Corporate Rescue Law – An Anglo-American Perspective

Corporate Rescue Law – An Anglo-American Perspective

Corporations, Globalisation and the Law series

Gerard McCormack

This book offers an unprecedented and detailed comparative critique of Anglo-American corporate bankruptcy law. It challenges the standard characterisation that US law in the sphere of corporate bankruptcy is ‘pro-debtor’ and UK law is ‘pro-creditor’, and suggests that the traditional thesis is, at best, a potentially misleading over-simplification. Gerard McCormack offers the conclusion that there is functional convergence in practice, while acknowledging that corporate rescue, as distinct from business rescue, still plays a larger role in the US. The focus is on corporate restructurings with in-depth scrutiny of Chapter 11 of the US Bankruptcy Code and the UK Enterprise Act, and offers other comparative oversights.

Chapter 9: Conclusion

Gerard McCormack

Subjects: law - academic, company and insolvency law, corporate law and governance


that Congress no longer intended to impose the now-omitted requirement that similar claims be classified together . . . However, the legislative history indicates that Congress may not have intended to change the prior rule.’ 260 Corporate rescue law – an Anglo-American perspective particular types of claims are substantially similar32 and prohibiting the separate classification of substantially similar claims possibly could create more, rather than less, litigation.33 Most courts have accepted that the separate classification of similar claims is permissible but, nevertheless, imposed some limits to ensure that classification is reasonable and meets with a basic fairness standard. Reasonableness itself may be a problematic concept. In determining reasonableness, some courts have focused on the business purpose in having separate classification whereas others have based their determinations on the nature of the claims and the extent to which these claims warrant separate representation.34 With the ‘nature of claim’ approach, the focus of classification historically has been on the nature or legal character of the claim as it relates to the assets of the debtor.35 The approach does not filter out classification schemes that are designed only to create a class that will vote favourably on the plan. Moreover, it requires litigation on a question that may be unrelated to the debtor’s business plan, and thus wastes time and resources.36 If one applied the test of whether there was a ‘business justification’ for separate classification of substantially similar claims, this should screen out impermissible gerrymandering of classes for voting purposes. The courts ought to be able...

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