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Blog 2015

2015-12-doc16 TRI Leiden newsletter December 2015

Turnaround, Rescue and Insolvency Research Team (TRI Leiden) is a multi-disciplinary group active in all matters of restructuring and insolvency. An update with its finalised and current research projects and activities over the past few months can be found in TRI Leiden's December 2015 newsletter. These include: EU Cross-Border Insolvency Coourt-to-Court Principles, next steps in harmonisation of rules on business rescue in Europe, proposal for guidelines for turnaround en restructuring professionals, comparative proposals to reform Chapter 11 US Bankruptcy Code, a new initiative on 'second chance', a seminar and a PhD on sovereign debt restructuring, and - evidently - publcations and (four!) book presentations. You can view this newsletter online at: Enjoy reading! I wish all readers of my blog a joyful festive season and I will be back in January.

2015-12-doc15 ISDA 2015 Universal Resolution Stay Protocol launched.

The International Swaps and Derivatives Association (ISDA) published mid November 2015 the ISDA 2015 Universal Resolution Stay Protocol. The protocol will enable parties to amend the terms of their Protocol Covered Agreements to contractually recognize the cross-border application of special resolution regimes applicable to certain financial companies. Moreover, it will support the resolution of certain financial companies under the United States Bankruptcy Code. It is in fact a relaunch of the mid November 2014 Stay Protocol in which eighteen systemically important global banks agreed to delay by one day their right to exercise certain early termination and cross-default rights against one another in connection with certain over-the-counter transactions when their counterparty is in imminent collapse and their fate is being decided by a national regulator. The new Stay Protocol now covers 21 major global banks. The agreement was brokered by the ISDA in conjunction with the Financial Stability Board (FSB). Lacking a general overall statutory approach, the contractual approach to cross-border recognition under ISDA Master Agreements is an intermediate measure, until more comprehensive statutory regimes are adopted. I have criticized the direction the proposals chosen for these statutory regimes took (territorial in stead of regional or universal) and now, over a year later, I wonder how responsible stakeholders can justify why things move at a snail's pace, see The ISDA 2015 Universal Protocol replaces the 2014 Stay Protocol, but is nearly identical to it. A substantial change, however, is that the International Capital Market Association (ICMA), International Securities Lending Association (ISLA) and Securities Industry and Financial Markets Association (SIFMA), in consultation with ISDA, have developed an annex that expands the ISDA 2015 Universal Protocol to cover certain securities finance master agreements. There is no specific cut-off date to the ISDA 2015 Universal Protocol. ISDA has reserved the right to designate a cut-off date by giving 30 days’ notice on its site, see

2015-12-14 Art. 86 EIR Recast will apply per 26 June 2016

Courts and Computers, A Cosy Couple? Already on 26 June 2016 Article 86 of the EU Insolvency Regulation (EIR Recast), on information on insolvency laws, will apply. The EIR Recast itself will enter into force 26 June 2017 (see my short memo on the recast at, or go to Article 86 ('Information on national and Union insolvency law') however is a forerunner. It will apply from 26 June 2016. What does it say? It contains three paragraphs: (1) The Member States shall provide, within the framework of the European Judicial Network in civil and commercial matters established by Council Decision 2001/470/EC, and with a view to making the information available to the public, a short description of their national legislation and procedures relating to insolvency, in particular relating to the matters listed in Article 7(2), (2) The Member States shall update the information referred to in paragraph 1 regularly, and (3) the Commission shall make information concerning this Regulation available to the public. The rationale for Article 86 is laid down in recital (76), which says: 'In order to improve the provision of information to relevant creditors and courts and to prevent the opening of parallel insolvency proceedings, Member States should be required to publish relevant information in cross-border insolvency cases in a publicly accessible electronic register. In order to facilitate access to that information for creditors and courts domiciled or located in other Member States, this Regulation should provide for the interconnection of such insolvency registers via the European e-Justice Portal. Member States should be free to publish relevant information in several registers and it should be possible to interconnect more than one register per Member State.' In practice, at least for me, to get access to the relevant sources is not unproblematic. However, with some help of a Leiden insolvency researcher I found it. Say, you're from England, France or Poland (practitioner of judge), and you want to understand some insolvency matters from the Netherlands, this is what you find Yes, just a few lines, in Dutch (!), updated over a year ago. Information concerning the twelve items mentioned in Article 7(2) EIR Recast (still) lacks. On the site one also finds a link to insolvency registers, see Click, and after a cheerful 'Welcome to the Insolvency Registers interconnection search interface! This functionality of the European e-Justice Portal allows you to search for insolvent entities, either natural or legal persons, within the EU', it says that this service is provided by the European Commission in cooperation with the participating Member States: Czech Republic, Germany, Estonia, Netherlands, Austria, Romania, Slovenia. It is still in a voluntary phase, probably welcoming twenty other Member States within some six months. It adds: 'Please note that participating registers may have specific national rules on the search criteria necessary, how long data is retained, etc. Please take a few moments to read more on this on our general information page. An eventful journey lies ahead, unless harmonisation attempts also focus on these details. I then just was curious how the Dutch Judiciary is maintaining one of my favourite sites, (the one with court decisions, in Dutch), especially the information provided in English. Click. No 'welcome' (that's fine), but simply the direct Dutch way 'The following site provides short information regarding the Dutch judicial system, see'. At the bottom I found a link 'international insolvency', see There it is said that the European Commission has proposed an amendment of the Insolvency Regulation, emphasizing court-to-court cooperation. Hmmm. It's not an amendment but a fully new regulation, repealing the existing one (see Article 91 EIR Recast). It then refers to the related articles (Hmmm, it refers to the proposal for the Recast, not the ones in the Recast itself). It then provides that cooperation with courts in The Netherlands is subject to rules of best practices for cooperation in cross-border insolvency cases as set out in principles and guidelines on communication and cooperation adopted by European and international associations active in the area of insolvency law, '... such as the JudgeCo Project and INSOL International'. 'JudgeCo project' is the umbrella name for its outcome, being the EU Cross-Border Insolvency Court-to-Court Cooperation Principles (‘EU JudgeCo Principles’) and its related EU JudgeCo Guidelines, see But Hmmm, the reference to INSOL International is not easy to understand. I am not aware of any guidelines suggested by INSOL. Should it refer to 'UNCITRAL'? Then follows that insolvency practitioners and government organizations dealing with 'bankruptcies' (Hmmm, the English version of the EIR Recast, but also the original Regulation does not use this term), can make inquiries on cooperation in insolvency proceedings via: Concluding: tiny steps taken, long march to go.

2015-12-doc13 Shareholders and their position in insolvency

The treatment of shareholders in the insolvency of companies is a current research project co-led by the Bank of Italy and the World Bank. Research areas are (1) Shareholders’ Liability for the Distress of the Company, (2) Shareholders’ Powers over the Management During Insolvency Proceedings, and (3) The Treatment of Shareholders in Reorganization Procedures. The initiative for this reseach was taken at the end of 2012. Around the globe the interaction between insolvency law and company law has gained the attention of policymakers, legislators and legal commentators due to forum shopping and regulatory arbitrage in corporate insolvency. The latter developments increase the tension between the rights of the shareholders, the creditors and, in general, company law and insolvency law. This increasing tension has become subject of a large research project jointly led by the World Bank and the Banca d’Italia. The research is developed by the Community of Practice on Insolvency and Creditor/Debtor Regimes (the ‘CoP’) and has collected data on how various jurisdictions treat the legal position of shareholders of companies in the vicinity of insolvency. The focus of the research has been on identifying how this position is affected in a crisis scenario and to identify the interaction between shareholder rights and the normal operations in either a liquidation or a reorganization process. The questionnaire is designed to analyse the conflicts between insolvency law and company law and the focus will be on two principal areas of conflict, namely the individual rights of shareholders and the role of the shareholders’ meeting in an insolvent company. The main issues that can be distinguished within those two principal areas of conflict are (i) the respective powers of the board and the shareholders’ meeting in insolvency proceedings; (ii) the substantive and procedural rights of shareholders in a company subject to insolvency proceedings; (iii) the possibility of using the old/same corporate entity as a vehicle for the reorganization of the company; and (iv) the possibility of the shareholders to retain a participation in the reorganized company, and, iof they are allowed to retain a participation, the allocation of value between creditors and shareholders. Two years ago, the CoP has assigned the task of responding to or organizing the collection of responses to the survey to national coordinators. For the Netherlands, Professor Michael Veder (Radboud University of Nijmegen) and myself were appointed as national coordinators and we have analysed the conflicts between Dutch insolvency law and company law with the assistance of (now) professor Bas de Jong (Radboud University of Nijmegen) and Tom Dijkhuizen LLM of the Leiden Law School. The Netherlands Report (September 2014) is, together with some 20 other country reports, available via For furthers analysis and discussions: a conference will be organized June 23-24, 2016 and will be held in Rome, at the Bank of Italy premises.

2015-12-doc12 New: 4th ed. of International Insolvency Law. Part I

Wessels International Insolvency Law Part I. Global Perspectives on Cross-Border Insolvency Law, 4th ed., 2015, is known as an authoritive and practical guide on the law of international insolvency. It covers the huge and vast increasing body of legislative rules, case law, scholarly literature and other available sources. Part II will be International Insolvency Law Part II. European Insolvency Law, foreseen for publication in 2017. Both will form the fourth edition of its original version. On the 3rd edition of 2012: A ‘magnificent book’ (Hon. Judge Bufford, Los Angeles), a ‘marvellous work’ (prof. Jessica Schmidt, University of Bayreuth), written  by one of the best specialists in the world (François Mélin, Vice-président du Tribunal de grande instance d’Amiens). This is a work that serious insolvency academics, judges or practitioners cannot afford to do without (prof. Paul Omar, Nottingham Law School and prof. Heinz Vallender, University of Cologne: ‘Am “Wessels” kommt niemand vorbei’). UPDATED International Insolvency Law Part I contains three themes. Chapter I starts with a detailed account of topics which nearly always emerge from cross-border insolvency cases and continues the debate on principles and new dogmatic and pragmatic approaches to issues and disputes on international insolvency law, including several remarkable court decisions. Regional conventions (in Latin-America, the Nordic European countries, the OHADA Treaty in Central Africa) have been explained and several of the ‘soft law’ sources have been described. These include best practice rules from organizations such as INSOL International and UNCITRAL’s Legislative Guide on Insolvency Law, including its recommendations for the treatment of corporate groups, and the use of Protocols or cross-border insolvency agreements. In Chapter II the status of international insolvency law in the Netherlands has been updated. Despite the EU Insolvency Regulation being applicable to intra-community cases since May 2002, Articles 203-205 of the Dutch Bankruptcy Act remain relevant for cross-border cases with third-(non-EU)countries as will the general application by courts in the Netherlands of private international law, as demonstrated in cross-border legal disputes related to the insolvent Russian corporate giant Yukos Oil Company having shares in a company, incorporated in the Netherlands, which holds large assets in several countries. In Chapter III in this fourth edition the main topic is the UNCITRAL Model Law on Cross-Border Insolvency of 1997 and the considerations to weigh when a State is in the process of enacting it. The analyses of the Model Law has been broadened and deepened with a short analysis of some fifty USA and UK cases, such as ABC Learning Centres, Barnet, Cozumel Caribe, Fairfield Sentry, Kekhman, Kemsley, Lehman Brothers, Madoff, New Cap, Nortel Networks, Quimonda, Rubin, Octaviar, Saad, Singularis and Suntech Power, and a selection of the ever growing literature, mainly from sources in the USA and the UK. The text of Wessels International Insolvency Law Part I, 4th ed., 2015, is completed by a refreshed Bibliography and a set set of comprehensive appendices containing the most recent texts of hard and soft law. The law is stated as per August 1, 2015. Obviously, International Insolvency law Part II European Insolvency Law provides an extensive treatment of the Regulation (EU) 2015/848 of the European Parliament and the Council of 20 May 2015 on insolvency proceedings (recast), which shall enter into force 26 June 2017. To order, go to An English flyer will be available soon.