The Characterization of Pre-insolvency Proceedings in Private International Law

Mevorach, Irit; Walters, Adrian

Abstract

© 2020, The Author(s). The decade since the financial crisis has witnessed a proliferation of various ‘light touch’ financial restructuring techniques in the form of so-called pre-insolvency proceedings. These proceedings inhabit a space on the spectrum of insolvency and restructuring law, somewhere between a pure contractual workout, the domain of contract law, and a formal insolvency or rehabilitation proceeding, the domain of insolvency law. While, to date, international insolvency instruments have tended to define insolvency proceedings quite expansively, discussion of the cross-border implications of pre-insolvency proceedings has barely begun. The question is whether pre-insolvency proceedings should qualify as proceedings related to insolvency for the purpose of private international law characterization. The risk is over-inclusivity of cross-border insolvency law, which, where it is based on universality and unity, might defeat contractual expectations. This article argues, however, that we should be slow to exclude pre-insolvency proceedings from cross-border insolvency law: these proceedings are initiated in the zone of insolvency, their effectiveness depends on a statutory mandate and not purely on private ordering, they interact and intersect with formal proceedings, and can benefit from the unique system developed by cross-border insolvency law. We suggest, though, that modified universalism (the leading norm of cross-border insolvency) and international insolvency instruments, should, and are able to, adjust to the peculiarities of pre-insolvency proceedings to address concerns about inclusivity and accommodate pre-insolvency proceedings adequately.

Citation

Mevorach, I., & Walters, A. (2020). The Characterization of Pre-insolvency Proceedings in Private International Law. European Business Organization Law Review, 21(4), 855-894. https://doi.org/10.1007/s40804-020-00176-x

• Journal Article Type: Article
• Acceptance Date: Jun 17, 2019
• Online Publication Date: Feb 26, 2020
• Publication Date: 2020-12
• Deposit Date: Jul 8, 2019
• Publicly Available Date: Mar 2, 2020
• Journal: European Business Organization Law Review
• Print ISSN: 1566-7529
• Electronic ISSN: 1741-6205
• Publisher: Springer Verlag
• Peer Reviewed: Peer Reviewed
• Volume: 21
• Issue: 4
• Pages: 855-894
• DOI: https://doi.org/10.1007/s40804-020-00176-x
• Keywords: Political Science and International Relations; Business and International Management; Law
• Public URL: https://nottingham-repository.worktribe.com/output/2284445
• Publisher URL: https://link.springer.com/article/10.1007/s40804-020-00176-x