Law 691 International Insolvency

Law 691 International Insolvency - International Insolvency...

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International Insolvency Monday, January 07, 2008 80043 Module 1: Overview of insolvency legislation as a matter of national domestic law A. The different traditions 1. Common law jurisdictions a. Liquidation b. Reorganization c. The US model d. The UK model 2. Civil law jurisdictions a. Liquidation b. The Italian model c. The German model d. The French model 3. Priorities a. Social claims b. Tax claims 3. “Fresh start” v. “stigma.” Briefcase.yahoo.com Name: Casepanzani Pw: phoenix2008 Financial crisis in Asia (Thailand) in the late 1990s World Bank Principles published in lieu of this 13 th -14 th C. Italy Coastal towns starting to trade and mass commerce beginning (portal to the world) Merchants must have faith in each other Bankruptcy is the impossibility to pay your creditor – break in the faith Terrible sanctions for the bankrupt Public displays of humiliation Put in prison until they were able to pay their debts Stigma of the bankrupt treated like a criminal Lost right to sell property, lost right to vote and run for public office Papers given to the court, had to ask the judge for permission to leave town (judge was able to give a very little sum of money from the trust of the estate Were able to get discharged only in rare instances (had to pay all creditors) Followed them for the rest of their lives break of faith for the other people working in the business Bankruptcy is a way to deal with the ordinary/normal risk of enterprise Insolvency lack of capital/business income/assets to pay debts = insolvency (economic) fair transparent equal treatment 1978 US Bankruptcy code change reference from “the bankrupt” to “the debtor” (neutral term) It is to the creditors benefit to sell the assets as a whole and have less legal action (one judge & lawyer, as opposed to many)
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Distributed more fairly 1) Liquidation destroys the enterprise Many times the business cannot be saved, so all the goods are sold Proceeding may have started too late 2) Reorganization Try to see what is not working with the enterprise (why insolvent) Reduction of the debts needed to continue Needs to obtain new financing 3) enterprise in activity [363 sale (US)] Selling the enterprise on the market, the value of the “going concern” is much more valuable than the single assets (the business should be big) Only the enterprise is bought, proceeds without the debts The effort is always to anticipate approaching insolvencies Example: 2003 Parmalat An insolvent company is the property of its creditors In the early 1980s, China instituted and insolvency law Because of the investors from Western countries in order to give credit The creditors insist on having a sound insolvency system (relieves a risk factor) Safe credit system is one of the main points of the emphasis on good international insolvency law for the purpose of developing countries Common law (societal principles) vs. civil law (codes) [from the Roman law]
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Law 691 International Insolvency - International Insolvency...

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