Adrian J Walters

Corporate Insolvency in the United Kingdom: The Impact of the Enterprise Act 2002

With effect from September 15, 2003, the Enterprise Act made significant changes to the governance of corporate rescue procedures in the United Kingdom which involved a shift away from a “concentrated creditor” model of governance towards a “dispersed creditor” model of governance which vests greater control rights in unsecured creditors collectively. These changes were motivated by fairness and efficiency concerns, notably the concern that the UKs administrative receivership procedure was not conducive to rescue outcomes and operated to the detriment of unsecured creditors. This article discusses the Enterprise Act reforms in the context of wider theoretical debates about the desirability (or otherwise) of secured creditor control of corporate rescue procedures. It then presents in summary form the findings of an empirical study carried out by the authors that sought to evaluate the impact of the Act by comparing the gross realizations, costs and net returns to creditors in a sample of 284 corporate insolvencies commenced before and after the law changed. Whilst we find that gross realizations have increased under the streamlined administration procedure introduced by the Act when compared with the old receivership procedure, we also find that costs have increased. These findings imply that secured creditor control of the insolvency procedure (as in receivership) may be no worse for unsecured creditors than control by dispersed unsecured creditors (as in administration) at least as regards returns.

Personal Insolvency Law After the Enterprise Act: An Appraisal

This article offers an appraisal of the recent reforms of personal insolvency law introduced in England and Wales by the Enterprise Act 2002, which came into force on 1 April 2004. The article suggests that the new law has four key structural elements: (i) the reduction in the duration of bankruptcy; (ii) the lifting of statutory restrictions and disabilities hitherto imposed on undischarged bankrupts; (iii) the new regime of post-discharge restrictions for so-called “culpable” bankrupts; and (iv) the introduction of a “fast-track” post-bankruptcy individual voluntary arrangement procedure supervised by the official receiver. The new law is examined in the light of the policies that it seeks to promote and the implications for debtor incentives are considered. The articles principal conclusions are (i) that the legal incentives for debtors to opt for an individual voluntary arrangement rather than bankruptcy do not appear to be particularly compelling and (ii) that the significant investment required in a system that differentiates between “honest” and “culpable” bankrupts will only be worthwhile if credit providers are prepared to treat the former significantly more favourably than the latter.

United States' bankruptcy jurisdiction over foreign entities: exorbitant or congruent

ABSTRACT Alarmed at the ease with which global bankruptcy jurisdiction can be engineered in the US through a combination of the Bankruptcy Code’s low bar to entry and the worldwide effects of a bankruptcy case, critics argue that the US promotes abusive bankruptcy forum shopping and harmful imposition of US norms on overseas stakeholders. This article advances a revised account of US bankruptcy jurisdiction over non-US debtors from a distinctively Anglo-American standpoint. The article’s central thesis is that critics overemphasise formal jurisdictional rules and pay insufficient attention to how US courts actually exercise jurisdiction in practice. It compares the formal law ‘on the books’ in the US and UK for determining whether or not a domestic insolvency or restructuring proceeding relating to a foreign debtor can be maintained in each jurisdiction and provides a functional account of how US bankruptcy jurisdiction over foreign entities is exercised in practice using the concept of jurisdictional congruence as a benchmark.