Show Less
You do not have access to this content

EXECUTORY CONTRACTS IN INSOLVENCY LAW

A Global Guide

JASON CHUAH, EUGENIO VACCARI

Executory Contracts in Insolvency Law offers a unique, comprehensive, and up-to-date transnational study of the topic, including an analysis of certain countries which have never previously been undertaken in English. Written by experts in the field, with extensive experience of both research and professional experience, this is a groundbreaking investigation into the philosophies and rationales behind the different policy choices adopted and implemented by a range of over 30 jurisdictions across the globe.
Show Summary Details
This content is available to you

EXTENDED CONTENTS

List of editors and contributors

1   A thematic and comparative critique

      Jason Chuah

BACKGROUND TO THE RESEARCH PROJECT 1.01

PROJECT METHODOLOGY 1.08

Prefatory observations 1.10

LIMITS ON ASSUMPTION OR DISCLAIMING OF EXECUTORY OBLIGATIONS 1.19

Judicial supervision in the reorganization efforts 1.23

Ipso facto stipulations 1.32

Assignment of executory contracts 1.44

Value extraction 1.59

CONCLUSION 1.61

PART I   CIVIL LAW SYSTEMS

2   National report for Albania

      Gelanda Shkurtaj

A  Introduction 2.01

B  Available procedures 2.05

(1) Eligibility requirements 2.09

(2) Insolvency requirement 2.16

(3) Locus standi 2.19

(4) Informal turnarounds 2.26

C  Treatment of the executory contracts 2.30

(1) Adminstrator’s rights 2.37

D  Past reforms and current debate 2.45

(1) The introduction of the Insolvency Agency 2.45

(2) The role of the Agency 2.50

(3) The legal stalemate between Article 605 of Civil Code and Article 144 of the 2016 Act 2.53

(4) Introduction of the Prosecutor 2.59

(5) The role of the Insolvency Administrator 2.60

(6) Amendments to the Civil Procudure Code 2.62

(7) Proceedings started in other jurisidictions 2.63

(8) Concluding remarks on executory contracts and reforms 2.66

E  Concluding remarks 2.70

(1) Reform of the Albanian Insolvency Law: a comparative study 2.74

3   National report for Argentina

      Héctor José Miguens

A  Introduction 3.01

B  Insolvency procedures 3.09

(1) The Acuerdo Preventivo Extrajudicial (APE) or pre-packaged reorganization 3.09

(2) The Concurso Preventivo (CP) or reorganization proceeding 3.12

(3) The ‘quiebra’ or liquidation 3.15

C  Treatment of executory contracts 3.20

(1) In APEs and CPs 3.20

(2) In ‘quiebra’ procedures 3.25

(3) General scheme for all contracts 3.26

(4) Rules for reciprocal pending obligations 3.32

(5) Contractual clauses 3.36

(6) Preliminary contracts 3.39

(7) Contracts with personal performance by the bankrupt, contracts of continuous execution and normative contracts 3.44

(8) Commission or consignment contracts 3.47

(9) Company contracts – law of recess 3.48

(10) Non-integrated contributions to the corporation 3.49

(11) Accidental corporation (‘Sociedad accidental’ or ‘negocio en participación’) 3.50

(12) Debentures and securities 3.54

(13) Fixed-term contracts 3.55

(14) Insurance contracts 3.58

(15) Protest of a security or negotiable instrument 3.59

(16) Real estate leases 3.61

(17) Life annuity agreements 3.66

(18) Contracts for the purpose of conservation and administration of property of the bankrupt debtor 3.69

(19) Contracts on dispossessed property (bankruptcy assets) 3.70

(20) Lease agreements in cases of continuation of the business 3.74

(21) Mortgages and pledges on the continuation of the business operation 3.76

(22) Employment contracts 3.77

D  Reforms 3.83

E  Concluding remarks 3.85

4   National report for Austria

      Felix Kernbichler

A  Introduction 4.01

B  Insolvency procedures 4.03

(1) Formal proceedings 4.03

(2) Out-of-court workouts 4.09

C  Treatment of executory contracts 4.12

(1) Power to continue and reject contracts 4.13

(2) Automatic stay 4.15

(3) Prohibition of ipso facto clauses 4.29

(4) Timely decision 4.34

(5) Practical consequences 4.39

(6) Proposal for a Directive on preventative restructuring 4.41

D  Reforms 4.45

E  Concluding remarks 4.47

5   National report for Brazil

      Francisco Satiro and Eduardo G. Wanderley

A  Introduction 5.01

B  Available procedures 5.06

(1) Judicial Reorganization 5.07

(2) Extrajudicial Reorganization 5.30

(3) Bankruptcy Liquidation 5.33

C  Treatment of executory contracts 5.54

(1) Treatment of executory contracts under LRF 5.55

(2) Treatment of executory contracts in Bankruptcy Liquidation 5.59

(3) Treatment of executory contracts in Judicial Reorganization and Extrajudicial Reorganization 5.80

D  Reforms 5.94

E  Concluding remarks 5.95

6   National report for Bulgaria

      Georgi Valentinov Georgiev

A  Introduction 6.01

B  Available procedures 6.02

(1) Insolvency proceedings 6.05

(2) The stabilization procedure 6.36

(3) Out-of-court proceedings 6.48

C  Treatment of executory contracts 6.52

(1) Insolvency proceedings 6.52

(2) The stabilization procedure 6.69

D  Reforms 6.90

E  Concluding remarks 6.92

7   National report for Chile

      Camila Hoyuela Zattera, Maximiliano Escobar Saavedra and Mauricio Inostroza Sáez

A  Introduction 7.01

B  Framework of available insolvency proceedings 7.05

(1) Commencement of liquidation and reorganization proceedings 7.08

(2) Judicial and out-court proceedings 7.12

(3) Effects arising from reorganization and liquidation proceedings 7.16

C  Treatment of executory contracts under Chilean insolvency law 7.19

(1) Reorganization proceedings 7.20

(2) Liquidation proceedings 7.24

(3) Contractual agreements negotiated by parties in solvent times and executory contracts 7.29

D  Reforms and concluding remarks 7.31

8   National report for China

      Yingxiang Long and Rebecca Parry

A  Introduction 8.01

(1) Rights under contract law where performance threatened by insolvency 8.04

(2) Executory contracts in insolvency 8.07

B  Legal framework 8.16

(1) Obstacles and new movements 8.16

(2) The development of insolvency law 8.27

(3) Existing procedures 8.33

C  Treatment of executory contracts 8.37

(1) The options for administrators 8.37

(2) The concept of executory contracts under PRC insolvency law 8.40

(3) The effect of continuation and termination 8.46

(4) Ipso facto clauses 8.51

D  Concluding remarks 8.60

9   National report for Croatia

      Jasnica Garašić and Siniša Petrović

A  Introduction and insolvency procedures 9.01

(1) Pre-bankruptcy proceedings 9.02

(2) Bankruptcy proceedings 9.03

B  Treatment of executory contracts 9.14

(1) Pre-bankruptcy proceedings 9.14

(2) Bankruptcy proceedings 9.16

(3) Extraordinary management procedure 9.73

C  Pre-insolvency agreed contractual remedies 9.76

(1) Pre-bankruptcy proceedings 9.76

(2) Bankruptcy proceedings 9.77

(3) Extraordinary management procedure 9.88

D  Reforms 9.89

E  Concluding remarks 9.96

10  National report for Denmark

      Line Herman Langkjaer

A  Introduction to the available insolvency procedures 10.01

(1) Actors in the proceedings 10.05

(2) Requirements 10.07

(3) Out-of-court restructuring 10.09

B  Treatment of executory contracts 10.13

(1) Regulation of executory contracts in DBA 10.15

(2) Assumption of executory contracts 10.19

(3) The effects of the assumption of a contract 10.26

(4) Protection of the counterparty in the DBA 10.33

(5) The effects of non-assumption (rejection of the contract) 10.37

(6) Long-term contracts and indefinite contracts 10.39

(7) Mandatory rules 10.44

(8) Executory contracts in restructuring proceedings 10.47

(9) Continuation of the executory contracts 10.48

(10) The effects of continuation 10.51

(11) Assignment of contracts 10.54

C  Legislative reforms since 2000 10.57

(1) Introducing the restructuring procedure in 2011 10.58

(2) Changes in the treatment of executory contracts in 2011 10.61

(3) Future reforms of the insolvency framework 10.63

D  Concluding remarks 10.65

11  National report for Finland

      Jarmo Tuomisto

A  Introduction and available procedures 11.01

(1) Insolvency proceedings available to companies in financial or economic distress 11.01

(2) The requirements for triggering an insolvency proceeding 11.05

(3) Other general questions concerning Finnish insolvency proceedings 11.11

B  Treatment of executory contracts 11.12

(1) Treatment of executory contracts in bankruptcy 11.12

(2) Treatment of executory contracts in restructuring proceedings 11.27

(3) Contractual remedies agreed by the parties in solvent times 11.30

C  Reforms 11.35

D  Concluding remarks 11.41

12  National report for France

      Emilie Ghio

A  Introduction: available insolvency procedures in France 12.01

(1) Liquidation and rehabilitation praoceedings 12.05

(2) Pre-insolvency proceedings 12.09

(3) Out-of-court proceedings 12.12

(4) General comments and other remarkable features of the French regime 12.15

B  Treatment of executory contracts in France 12.17

(1) General remarks about executory contracts 12.17

(2) Executory contracts in French insolvency proceedings 12.19

(3) Statutory treatment of contractual remedies 12.39

C  Reforms 12.45

(1) Major reforms of French insolvency law to date 12.45

(2) Influences behind the reforms 12.59

(3) Impact of such reforms on executory contracts provisions 12.64

(4) General trends in French reforms 12.70

(5) The European context underpinning French reforms 12.75

D  Concluding remarks 12.79

13  National report for Germany

      Vanessa Buttafuoco

A  Introduction 13.01

B  Available procedures 13.04

(1) The main procedure – Regelinsolvenzverfahren 13.06

(2) The insolvency plan – Insolvenzplanverfahren 13.32

(3) The self-administration procedure – Eigenverwaltung 13.34

C Executory contracts and contractual remedies 13.36

(1) The insolvency administrator’s right of choice and executing contracts 13.38

(2) Contractual remedies – insolvency-related clauses 13.46

D  Reforms 13.58

E  Concluding remarks 13.72

14  National report for Greece

      Loukas Panetsos

A  Introduction to Greek insolvency law 14.01

(a) Application 14.03

(b) The actors of insolvency 14.05

B  The insolvency procedures 14.06

(a) The rehabilitation procedure 14.07

(b) The main insolvency procedure and the restructuring plan 14.10

(c) Synopsis 14.12

C  The treatment of executory contracts 14.13

(a) Instant executory contracts 14.16

(b) Permanent executory contracts 14.18

(c) The general principle regarding ipso facto clauses 14.19

(d) The executory contracts of personal character 14.21

(e) Employment contracts 14.24

(f) Other provisions 14.26

(g) Synopsis 14.27

D  Major reforms in the Greek insolvency law 14.28

(a) A timeline of the recent reforms 14.30

(b) The drivers for reform 14.34

(c) The reform in the treatment of executory contracts and ipso facto clauses 14.37

(d) Quantitative and qualitative studies regarding the Greek insolvency law system 14.39

(e) Conclusion 14.43

E  Concluding remarks 14.44

15  National report for Italy

      Rolandino Guidotti

A  Introduction and available procedures 15.01

(1) Introduction 15.01

(2) The Bankruptcy procedure in Italy 15.20

B  Treatment of executory contracts 15.29

(1) General treatment of executory contracts in the Bankruptcy procedure 15.29

(2) The most significant specific contracts 15.44

(3) The arrangement with creditors based on liquidation 15.90

(4) The arrangement with creditors on a going concern basis 15.95

(5) The executory contracts in the arrangements with creditors 15.100

(6) The executory contracts in the arrangements with creditors on a going concern basis 15.110

C  Reforms 15.113

(1) The global ‘Rordorf Reform’ 15.113

(2) The general principles 15.120

(3) The crisis of groups of companies 15.122

(4) The judicial winding-up procedure 15.129

(5) The reform of the arrangements with creditors 15.137

D  Concluding remarks 15.139

16  National report for Japan

      Jin Chun and Stacey Steele

A  Introduction 16.01

B  Insolvency procedures 16.04

C  Treatment of executory contracts 16.11

(1) General rule in relation to the treatment of executory contracts 16.11

(2) Special rules for certain types of contracts 16.21

(3) Treatment of ipso facto clauses 16.36

D  Reforms 16.43

(1) Reforms in respect of executory contracts 16.44

(2) Reforms in respect of ipso facto clauses 16.47

(3) Principal supporters of the reforms 16.48

E  Concluding remarks 16.50

17  National report for Lithuania

      Frank Heemann and Karolina Gasparké

A  Introduction 17.01

B  Insolvency procedures 17.02

(1) Insolvency procedures under the EBL 17.02

(2) Insolvency procedures under the ERL 17.17

C  Treatment of executory contracts 17.24

(1) Insolvency proceedings under the EBL: impact on executory contracts 17.25

(2) Insolvency proceedings under the ERL: impact on executory contracts 17.45

D  Reforms 17.55

(1) General 17.55

(2) Reforms in the context of executory contracts from 2000 17.59

E  Concluding remarks 17.63

18  National report for Panama

      José Maria Lezcano Navarro

A  Introduction 18.01

(1) Rationale of the law and subsequent innovation 18.10

(2) Reorganization 18.15

(3) Insolvency courts 18.21

(4) Cross-border insolvency 18.26

B  Available insolvency procedures 18.32

(1) Objective 18.33

(2) Circumstances that trigger the process 18.34

(3) Effect over the business in distress 18.35

C  Treatment of executory contracts 18.37

(1) Executory contracts and reorganization 18.40

(2) Proteccion Financiera Concursal 18.43

(3) Specific contracts 18.45

(4) Executory contracts and cross-border insolvency 18.54

D  Reforms and concluding remarks 18.55

19  National report for the Russian Federation

      Dmitry Konstantinov

A  Introduction 19.01

B  insolvency procedures 19.02

(1) Observation control 19.08

(2) Economic recovery 19.14

(3) External control (external administraton) 19.16

(4) Comprehensive agreement 19.18

(5) Liquidation 19.19

C  Treatment of executory contracts 19.22

(1) Rejection of executory contracts by the insolvency practitioner 19.28

(2) Performance of the executory contracts 19.37

D  Reforms 19.46

E  Concluding remarks 19.55

20  National report for Slovenia

      Katja Zdolšek

A  Introduction 20.01

B  Corporate bankruptcy proceEdINGs 20.09

(1) Compulsory settlement proceedings 20.12

(2) Preventive restructuring proceedings 20.17

(3) Out-of-court restructuring 20.20

C  Treatment of executory contracts 20.22

(1) The general regime for treatment of claims arising from contracts 20.22

(2) Treatment of executory contracts by the Insolvency Act 20.24

(3) Enforceability of contractual clauses agreed in solvent times 20.40

D  Major reforms 20.42

E  Concluding remarks 20.49

21  National report for Spain

      José Carles and Carlos Cuesta

A  Introduction 21.01

(1) Available insolvency procedures in Spain 21.01

(2) Requirements for insolvency procedures in Spain and rules for petition 21.03

(3) Out-of-court workouts and hybrid pre-insolvency proceedings in Spain 21.09

(4) General rule for contracts in which only one party has not fully performed its obligations 21.13

B  Bankruptcy procedures 21.16

(1) Treatment of executory contracts 21.16

(2) Terminaton clauses and contractual remedies agreed by the parties in solvent times 21.35

(3) Special rules depending on the specific nature of some contracts 21.42

C  Major reforms in Spain since 2000 21.45

(1) The Spanish Insolvency Act from 2003 21.45

(2) Further major reforms and the introduction of hybrid pre-insolvency proceedings in Spain 21.47

(3) Reforms regarding executory contracts 21.57

D  Concluding remarks 21.66

22  National report for Switzerland

      Patrick Keinert

A  Introduction and available corporate insolvency procedures 22.01

(I) Preface and sedes materiae 22.01

(II) Liquidation procedure (Konkursverfahren) 22.02

(III) Composition agreement procedure (Nachlassverfahren) 22.06

(IV) Stay of insolvency proceedings (Konkursaufschub) 22.19

(V) Evalution 22.21

B  Treatment of executory contracts 22.24

(I) Historical background of the administrator's right to determine execution of the contract 22.24

(II) Effects of insolvency proceedings on executory contracts 22.26

(III) The exercise of the adminisrator’s right in the liquidation procedure 22.30

(IV) Executory contracts in the composition procedure 22.41

(V) Treatment of contractual remedies agreed by the parties in times of solvency 22.43

C  Reforms 22.48

(I) SchKG reform 1994 22.48

(II) SchKG reform 2014 22.51

(III) Current reform on the Law of Obligations (Law on Stock Companies) 22.55

D  Concluding remarks 22.56

23  National report for The Netherlands

      Marco Verdonk and Rolef de Weijs

A  Insolvency procedures under Dutch law 23.01

(1) Liquidation procedure (faillissement23.02

(2) Suspension of payment procedure (surseance23.04

B  Treatment of executory contracts 23.06

(1) Treatment of executory contracts in insolvency 23.06

(2) Some specified contracts: lease, labour, contracts for energy, future contracts and agency 23.15

(3) Insolvency clauses: divestment clauses and multiplier 23.25

C  Legislative reforms 23.33

D  Concluding remarks 23.39

24  National report for the Republic of Turkey

      Çağlar Kaçar

A  Introduction 24.01

B  Corporate insolvency procedures 24.02

(1) Ordinary composition 24.02

(2) Post-insolvency composition 24.08

(3) Postponement of insolvency/bankruptcy 24.10

(4) Restructuring of capital companies and cooperatives through mutual consent 24.19

(5) Liquidation through composition with creditors 24.26

(6) Insolvency liquidation 24.29

C  Treatment of executory contracts 24.35

(1) Effect of reorganisation applications 24.35

(2) Effect of the opening of a liquidation procedure 24.39

(3) Other agreements and general approach 24.40

(4) Effects of ipso facto clauses 24.48

D  Reforms 24.51

E  Concluding remarks 24.60

PART II   COMMON LAW SYSTEMS

25  National report for Australia

      Elizabeth Streten

A  Introduction 25.01

(1) Liquidation 25.09

(2) Receivership 25.12

(3) Corporate rescue 25.13

B  Treatment of executory contracts 25.17

(1) Liquidation 25.17

(2) Receivership 25.23

(3) Corporate rescue 25.29

C  Reforms 25.34

D  Concluding remarks 25.46

26  National report for Bangladesh

      Morshed Mannan, Muhammad Mahbubur Rahman and Borhan Uddin Khan

A  Introduction 26.01

(1) Commercial and creditor-debtor relations in Bengal in the colonnial period 26.04

(2) Early insolvency litigation 26.09

B  Current framework and available insolvency procedures 26.16

C  Treatment of executory contracts 26.24

(1) Executory contracts are deemed to be assumed 26.25

(2) Executory contracts may be rejected by disclaimer 26.32

(3) Role of the creditors 26.35

(4) Special contracts and contractual provisions 26.37

D  Reforms 26.41

E  Concluding remarks 26.43

27  National report for England and Wales

      Eugenio Vaccari

A  Introduction 27.01

B  Insolvency procedures 27.03

(1) Liquidation proceedings 27.08

(2) Rescue proceedings 27.12

(3) Schemes of arrangement 27.21

C  Treatment of executory contracts 27.23

(1) The effects of insolvency proceedings on executory contracts 27.25

(2) Special precepts applicable to specific contracts 27.42

(3) Contractual remedies negotiated by the parties in solvent times 27.80

(4) Concluding remarks 27.91

D  Reforms 27.93

E  Concluding remarks 27.105

28  National report for New Zealand

      Scott Abel

A  Introduction and insolvency procedures 28.01

(1) Receivership 28.02

(2) Voluntary administration 28.05

(3) Liquidation (company, creditor or court-initiated) 28.07

(4) Creditors’ compromise 28.10

(5) Scheme of arrangement 28.13

(6) Statutory management 28.15

B  Treatment of executory contracts 28.16

(1) Receivership 28.18

(2) Voluntary administration 28.23

(3) Liquidation 28.29

(4) Creditors’ compromise and schemes of arrangement 28.34

(5) Statutory management 28.38

C  Major reforms 28.41

D  Concluding remarks 28.44

29  National report for Singapore

      Bingdao Wang

A  Introduction 29.01

B  Overview of Singapore legal framework on corporate insolvency, and recent reforms 29.04

(1) New Companies (Amendment) Act 2017 29.15

C  Treatment of executory contracts 29.22

(1) Disclaimer 29.24

(2) Special executory contracts 29.33

(3) Ipso facto clauses 29.40

D  Concluding remarks 29.68

30  National report for the United States

      Roberta Righi and Jessica J. Winters

A  Introduction and available procedures 30.01

(1) The chapter 7 procedure 30.05

(2) The chapter 11 procedure 30.13

(3) The insolvency procedures versus out of court agreements 30.22

B  Treatment of executory contracts in the US law 30.26

(1) Assumption, assignment and/or rejection of an executory contract 30.40

C  Reform proposals 30.52

D  Concluding remarks 30.62

PART III   HYBRID LEGAL SYSTEMS

31  National report for Canada

      Alfonso Nocilla

A  Introduction 31.01

(1) Overview of CCAA restructuring 31.02

(2) Overview of BIA commercial proposals 31.09

(3) Receivership, liquidation and out-of-court procedures 31.11

B  Treatment of executory contracts 31.12

(1) Disclaimer and assignment in BIA commercial reorganizations 31.12

(2) Disclaimer and assignment under the CCAA 31.17

C  Recent reforms 31.23

D  Concluding remarks 31.33

32  National report for Cyprus

      Anna Plevri

A  Introduction 32.01

B  Insolvency procedures 32.03

(1) Compulsory liquidaton 32.03

(2) Examinership 32.22

C  Treatment of executory contracts 32.30

D  Reforms – past and current 32.39

(1) Major reforms of current insolvency legislation in Cyprus since 2005 32.39

E  Concluding remarks 32.48

33  National report for India

      Indrajit Dube

A  Introductory note 33.01

B  Evolution of corporate insolvency law in India 33.04

(1) Bank nationalisations and its impact on insolvency 33.09

(2) Economic reform and insolvency 33.11

C  Insolvency framework 33.17

D  The treatment of executory contracts in India 33.22

E  Concluding remarks 33.27

34  National report for South Africa

      Clement Marumoagae

A  Introduction 34.01

B  Brief overview of South Africa legal framework 34.06

C  Treatment of executory contracts 34.09

(1) Common law approach 34.11

(2) Statutory provisions relating to executory contracts 34.22

D  Lack of reforms 34.42

E  Concluding remarks 34.45

35  National report for the United Arab Emirates and its free zones

      Christian Chamorro-Courtland

A  Introduction 35.01

B  Insolvency law 35.04

C  Available procedures and treatment of executory contracts 35.09

(1) Voluntary arrangement (restructuring) 35.10

(2) Liquidation 35.13

(3) Close-out netting 35.16

(4) The shortcomings of the DIFC 35.18

D  Reforms 35.24

(1) The new insolvency legislation 35.29

(2) Insolvency set-off and close-out netting 35.36

(3) Ipso facto clauses 35.39

E  Concluding remarks 35.44

Index