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An Introduction to Shari'ah Considerations in Bankruptcy and Insolvency Contexts and Islamic Finance's First Bankruptcy (East Cameron)

29 Pages Posted: 1 May 2011 Last revised: 19 Jun 2012

Michael J. T. McMillen

Curtis, Mallet-Prevost, Colt & Mosle LLP; University of Pennsylvania Law School

Date Written: June 17, 2012

Abstract

This paper is an introductory survey of bankruptcy and insolvency theory and practice relating to the introduction of Shari'ah principles into secular bankruptcy and insolvency regimes in both jurisdictions that incorporate the Shari'ah, to some extent, into the secular law of the jurisdiction and purely secular jurisdictions. The paper first summarizes some of the Shari'ah principles that are applicable in the bankruptcy and insolvency context. Thereafter, the paper notes the general nature of the secular bankruptcy and insolvency regimes currently in use and summarizes some current practices that are of relevance in the distressed debt, bankruptcy, insolvency, reorganization, restructuring and workout markets, particularly in jurisdictions that have adopted or may adopt a reorganization methodology (such as Chapter 11 or the UNCITRAL model insolvency law). Finally, the paper summarizes certain aspects of the bankruptcy proceeding involving the East Cameron oil and gas sukuk as an example of a secular bankruptcy proceeding involving a Shari'ah-compliant instrument and transaction.

Keywords: Islamic finance, Islamic investments, sharia, shari'ah, bankruptcy, insolvency, sukuk, distressed debt, iflas, taflis, muflis, debtor-in-possession, DIP loans, 363 sale, Islam, Islamic jurisprudence, East Cameron

JEL Classification: F00, F15, F23, F34, F36, F39, G15, G21, G234, G33, K20, K33, P34, P43

Suggested Citation

McMillen, Michael J. T., An Introduction to Shari'ah Considerations in Bankruptcy and Insolvency Contexts and Islamic Finance's First Bankruptcy (East Cameron) (June 17, 2012). Available at SSRN: https://ssrn.com/abstract=1826246 or http://dx.doi.org/10.2139/ssrn.1826246

Michael J. T. McMillen (Contact Author)

Curtis, Mallet-Prevost, Colt & Mosle LLP ( email )

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University of Pennsylvania Law School ( email )

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