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Protocols

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International Insolvency Law

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Abstract

Another theory about dealing with international insolvencies—implemented already, in specific cases—that has been proposed is the contractualist theory. According to that, parties may choose the regime that will govern an international insolvency.

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Notes

  1. 1.

    Mevorach (2014), p. 226,

  2. 2.

    Warren and Westbrook (2005), pp. 1201, 1248–1254.

  3. 3.

    Mevorach (2010), p. 405.

  4. 4.

    Sarra (2008), p. 84.

  5. 5.

    Wouters and Raykin (2013), p. 418.

  6. 6.

    Which might be used in cases of a group of companies’ insolvency too, see infra, 7.

  7. 7.

    Not a very strong argument, though, for those who believe that the State should always control such—sensitive, for many reasons—cases.

  8. 8.

    Veneziano (2004), pp. 60–63.

  9. 9.

    Queirolo and Dominelli (2017), pp. 132–133.

  10. 10.

    Specifically about drawing up protocols in accordance with German law, see Busch et al. (2010), p. 417.

  11. 11.

    Miguens (2018), p. 56.

  12. 12.

    Moustaira (2002), p. 1578.

  13. 13.

    Eidenmüller (2001), p. 30.

  14. 14.

    Paulus (1998), p. 981.

  15. 15.

    Mannan (2016), p. 205.

  16. 16.

    In re P. Macfadyen & Co. Ex parte Vizianagaram Co., Ltd. [1908] 1 K.B. 675.

  17. 17.

    Mannan (2016), p. 205.

  18. 18.

    At the beginning of the twentieth century, courts in British India (composed of the three actual countries: India, Pakistan, Bangladesh) could evidently cooperate easily with courts in London, since their laws were very much influenced by English law at the time they were Great Britain’s colonies. Today, all three countries adopt a rather territorial approach towards cross-border insolvency cases. None of those treats differently domestic and foreign creditors in their company law regarding preferential payments. There is, though, one exception: according to Bangladesh’s bankruptcy law, local banks and financial institutions may, on certain conditions, be prioritized before foreign secured creditors in case a corporation is declared bankrupt, see Mannan (2016) p. 205.

  19. 19.

    See Shaaban Masoud (2014), p. 196, who states: “Notably, the existing regimes in most of the SSA [Sub-Saharan Africa] countries are traceable from the historical colonial legacy. As such, a fair assessment of the regimes must take that fact into account and consider the corresponding legal families in which they are situated. The application of the common law to Anglophone SSA countries is the best example of the continuing influence of the colonial legacy. This legacy also applies to cross-border insolvency aspects of the common law jurisdictions in SSA.”

  20. 20.

    In re Maxwell Comm’n Corp., 170 B.R. 800 (Bankr. S.D.N.Y. 1994), aff’d, 186 B.R. 807 (S.D.N.Y. 1995), 93 F.3d 1036 (2d Cir. 1996).

  21. 21.

    Wouters and Raykin (2013), p. 420.

  22. 22.

    Westbrook (1996), p. 2535.

  23. 23.

    Flaschen and Silverman (1998), p. 592.

  24. 24.

    Homan (2001), pp. 250–252.

  25. 25.

    Lee (2013), p. 284.

  26. 26.

    The “ultimate parent company” of all the Lehman entities, see McDermott and Turetsky (2011), p. 416.

  27. 27.

    Report of Anton R. Valukas, Examiner at 3, In re Lehman Bros. Holdings, No 08-13555 (Bankr. S.D.N.Y.Mar.11, 2010), ECF No. 7531. Available at: www.lehmansecuritieslitigation.com/pdf/BK%20[Dkt.%207531]%20Report%20Anton%20Valukas,%20Examiner%20(Vols.%201%20-%205).pdf.

  28. 28.

    Lubben 2017.

  29. 29.

    Lee (2013), p. 289.

  30. 30.

    ‘Background’ in Lehman Protocol. Available at: http://www.ekvandoorne.com/files/CrossBorderProtocol.pdf.

  31. 31.

    Davidoff and Zaring (2009), p. 474.

  32. 32.

    Lubben and Pei Woo (2014), p. 296.

  33. 33.

    Levitin (2009), p. 1007.

  34. 34.

    Hashmall (2010), p. 839.

  35. 35.

    Okamoto (2009), pp. 196–198.

  36. 36.

    Lubben and Pei Woo (2014), p. 297.

  37. 37.

    More than one hundred separate bankruptcy proceedings, according to Kirshner (2018), p. 2.

  38. 38.

    In Hong Kong, there were opened insolvency proceedings for eight subsidiaries of Lehman Brothers, see Ali and Wang Kwok (2011), p. 153.

  39. 39.

    Lubben and Pei Woo (2014), p. 302 and note 37.

  40. 40.

    Lubben and Pei Woo (2014), p. 305 note 56.

  41. 41.

    LEHMAN BROS. HOLDINGS INC., FORM 10-K 29 (2008), available athttp://www.sec.gov/Archives/edgar/data/806085/000110465908005476/a08-3530_110k.htm.

  42. 42.

    Sexton (2012), p. 833.

  43. 43.

    Among other proceedings, there was one proceeding before English courts, about a proposed scheme of arrangement between the administrators of Lehman Brothers International (Europe) [LBIE] and creditors of the company—account holders that had potential claims on the assets held by LBIE. The scheme creditors were required to release all claims against LBIE, as well as those against the scheme supervisors, the administrators and other scheme creditors in exchange for the right to have such a part of the asset held in trust as was available for distribution under the scheme. The subject of the dispute was the legality of the arrangement as a scheme of arrangement under Part 26 of the Companies Act. The administrators argued that the main objective of the scheme was not to vary or extinguish the property rights of the company’s clients, but to vary their contractual relationships with LBIE as creditors and debtor. The Companies Court judge disagreed with the administrators, stating that the scheme was mostly about eliminating LBIE’s obligations towards its clients and, consequently fell outside the jurisdiction of Part 26. The Court of Appeal concurred with the Companies Court judge, pointing out that “an arrangement between a company and its creditors must mean an arrangement, which deals with their rights inter se as debtor and creditor”, see Nana (2012), pp. 4–7.

  44. 44.

    Lee (2013), p. 289.

  45. 45.

    Kirshner (2018), p. 6.

  46. 46.

    In 2010, just two years after Lehman Brothers Holdings Inc. (LBHI) filed for Chapter 11 procedure in the U.S. Bankruptcy Court, no one could foresee what would be the repercussions of the whole situation and how long they would be felt. Jurists too were anxious to see how the insolvency laws of the countries involved would deal with this tremendously dangerous situation. Thus, for example, Wattermoli (2010), p. 161, was declaring: “Por otra parte, la dimensión mundial de la crisis parece representar una ocasión propicia para verificar, en un contexto más general, el estado de evolución del procedimiento de Reorganización, analizando desde la óptica de la tutela de los intereses de los acreedores; esto permitirá en un momento posterior formular algunas hipótesis sobre el contenido del plan de reorganización de Lehman Brothers Holdings Inc. y, por lo tanto, el impacto que tal desequilibrio puede tener respecto a los sujetos que están implicados.”

  47. 47.

    Westbrook (2006), p. 337.

  48. 48.

    Ayotte and Skeel (2010), p. 469.

  49. 49.

    Lubben and Pei Woo (2014), pp. 299–300.

  50. 50.

    See Lubben (2011), p. 1263, speaking about American Bankruptcy Law.

  51. 51.

    Lubben (2004), p. 1420.

  52. 52.

    McAlister (2008), p. 129.

  53. 53.

    Butler and Macey (1997), p. 698.

  54. 54.

    Certain UK cases, related to the Lehman collapse, and referring to CASS were tried by the Court of Appeal, the decision of which was affirmed by the UK Supreme Court, on 29 February 2012. As it is mentioned, “[e]ssentially, the Supreme Court decision prevented the clients from becoming unsecured creditors and therefore rendering their money in the company’s client account to be subject to the pari passu rule for bankruptcy distribution.”, see Lee (2013), p. 298.

  55. 55.

    See Lubben (2011), p. 1268: “The new law partially supersedes chapter 11 as applied to financial companies, granting the Treasury Secretary the authority to appoint the FDIC as receiver of a systematically important financial company, with certain important limitations …”.

  56. 56.

    Lubben (2018), p. 1377, says it is incredibly difficult to actually use OLA.

  57. 57.

    Maybe, says Lubben (2011), p. 1270.

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  1. School of Law, National and Kapodistrian University of Athens, Athens, Greece

    Elina Moustaira

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Moustaira, E. (2019). Protocols. In: International Insolvency Law. Springer, Cham. https://doi.org/10.1007/978-3-030-04450-3_6

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