A Global Guide
JASON CHUAH, EUGENIO VACCARI
THOMAS KADNER GRAZIANO, JURIS BOJĀRS, VERONIKA SAJADOVA
This Introduction is designed to draw on the rich materials the national reports have produced and to reach some preliminary findings on the study. In particular, it suggests that despite the policy concerns about reorganisation, rescue and the preservation of value in the context of executory contracts, the legal rules can in themselves lead to results which may not sit well with the policy objectives.
This chapter analyses the treatment of executory contracts under Albanian insolvency law. It observes that the general approach in the law is that executory contracts should not be affected simply by the commencement of a formal insolvency procedure. Nevertheless, special rules are prescribed only with reference to some contracts, namely fixed date transactions, leases, mandate, public and employment contracts, as these are the most frequently used contracts in the ordinary course of business.
Héctor José Miguens
This chapter investigates the treatment of executory contracts under Argentinian law. It discusses with reference to the specific contracts and the procedures (acuerdo preventivo extrajudicial, concurso preventivo and quiebra) mentioned in the law how and to what extent their treatment differs from the residual rule included in s. 159 of the Insolvency Act. This chapter highlights that to date, regulatory reforms have paid little consideration to international trends in the insolvency sector. Nevertheless, to improve the effectiveness and efficiency of the system, future reforms should draw inspirations from established best practices from neighbouring jurisdictions and from the United States.
This chapter presents an overview of the Austrian Insolvency Code (Insolvenzordnung – IO). It focuses on insolvent businesses and introduces their possibilities to reorganize or to orderly liquidate in an Austrian insolvency proceeding. After providing the legal framework of the Austrian Insolvency Code, the chapter puts its main emphasis on the treatment of executory contracts in insolvency. The latest major reform of Austrian corporate insolvency law in 2010 altered the approach towards executory contracts in a quite spectacular fashion: in light of the worldwide economic crisis, the Austrian legislature made an attempt to aid businesses in their efforts to reorganize after they have filed for insolvency. In order to achieve its goal, it put an automatic stay of contracts in insolvency proceedings in place. At the moment, however, it is fairly easy for counterparties to avoid such automatic stay. The current provisions simply contain too many loopholes. The good news is: they can be marked quite accurately. For the Austrian Insolvency Code, this gives every reason to hope that the legislature will see the next insolvency law reform as a chance to close those loopholes. For foreign legislatures, this can serve as an inspiration for modelling their own regulations in the future.
Francisco Satiro and Eduardo G. Wanderley
This chapter looks at the treatment of executory contracts under Brazilian bankruptcy law and at the debate for reforming the existing law. Federal Law No. 11,101/2005, as of 9 February 2005, amended from time to time (the Bankruptcy Law or “BBL), governs corporate insolvency in Brazil. As a matter of legislative policy, the BBL aims at allowing for the reorganization of viable businesses and the efficient liquidation of businesses that should otherwise be wound-up. Whilst this may sound counterintuitive for business reorganizations – i.e., formal insolvency proceedings should protect going concern value and not the opposite – stigma, the use of personal guarantees by shareholders (which accelerate upon the engagement of BBL), lack of available financing for insolvent entities, local bank policies and regulations as regards risk exposure and allocation and a certain degree of legal uncertainty with the application of BBL, all contribute to calling formal insolvency proceedings only as the last resort. The treatment of executory contracts in BBL is somewhat dispersed and, as a matter of policy, should be improved, especially in Judicial Reorganization. There is a growing interest in corporate insolvency matters in Brazil, and recent multi-billion-dollar cases have highlighted the importance of the treatment of executory contracts. It is expected that the initiative of the Ministry of Finance to propose a new draft-bill to amend BBL will address such concerns accordingly.
Georgi Valentinov Georgiev
This chapter looks at the treatment of executory contracts under Bulgarian insolvency law and at the debate for reforming the existing law. In particular, this chapter covers the treatment of executory contracts under general insolvency proceedings and the stabilization procedure. With reference to general insolvency proceedings, this chapter investigates the right of the administrator to terminate executory contracts and the creditors’ right to set-off their claims against the insolvent estate. With reference to the stabilization procedure, this chapter investigates not only the right to terminate executory contracts, but also the enforceability of contractual remedies agreed by the parties in solvent times. The chapter also includes a final section that discusses the options for reform of the existing law.
Camila Hoyuela Zattera, Maximiliano Escobar Saavedra and Mauricio Inostroza Sáez
This chapter discusses the treatment of executory contracts and the options of reform under Chilean corporate insolvency law. It observes that Chilean insolvency law deals differently with the effects of executory contracts, depending on whether it is a reorganization or liquidation proceeding. Such differentiation relates to the objective that both these proceedings aim for, this is, reorganization aims to reorganize viable and salvable companies, whereas liquidation aims to liquidate those companies that do not hold any possibilities of subsisting. The chapter highlights that it is not clear the quality that the creditor’s rights must have in order to be exercised in insolvency proceedings. The legislative choice to either preserve or terminate executory contracts may be affected by the opportunity for the creditors to exercise their rights in the insolvency procedure.