Creditor Protection in Private Companies

Creditor Protection in Private Companies
Author: Thomas Bachner
Publisher:
Total Pages: 315
Release: 2009
Genre: Corporation reserves
ISBN: 9780511514401


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Investigates mechanisms in English and German law that protect creditors against the abuse of limited liability by directors and shareholders.

Creditor Protection in Private Equity-Backed Leveraged Buyout and Recapitalisation Practices

Creditor Protection in Private Equity-Backed Leveraged Buyout and Recapitalisation Practices
Author: Hasan Erdem ?i?mangil
Publisher: BWV Verlag
Total Pages: 463
Release: 2014-11-17
Genre: Bankruptcy
ISBN: 3830534213


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Private equity-backed leveraged buyout (LBO) and leveraged recapitalisation practices have been on the rise since the early 1970s when the LBO model was first invented. They continue to play a major role for investors for their less transparent and less bureaucratic investment models outside of capital markets, where financial regulations become tighter following the financial crisis of 2008 affecting global capital markets in a chain reaction. Private equity-backed LBOs and leveraged recapitalisations continue to be popular investment models, however they carry risks both at the target company level and on a macroeconomic level due to the interconnectedness of these investments with global capital markets for funding and refinancing of acquisition finance debts. Creditor protection mechanisms of company and insolvency law therefore play a central role in preventing or dealing with failures that may be triggered at the target company level and have detrimental effects for all creditors and the economy. Though the European legal capital system must be critically revisited, England's and Germany's already mature markets and legal systems should help in developing a better interpretation of these rules in developing economies like Turkey, consequently establishing a solid base for this investment practice in these economies.

The Law and Economics of Creditor Protection

The Law and Economics of Creditor Protection
Author: Horst Eidenmüller
Publisher: T.M.C. Asser Press
Total Pages: 0
Release: 2008
Genre: Law
ISBN: 9789067046336


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This book presents important contributions to the current debate on creditor protection in European company law. Reform of the European rules on creditor protection in company law is imminent. Academic work on both sides of the Atlantic shows a tendency that traditional mandatory rules should give way to individual solutions which are freely negotiated between creditors and corporate debtors. Recent judgments by the European Court of Justice have spurred regulatory competition between Member States and the incumbent system is being challenged by the Europe-wide introduction of the International Accounting Standards/International Financial Reporting Standards. Last but not least, the European Insolvency Regulation poses the question how company law and insolvency law shall be realigned in the future. Contributors to this book, which is based on the results of a symposium held in Munich in December 2005, include scholars who are currently working on reform projects in various Member States, leading experts in company law, insolvency law, accounting law, and economics. The manifold thoughts presented by these outstanding authors provide the reader with important insights and will not fail to inform and influence the current policy debate. As such, the book is an indispensable tool for all players in the field. Prof. Dr. Horst Eidenmüller is Professor of Private Law, German, European and International Company Law and Director of the Institute for International Law, Ludwig Maximilian University, Munich, Germany.Prof. Dr. Wolfgang Schön is Director of the Max Planck Institute for Intellectual Property, Competition and Tax Law, Department of Accounting and Taxation, in Munich and Honorary Professor at the Ludwig Maximilian University, Munich, Germany.

Creditor Protection in Private Companies

Creditor Protection in Private Companies
Author: Thomas Bachner
Publisher: Cambridge University Press
Total Pages: 353
Release: 2009-04-16
Genre: Business & Economics
ISBN: 0521895383


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Investigates mechanisms in English and German law that protect creditors against the abuse of limited liability by directors and shareholders.

Covenants and Third-Party Creditors

Covenants and Third-Party Creditors
Author: Daniela Matri
Publisher: Springer
Total Pages: 270
Release: 2017-10-17
Genre: Law
ISBN: 3319620363


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This book adds to the debate on the effects of covenants on third-party creditors (externalities), which have recently become a focus of discussion in the contexts of bankruptcy law, corporate law and corporate governance. The general thrust of the debate is that negative effects on third-party creditors predominate because banks act in their own self-interest. After systematising the debated potential positive and negative externalities of covenants, the book empirically examines these externalities: It investigates the banks’ factual conduct and its effects on third-party creditors in Germany and the US. The study’s most significant outcome is that it disproves the assumption that banks disregard third-party creditors’ interests. These findings are then interpreted with the tools of economic analysis; particularly, with the concept of common pool resources (CPRs). Around the aggregated value of the debtor company’s asset pool (as CPR) exists an n-person prisoner’s dilemma between banks and third-party creditors: No creditor knows when and under what conditions the other creditor will appropriate funds from the debtor company’s asset pool. This coordination problem is traditionally addressed by means of bankruptcy law and collaterals. However, the incentive structure that surrounds the bilateral private governance system created by covenants and an event of default clause (a CPR private governance system) is found to also be capable of tackling this problem. Moreover, the interaction between the different regulation spheres – bankruptcy law, collateral and the CPR private governance system − has important implications for both the aforementioned discussions as well as the legal treatment of covenants and event of default clauses. Covenants alone cannot be seen as an alternative to institutional regulation; the complete CPR private governance system and its interaction with institutional regulation must also be taken into consideration. In addition, their function must first find more acceptance and respect in the legal treatment of covenants and event of default clauses: The CPR private governance system fills a gap in the regulation of the tragedy of the commons by bankruptcy law and collateral. This has particularly important implications for the German § 138 BGB, § 826 BGB and ad hoc duties to disclose insider information.

Financial Crises, Creditor Protection, and Private Investment

Financial Crises, Creditor Protection, and Private Investment
Author: Kartik Anand
Publisher:
Total Pages: 48
Release: 2016
Genre: Corporation law
ISBN:


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"Financial crises are often followed by statutory corporate laws that influence the way in which control rights are allocated between firms and investors. The authors develop an optimal contracting model of corporate bankruptcy to study how crises influence the flexibility of the legal framework and, in turn, creditor protection and private investment. Their findings suggest that financial crises impact more negatively on aggregate private investment in countries where corporate law is more flexible, and that the equilibrium level of legal flexibility decreases the more privileged is the position of domestic creditors in capital markets. Extending the analysis to multiple jurisdictions, they show that the legal flexibility of corporate law in equilibrium declines in the degree of pro-debtor bias of the bankruptcy court. Their findings contribute to the debate on enabling versus mandatory corporate law that has followed the passage of the Dodd-Frank Act."--Abstract.

Company Directors' Liability and Creditor Protection

Company Directors' Liability and Creditor Protection
Author: Andrew Keay
Publisher:
Total Pages: 0
Release: 2023
Genre: Business failures
ISBN: 9781032515113


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The book provides an analytical exposition of the law concerning directors' liability for the losses sustained by their companies' creditors, when the directors' companies are in financial distress or become insolvent. It is a detailed one-stop resource for obtaining a good understanding of the law which has developed from legislation and case law. In particular, there is a detailed consideration of what needs to be proved, what defences there are, and what might be the issues of concern for all parties. A doctrinal method is adopted and there is extensive analysis of the relevant legislation and case law. Rather than merely referring to cases to support propositions, the discussion considers many of the cases in context and in depth and their relevance to the aim of the book. The book also endeavours to provide views, in a practical way, on aspects of the law and it identifies problems and how they may be addressed. Of interest to legal practitioners and insolvency practitioners alike, in addition the book will be useful to directors, government officials and academics.

Creditor Rights and the Public Interest

Creditor Rights and the Public Interest
Author: Janis Pearl Sarra
Publisher:
Total Pages: 352
Release: 2003
Genre: Law
ISBN: 9780802087546


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Creditor Rights and the Public Interest supports the greater representation of non-traditional creditors in the process of insolvency restructuring in Canada, concentrating particularly on restructuring under the federal Companies' Creditors' Arrangement Act (CCAA). Arguing in favour of the representation of such non-traditional creditors as workers, consumers, trade suppliers, and local governments, Janis Sarra describes the existing process of addressing their interests, analyzes four case studies that focus on non-creditor groups, and compares the Canadian approach to that of several other countries, such as Germany, France, and the United States. Sarra draws on a comprehensive body of academic literature that covers a broad range of issues--insolvency theory, corporate governance theory, legislative history, and bankruptcy and insolvency practice. She further surveys the relevant legislation and supplements her analysis with insights drawn from extensive primary research of court records and personal interviews with lawyers, judges, and government officials. Creditor Rights and the Public Interest ultimately illustrates the way in which the concept of the public interest can be utilized to foreground the concerns of non-traditional stakeholders. Sarra provides a coherent account of the justification for recognizing these creditors by situating insolvency law in a legal regime that realizes a duty to maximize all of the interests and investments at stake in the corporation. In an academic field where scholarship is currently scarce, Sarra's text will be a welcome contribution.