RIZWAAN JAMEEL MOKAL
- Published in print:
- 2005
- Published Online:
- January 2010
- ISBN:
- 9780199264872
- eISBN:
- 9780191718397
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199264872.003.0004
- Subject:
- Law, Company and Commercial Law
This chapter delves into the nature of the pari passu principle, which supposedly requires all unsecured claims of an insolvent company to be met proportionately from the insolvent's estate. It ...
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This chapter delves into the nature of the pari passu principle, which supposedly requires all unsecured claims of an insolvent company to be met proportionately from the insolvent's estate. It argues that there is widespread misunderstanding about the role of this principle. The principle is claimed by commentators to be responsible for the orderliness of corporate liquidation, to explain and justify the collectivity of the liquidation regime and the rules providing for the avoidance (or more accurately, adjustment) of certain types of transaction, and to ensure fairness to all of the insolvent's creditors. The central claim in the chapter —that none of these functions can properly be attributed to the principle —is illustrated by empirical evidence of how the estates of insolvent companies are in fact distributed, the statutory provisions which help put the principle in its proper place, and the case law said to support it. The Authentic Consent Model is deployed to demonstrate that the pari passu rule —often called the ‘equality’ principle—has little to do with ‘real’ equality. The chapter shows what it claims is the actual role of ‘formal’ equality of the sort enshrined in the ‘equality’ principle.Less
This chapter delves into the nature of the pari passu principle, which supposedly requires all unsecured claims of an insolvent company to be met proportionately from the insolvent's estate. It argues that there is widespread misunderstanding about the role of this principle. The principle is claimed by commentators to be responsible for the orderliness of corporate liquidation, to explain and justify the collectivity of the liquidation regime and the rules providing for the avoidance (or more accurately, adjustment) of certain types of transaction, and to ensure fairness to all of the insolvent's creditors. The central claim in the chapter —that none of these functions can properly be attributed to the principle —is illustrated by empirical evidence of how the estates of insolvent companies are in fact distributed, the statutory provisions which help put the principle in its proper place, and the case law said to support it. The Authentic Consent Model is deployed to demonstrate that the pari passu rule —often called the ‘equality’ principle—has little to do with ‘real’ equality. The chapter shows what it claims is the actual role of ‘formal’ equality of the sort enshrined in the ‘equality’ principle.
Rizwaan Jameel Mokal
- Published in print:
- 2005
- Published Online:
- January 2010
- ISBN:
- 9780199264872
- eISBN:
- 9780191718397
- Item type:
- book
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199264872.001.0001
- Subject:
- Law, Company and Commercial Law
This book analyses corporate insolvency law as a coherent whole, stemming from common fundamental principles and amenable to being justified or criticized on that basis. The book explains why ...
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This book analyses corporate insolvency law as a coherent whole, stemming from common fundamental principles and amenable to being justified or criticized on that basis. The book explains why consistency of principle must be sought, and how it might be found in the relevant statutory and case law. It then draws on political and legal philosophy to construct an egalitarian theory for the analysis of corporate insolvency law based on the premise that all the parties affected by this law are to be treated as equals. The book argues that this theory can reconcile the dictates of fairness with the demands of economic efficiency. The theory is employed to analyze some of the most important aspects of insolvency law. Why should the individualistic method of enforcing claims against solvent companies give way to a collective method during insolvency? Why are there different formal mechanisms for dealing with troubled companies? What role does the pari passu principle play in the distribution of an insolvent company's assets? The controversial issues of whether and when secured creditors should be accorded priority over others receives detailed consideration. The functional role of the floating charge and its relationship with receivership are also analyzed in this context. The many questions relating to the operation of the new administration procedure introduced by the Enterprise Act 2002 are considered in the light of principle. The book also analyzes the role of the wrongful trading provisions. It examines, finally, why insolvency law objects to certain transactions at an undervalue and those having a preferential effect.Less
This book analyses corporate insolvency law as a coherent whole, stemming from common fundamental principles and amenable to being justified or criticized on that basis. The book explains why consistency of principle must be sought, and how it might be found in the relevant statutory and case law. It then draws on political and legal philosophy to construct an egalitarian theory for the analysis of corporate insolvency law based on the premise that all the parties affected by this law are to be treated as equals. The book argues that this theory can reconcile the dictates of fairness with the demands of economic efficiency. The theory is employed to analyze some of the most important aspects of insolvency law. Why should the individualistic method of enforcing claims against solvent companies give way to a collective method during insolvency? Why are there different formal mechanisms for dealing with troubled companies? What role does the pari passu principle play in the distribution of an insolvent company's assets? The controversial issues of whether and when secured creditors should be accorded priority over others receives detailed consideration. The functional role of the floating charge and its relationship with receivership are also analyzed in this context. The many questions relating to the operation of the new administration procedure introduced by the Enterprise Act 2002 are considered in the light of principle. The book also analyzes the role of the wrongful trading provisions. It examines, finally, why insolvency law objects to certain transactions at an undervalue and those having a preferential effect.
Bob Wessels and Stephan Madaus (eds)
- Published in print:
- 2020
- Published Online:
- March 2021
- ISBN:
- 9780198826521
- eISBN:
- 9780191932274
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/oso/9780198826521.003.0007
- Subject:
- Law, EU Law
The viability of a business depends on the continuation of its essential contracts at least as much as on a successful business idea. Without an essential licence, without energy and goods supply, ...
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The viability of a business depends on the continuation of its essential contracts at least as much as on a successful business idea. Without an essential licence, without energy and goods supply, without a work force, or a lease, the debtors’ business simply cannot continue. Without the prospect of contract continuation (in whatever form), any option to restructure, but also any value maximizing going-concern sale in a liquidation, is off the table. The termination of contracts—by force of law or based on a contractual clause—due to the commencement of restructuring or insolvency proceedings must, therefore, be carefully considered.
Less
The viability of a business depends on the continuation of its essential contracts at least as much as on a successful business idea. Without an essential licence, without energy and goods supply, without a work force, or a lease, the debtors’ business simply cannot continue. Without the prospect of contract continuation (in whatever form), any option to restructure, but also any value maximizing going-concern sale in a liquidation, is off the table. The termination of contracts—by force of law or based on a contractual clause—due to the commencement of restructuring or insolvency proceedings must, therefore, be carefully considered.
