Corporate Rescue Law – An Anglo-American Perspective
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Corporate Rescue Law – An Anglo-American Perspective

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.
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Chapter 8: The restructuring plan

Gerard McCormack

Abstract

There are major differences between US and UK law when it comes to the formulation and acceptance of a restructuring or reorganisation plan for an ailing company. The main differences are threefold and could be summarized as follows. Firstly, in the US, the debtor has an exclusive right to formulate a reorganization plan for a certain period of time whereas there is no such opportunity in the UK. Secondly, US law is much more prescriptive when it comes to division of creditors into classes. UK law is much less prescriptive in this regard. Thirdly, a class of creditors, including secured creditors in exceptional circumstances can be crammed down in the US, i.e. forced to accept a reorganization plan against its wishes provided that at least one other class of impaired creditors has accepted the plan.

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