The problems faced by debtors in South Africa is not that there are no alternatives to insolvency proceedings, but that the available alternatives do not provide for a discharge of debt as with a ...sequestration order, which is ultimately what the debtor seeks to achieve. Debtors in South Africa can make use of debt review in terms of the National Credit Act 34 of 2005 or administration orders in terms of the Magistrates' Court Act 32 of 1944 to circumvent the sequestration process. However, both debt review and administration orders do not provide for a discharge of debt and provide for debt-restructuring only, in order to eventually satisfy the creditor's claims. Attention is given to the sequestration process and the alternatives to sequestration as they relate specifically to the discharge or lack of a discharge of a debtor's debts. The South African law is compared to Kenyan Law. This article seeks to analyse the alternatives to the bankruptcy provisions of the newly enacted Kenyan Insolvency Act 18 of 2015 in order to influence the possible reform of insolvency law in South Africa. Like the South African Insolvency Act, the old Kenyan Bankruptcy Act (Cap 53 of the Laws of Kenya) also did not have alternatives to bankruptcy. The old Kenyan Bankruptcy Act, however, contained a provision on schemes of arrangement and compositions. The Kenyan Insolvency Act now caters for alternatives to bankruptcy and provides a wide range of alternatives to bankruptcy, some of which allow debtors in different financial positions to obtain a discharge.
The COVID-19 crisis caused an unprecedented global disruption of economic activity, which was especially intense in Spain due to the nature of its economy. Many legal and institutional reforms were ...adopted, and extraordinary economic measures implemented. As interim reforms are lifted and economic incentives wear off, Spain will need to grapple with the economic damage caused by the pandemic. Arguably, the reform of the insolvency system recently approved, which precedes and is independent of the measures enacted to stave off risks caused by the pandemic, provides an enhanced and improved framework to deal with business insolvency. Spain now counts on a state-of-the-art hybrid restructuring system and a modern regulation to deal with the financial and economic distress of micro enterprises. However, the special legislation approved during COVID, and the side effects of the economic measures came with a cost and are already interfering with the day-to-day application of the new insolvency system, especially concerning public claims and public guarantees. Further, the Spanish legal framework has still some shortcomings which might prove a real hindrance to resuming access to credit at adequate levels.
The onset of the COVID-19 pandemic saw a period of rapid experimentation with insolvency law settings, designed to prevent a wave of insolvencies. Although governments acted quickly to keep debtors ...out of insolvency processes, they did not alter high levels of underlying indebtedness. In this worsening economic climate characterized by low growth, high inflation, fiscal tightening and high indebtedness, it appears, in certain countries, that these measures may have deferred, rather than prevented, high insolvency levels. A key economic legacy of the COVID-19 pandemic is the extensive fiscal stimulus and the resulting budgetary constraints this has placed on governments. In this context, there is increasing evidence of the importance of frameworks for out-of-court debt workouts as a complement to formal corporate restructuring frameworks.
The insolvency law is one of the core components of the comprehensive body of legislation that ensures the confidence of the legal community in a legal system. It regulates the conditions of ...widespread debtor liability and at the same time defines the framework within which creditors can expect their rights to be preserved through a reorganization and recapitalization of the indebted company. The actual effect of the insolvency law does not end at a country's borders. Insolvency proceedings are structured according to the right to have universally applicable validity. Joint legislation on cross-border insolvency proceedings is now in effect in the form of intrastate legislation in almost all member states of the European Union. This shared European legislation is impacting intrastate reform processes and influencing the insolvency legislation. Furthermore, the intrastate legislation is being influenced by the UNCITRAL-Model law. Academic debate is increasingly concerned with the convergence movement that has been triggered as a result. Practical applications require legal dogmatic clarification of the increasingly complex regulations of insolvency legislation, and information on structures and problems of foreign European and extra-European insolvency laws, as well as and in particular with regard to its interaction with German laws. The DZWIR publication series is a forum of these discussions. It is being published as a series of monographic examinations of fundamental questions on German, European and international insolvency legislation. As such, this series contributes to the legal dogmatic clarification of disputes as well as to the promotion of European integration of national insolvency legislation.
Several countries and regions around the world, including Singapore, the United Kingdom, and the European Union, are amending their restructuring framework to implement a pre-insolvency mechanism ...that includes most of the features that exist in the US Chapter 11 reorganization procedure. However, unlike what happens in the United States, where unsuccessful reorganizations lead to Chapter 7 liquidations, companies using this ‘
de facto
Chapter 11’ (DFCH11) are still allowed to use formal reorganization procedures. This article argues that, while the rise of the DFCH11 is not necessarily undesirable provided that various protections are put in place, jurisdictions implementing this restructuring tool need to adapt their formal insolvency framework to this new era of ‘pre-insolvency law’. Otherwise, some inefficiencies can be created from the lack of coordination between insolvency and pre-insolvency law, since non-viable firms as well as viable businesses managed by the wrong people can opportunistically delay the commencement of a liquidation procedure even when it is the most desirable outcome for society.
This article traces the emergence of the concept of ‘group solution’ and its manifestations in insolvency law and bank resolution as an alternative to the rigid entity-by-entity approach. The rise of ...this concept can be linked to the recognition of the specificity of problems related to the insolvency of multinational enterprise groups, arising from group operational and financial interconnectedness. This has not happened at once, but has resulted from the evolution of views and ideas, evident in hard and soft law instruments of the 2000s and the 2010s. In light of this important development the article explores the concept of a group solution, its rationale, scope of application and limitations. It concludes that despite the gradual acceptance of the group phenomenon, a group solution has not been formed as a coherent and well-defined legal principle. Instead, it represents a variety of approaches, tools and practices, which pursue different policy objectives underpinned by different societal values. Among them are asset value maximization, business rescue, the protection of financial stability and the preservation of banks’ critical functions. With all its flexibility, a group solution has one pervasive limitation—it cannot trump the interests of individual group members and their creditors. At the same time, in order to realize the full potential of a group solution, it is necessary to embrace the group-sensitive and forward-looking interpretation of creditors’ interest, facilitating commercially sensible and practical group solutions.
This comprehensive Practical Guide provides direction on the wide array of legal questions and challenges that start-ups face. The Guide features analysis from five jurisdictions that represent a ...variety of legal traditions across different continents. Expert contributors address key legal issues for technology-based start-ups and entrepreneurs, as well as providing insights into the law and practice of the countries examined.
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