The Characterization of Pre-Insolvency Proceedings in Private International Law

European Business Organization Law Review The final authenticated version of this paper is available online at https://doi.org/10.1007/s40804-020-00176-x

34 Pages Posted: 14 Sep 2019 Last revised: 10 Jul 2020

See all articles by Irit Mevorach

Irit Mevorach

University of Nottingham

Adrian Walters

Chicago-Kent College of Law - Illinois Institute of Technology

Date Written: July 1, 2019

Abstract

The decade since the financial crisis has witnessed a proliferation of various ‘light touch’ financial restructuring techniques in the form of so-called pre-insolvency proceedings. These proceedings inhabit a space on the spectrum of insolvency and restructuring law, somewhere between a pure contractual workout, the domain of contract law, and a formal insolvency or rehabilitation proceeding, the domain of insolvency law. While, to date, international insolvency instruments have tended to define insolvency proceedings quite expansively, discussion of the cross-border implications of pre-insolvency proceedings has barely begun. The question is whether pre-insolvency proceedings should qualify as proceedings related to insolvency for the purpose of private international law characterization. The risk is over-inclusivity of cross-border insolvency law, which, where it is based on universality and unity, might defeat contractual expectations. This article argues, however, that we should be slow to exclude pre-insolvency proceedings from cross-border insolvency law: these proceedings are initiated in the zone of insolvency, their effectiveness depends on a statutory mandate and not purely on private ordering, they interact and intersect with formal proceedings, and can benefit from the unique system developed by cross-border insolvency law. We suggest, though, that modified universalism (the leading norm of cross-border insolvency) and international insolvency instruments, should, and are able to, adjust to the peculiarities of pre-insolvency proceedings to address concerns about inclusivity and accommodate pre-insolvency proceedings adequately.

Keywords: Bankruptcy, insolvency, pre-insolvency proceedings, cross-border insolvency, private international law

JEL Classification: K20, K30, K33

Suggested Citation

Mevorach, Irit and Walters, Adrian, The Characterization of Pre-Insolvency Proceedings in Private International Law (July 1, 2019). European Business Organization Law Review The final authenticated version of this paper is available online at https://doi.org/10.1007/s40804-020-00176-x, Available at SSRN: https://ssrn.com/abstract=3448821

Irit Mevorach

University of Nottingham ( email )

University Park
Nottingham, NG7 2RD
United Kingdom

Adrian Walters (Contact Author)

Chicago-Kent College of Law - Illinois Institute of Technology ( email )

565 W. Adams St.
Chicago, IL 60661-3691
United States

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