudicators in court proceedings, but also take on mediation‐like roles, at least in some jurisdictions. Limitations and challenges of these roles are discussed. The findings of this study are relevant for determining and regulating the roles and tasks of insolvency judges.
We find that shareholder-friendly corporate governance is associated with higher stand-alone and systemic risk in the banking sector. Specifically, shareholder-friendly corporate governance results ...in higher risk for larger banks and for banks that are located in countries with generous financial safety nets as banks try to shift risk toward taxpayers. We confirm our findings by comparing banks to nonfinancial firms and examining changes in bank risk around an exogenous regulatory change in governance. Our results underline the importance of the financial safety net and too-big-to-fail guarantees in thinking about corporate governance reforms at banks.
17 November 2022, Banco Court, Supreme Court of Queensland I THE DEBATE The underlying rationale for tracing in equity is a much-debated topic and has seemingly resulted in more theories than there ...are commentators. Permitting a claimant to utilise the tracing process in whimsical ways, as has occurred with the concept of 'backward tracing', leaves a stain on the administration of justice. ...what was it in the nature of B's right, claim or interest in relation to the original painting or in the relationship with the trustee that enabled the invocation of such a process, which resulted in such a windfall? In general, but not exclusively, most accept that the party seeking to trace held, at least at one stage, a right, claim or interest in relation to property which has been adversely affected by the actions of another and has been the subject of some form of substitution.15 A
Transaction avoidance is part of insolvency proceedings. The successful application of the rules on transaction avoidance allows the value of the debtor’s assets to be maximised, and thus increases ...the satisfaction of creditors’ claims. In the European Union, the substantive rules on insolvency law still are a matter of the national laws of Member States. However, trends in the policy-making actions of the European Union reveal that various initiatives have been proposed to establish certain rules on transaction avoidance which should increase recovery rates for creditors and contribute to the proper functioning of the domestic market. This article focuses on the general aims of transaction avoidance and provides a critical assessment of the proposed harmonisation of the rules on transaction avoidance in European Union law. The authors found that the proposed rules on the harmonisation of transaction avoidance rules in European Union insolvency law may actually discourage businesses regarding the exercise of the freedom of establishment, and may also intervene in the substantive insolvency and civil law regulations of Member States.
The Jordanian legislature related to "insolvency" has a great importance due to its effect on preserving the sustainability of stalled economic projects, taking into account the existence of ...guarantees that preserve the rights of all parties, including creditors and debtors, in a way that enhances confidence in the investment environment and raises economic growth rates. The restructuring phase starts when the preliminary phase ends, upon the court’s announcement for the end of this phase and the beginning of the reorganization phase - unless the debtor requests to proceed with the liquidation procedures - and if the insolvency agent’s report concludes that reorganization is not possible, or if the economic activity stops, then the court issues a decision to proceed with the liquidation process. The study concluded that the reorganization phase - of both types – in case the debtor was bound by it and succeeded, would take him out of the financial turmoil that affected his economic project and that led to his insolvency from both actual and imminent types.
The Jordanian legislature related to "insolvency" has a great importance due to its effect on preserving the sustainability of stalled economic projects, taking into account the existence of ...guarantees that preserve the rights of all parties, including creditors and debtors, in a way that enhances confidence in the investment environment and raises economic growth rates. The restructuring phase starts when the preliminary phase ends, upon the court’s announcement for the end of this phase and the beginning of the reorganization phase - unless the debtor requests to proceed with the liquidation procedures - and if the insolvency agent’s report concludes that reorganization is not possible, or if the economic activity stops, then the court issues a decision to proceed with the liquidation process. The study concluded that the reorganization phase - of both types – in case the debtor was bound by it and succeeded, would take him out of the financial turmoil that affected his economic project and that led to his insolvency from both actual and imminent types.
The debtor, who is willing to implement the rehabilitation regime, needs proper support in order to maintain and protect insolvency, increase the liquidity of the entity, etc. The moratorium measure ...ensures all of the aforementioned in insolvency law, in particular in the rehabilitation regime. The use of the moratorium measure in the rehabilitation regime should not be understood solely in favour of the debtor. It is a means of protecting the interests of creditors along with the interests of the debtor. The law distinguishes between mandatory and additional moratorium measures. As soon as the court issues a ruling on opening the rehabilitation regime, certain measures of the moratorium are automatically put into effect, and in certain cases, based on the court’s decision, it is possible to apply additional measures of the moratorium. Consequently, the moratorium measure requires the court’s involvement and caution. When applying the moratorium, the court must act in accordance with the principles of justice and proportionality. The use of the moratorium measure in the rehabilitation regime can be considered an important means of implementation of one of the important principles of the law, “ – Maintaining and increasing the insolvency and business value as much as possible”.
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