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This paper argues that the non-obstante clause in the Insolvency and Bankruptcy Code 2016 (IBC), which gives supremacy to the IBC over all previous laws in case of conflict, does not serve its purpose of asset preservation, and highlights problems that arise due to its presence. The paper analyses this provision considering the test for determining inconsistency between statutes in Indian law. It argues that the impact of IBC across different fields of operation brings forth several inconsistencies when deciding a conflict between the IBC and another statute. It presents problems arising due to the supremacy given to the IBC through the non-obstante clause, and exhibits how its application sometimes defeats its purpose. Lastly, the paper analyses insolvency regimes of the UK and Singapore, as well as the UNCITRAL Guide on Insolvency, and presents an example of instituting better cooperation between authorities initiating proceedings against a company under different statutes. [ABSTRACT FROM AUTHOR]

Economic shocks create insolvency law-making space, generating opportunities for legal reform that may be absent in good times. Policymakers may suddenly acquire a mandate to resource institutions or drive through a change in the law where in good times such reforms were likely to be foiled by interest group capture, or simply unlikely to get sufficient political traction. A crisis, then, is an opportunity for the well-prepared insolvency policymaker. Insolvency rule-making in crisis conditions is, however, plainly also risky. Making best use of the opportunity implies making more than temporary changes to the regime. But design choices made mid-crisis will almost inevitably be influenced by the features of the crisis itself, generating a risk that the result of the reform effort will be distorted law, ill-suited to the achievement of the lawmaker's objectives in the long run. This paper considers the permanent restructuring law reforms enacted in the UK during the first wave of the Covid-19 pandemic. At first glance, these reforms appear to exemplify the case of the well-prepared policymaker, poised to drive through carefully planned changes to the law when the opportunity arises. On closer inspection, however, a different picture emerges. The permanent measures, which were enacted in a fast-track legislative process, departed from the Government's pre-pandemic plan in material and undesirable ways. In some cases, these deviations mean that the original objective has not been achieved at all; in others, the objective has been at least partially achieved, but at unnecessary cost. Overall, the UK experience appears to better exemplify the risks of attempting insolvency law reform in a crisis, than the opportunities that a crisis affords to an insolvency policymaker. [ABSTRACT FROM AUTHOR]

The UK Government has recently published a consultation paper on potential law reform for failing investment banks. The paper was prompted by the failure of Lehman Brothers and its repercussions. This article reviews the paper and highlights some of the key issues emerging which may form the focus of future law reform. [ABSTRACT FROM AUTHOR]

Purpose: The purpose of this paper is to examine the available judicial precedence using both the United Arab Emirates and UK laws to bring up a much broader understanding of wrongful and fraudulent trading concepts and provide a critical analysis of potential personal liabilities of directors in the UK and UAE jurisdictions for the acts of fraud and mismanagement. Design/methodology/approach: This paper seeks to understand corporate fraud from the aspect of trading. It will take an in-depth look into wrongful trading and fraudulent trading in the UAE and UK jurisdictions while analyzing the punishment for the same. The study will also look at famous cases for the same while seeking to understand the mitigation measures undertaken in various nations across the world. Findings: The author studies the contents and provisions of the UK Insolvency Act 1986, truly the concepts of wrongful trading and fraudulent trading are not explicitly mentioned in the UAE Law, but the said terms associated with "lifting of corporate veil" are notionally existent under the UAE Federal Law No2/2015, otherwise known as Companies Law (Articles 84 and 162-1), and under the UAE Bankruptcy Law (Federal Decree Law No. 9 of 2016), which provides legislation governing trading while the company is insolvent. Originality/value: In the current paper, the author is keen to examine the available judicial precedence to bring up a much broader understanding of the mentioned concepts and provide a critical analysis of potential personal liabilities of directors in the UK and UAE jurisdictions for the acts of fraud and mismanagement. [ABSTRACT FROM AUTHOR]

This paper examines the impact of a 'no deal' or 'hard' Brexit on the recognition of insolvency proceedings commenced in the UK by the remaining Member States of the European Union (EU) post‐Brexit. The paper considers the framework currently implemented by the Recast European Insolvency Regulation and the possible approaches when it will cease to apply to proceedings commenced post‐Brexit. The paper identifies that there will be no overarching framework in the event that 'no deal' is reached between the UK and the EU for post‐Brexit arrangements, resulting in reliance on individual Member States' domestic laws to determine recognition of insolvency proceedings commenced in the UK. The paper sets out the contrasting approaches of five of the UK's key trading partners in the EU: France, Germany, Ireland, the Netherlands and Spain. The paper concludes that UK insolvency proceedings will not be recognised in a consistent manner in these Member States, which will be detrimental to stakeholders in, and ultimately the economies of, the UK and these Member States. In doing so, the paper underlines the importance of an agreement being reached between the UK and the EU on the recognition of cross‐border insolvency proceedings for the benefit of all parties. Copyright © 2018 The Authors International Insolvency Review published by INSOL International and John Wiley & Sons Ltd. [ABSTRACT FROM AUTHOR]

The finance industry relies heavily on the risk modelling and analysis toolbox to assess the risk profiles of entities such as individual and corporate borrowers and investment vehicles. Such toolbox includes a variety of parametric and nonparametric methods for predicting risk class belonging. In this paper, we expand such toolbox by proposing an integrated framework for implementing a full classification analysis based on a reference point method, namely in-sample classification and out-of-sample classification. The empirical performance of the proposed reference point method-based classifier is tested on a UK data-set of bankrupt and nonbankrupt firms. Our findings conclude that the proposed classifier can deliver a very high predictive performance, which makes it a real contender in industry applications in banking and investment. Three main features of the proposed classifier drive its outstanding performance, namely its nonparametric nature, the design of our RPM score-based cut-off point procedure for in-sample classification, and the choice of a k-nearest neighbour as an out-of-sample classifier which is trained on the in-sample classification provided by the reference point method-based classifier. [ABSTRACT FROM AUTHOR]

This paper indicates some implications of corporate financial distress for corporate governance. Formal measures, laid down in statute and commercial law, and informal steps established by financial practice, both respond to the threat of insolvency by limiting (and sometimes removing) corporate control of incumbent management. Both need to be considered together in order to appreciate their effects in practice. Shifts in control are associated with UK statutory insolvency procedures, and the paper reviews accounting–based rules intended to protect creditors. It is argued that cash forecasts are the only effective basis for such rules. [ABSTRACT FROM AUTHOR]

After Brexit, the United Kingdom will become a third State to all effects. As far as insolvency is related, this will imply substantial changes regarding the recognition and enforcement of the UK insolvency proceedings. This paper purports to analyze the consequences a Hard-Brexit will have on insolvency-related matters, by describing the effects that should be expected with regard to the recognition in Spain of each of the proceedings that the UK legislation foresees for financially distressed debtors, namely administration, winding-up, voluntary agreements, bankruptcy and schemes of arrangement (which are dealt with separately due to their hybrid nature). [ABSTRACT FROM AUTHOR]

This paper argues that reform of the wrongful trading remedy in section 214 of the Insolvency Act 1986 is unlikely to yield significant increases in civil recovery for creditors of insolvent companies. The paper argues that the widely held view that procedural restrictions in the provision have unduly limited the application of the remedy are without foundation and, likewise, that there is little evidence that current modest levels of litigation under the provision demonstrate underperformance in the sanction relative to the scale of the misconduct against which it is directed. The paper draws on a wide range of analytical and empirical evidence to argue that the scope for application of the sanction is inherently limited by factors independent of the particular rules within the statutory remedy. [ABSTRACT FROM AUTHOR]

This paper challenges the standard characterisation that US law in the sphere of corporate bankruptcy is ‘pro debtor’ and UK law is ‘pro creditor’. It suggests that the traditional thesis is, at best, a potentially misleading over-simplification. It also 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 functional convergence has partly come through the UK Enterprise Act 2002 but the paper suggests that the main move has been that of US law and practice in a UK direction with more emphasis on business disposals and speedier cases than on corporate reorganisations, as traditionally understood. This mirrors practice in the UK where the emphasis has always been on business disposals. Unfortunately, the current economic recession on both sides of the Atlantic has shone a heightened spotlight on business bankruptcy and is likely to generate further changes in practice and ultimately legislation. Copyright © 2009 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

The article focuses on a research which uses relevant financial information of private medium-sized failed and non-failed manufacturing firms in Great Britain during 1994-2004 to determine whether corporate failure can be predicted by developing a Z-score model. The paper used multiple discriminant analysis to develop the Z-score. Z-score could help to overcome the difficulties associated with using single ratios to measure companies' health or risk of failure. The research provides a method to more accurately predict corporate failure in the area of benchmarking.

This paper attempts to differentiate among the theories of hedging by using disclosures in the annual reports of 400 UK companies and data collected via a survey. I find, unlike many previous US studies, strong evidence linking the decision to hedge and the expected costs of financial distress. The tests show that this is mainly because my definition of hedging includes all hedgers and not just derivative users. However, when the tests employ the same hedging definition as previous US studies, financial distress cost factors still appear to be more important for this sample than samples of US firms. Therefore, a secondary explanation for the strong financial distress results might be due to differences in the bankruptcy codes in the two countries, which result in higher expected costs of financial distress for UK firms. The paper also examines the determinants of the choice of hedging method distinguishing between non-derivative and derivatives hedging. My evidence shows that larger firms, firms with more cash, firms with a greater probability of financial distress, firms with exports or imports and firms with more short-term debt are more likely to hedge with derivatives. Thus, differences in opportunities, in incentives for reducing risk and in the types of financial price exposure play an important role in how firms hedge their risks. [ABSTRACT FROM AUTHOR]

Against a background of greater competition, market saturation and falling margins over the past decade UK banks have sought greater efficiencies in credit and risk assessment procedures, especially with personal lending products. In the same way they have attempted to reduce costs associated with the monitoring and collection of bad debts. Failure to monitor debt recoveries adequately, however, can lead to further pressure on profits. This paper uses a case study approach to outline key strategies adopted by two major banks in respect of formal insolvency, the 'tip' of a considerable debt recovery 'iceberg'. The paper illustrates the reactions and changing administrative practices of banks, as unsecured creditors, and draws on empirical research that has charted the effect of the Insolvency Act 1986 as regards individual debtors. The collection of bad debts presents banks with risks, heightened by adverse selection and moral hazard problems greater than those applicable to credit risk assessment. However, while the 'downside risk' equates with the debt write-off plus transaction costs the 'upside potential' has elements of both tangible and intangible benefit. The paper goes on to review specific centralization and outsourcing policies against the critical risks in insolvency. It also suggests that the bargaining power of major creditors, including banks, is increased through these activities, to the possible detriment of smaller creditors and of debtors. [ABSTRACT FROM AUTHOR]

This paper aims to simultaneously examine the effect of liquidity on reinsurance use and the reverse causality of reinsurance on liquidity. Using a sample of U.K. general insurers from 1994 to 2011, we find that insurers with higher liquidity tend to purchase more reinsurance, and those with higher reinsurance dependence tend to maintain higher liquidity. Our data indicates that the cash-constraint argument dominates the substitution argument. We further find an inverted U-shaped relation between reinsurance and liquidity. Particular attention should be paid to the less liquid insurers that purchase less reinsurance because they have both less underwriting and liquidity risk management, and thus are exposed to a higher level of insolvency risk. [ABSTRACT FROM AUTHOR]

One of the areas on which the Financial Conduct Authority's (FCA's) spotlight has shone most brightly in recent times is client assets (CASS) protection and CASS rules. In addition to having a generally more intensive and rigorous supervisory approach to CASS, the FCA has recently strengthened the rules themselves. Coupled with a new standard for audit firms' reporting on CASS compliance, this represents a new era for CASS compliance with corresponding challenges for investment firms, both large and small. The paper concludes with the message that the FCA's focus on CASS will not just remain, but is likely to be replicated by other regulators across the world. It therefore explores the challenges of complying with the CASS regime, including the additional burdens on corporate funding, the scope for varying interpretations of the rules themselves and the implicit rule of developing an insolvency mindset. Usefully, the paper then goes on to provide some practical guidance around building an effective control framework and embedding effective CASS compliance within the business. [ABSTRACT FROM AUTHOR]

Jurisdictions around the world are adjusting their insolvency laws with the aim to offer debtors in financial difficulties instruments that enable them to bring the company to a healthy state as soon as the problems arise. The rationale is that viable companies should have access to procedures that permit them to continue business, in whole or in part, by changing their capital structure as well as carrying out operational changes. Directors' duties to creditors form a regular part of the laws concerning insolvency and therefore, a change in the insolvency laws will, arguably, have consequences for directors' duties. In this paper, the impact of new preventive restructuring tools in the Netherlands and the UK on directors' duties is discussed. [ABSTRACT FROM AUTHOR]

In recent years, there has been a growth in the use of English schemes of arrangement by companies registered in other EU Member States. Recent high-profile examples include TeleColumbas GmbH, Rodenstock GmbH, Primacom Holdings GmbH, Re Metrovacesa SA and Re Seat Pagine Gialle SpA, although there are many more. In each case, these companies were able to access the English scheme jurisdiction without shifting their seat or COMI to the UK. This paper investigates this phenomenon, explaining the use of an English scheme of arrangement and why it might be regarded as valuable to these companies. The paper then tackles two issues. First, it assesses how these companies are able to access the English scheme jurisdiction, and, in particular, it analyses the potential application of both the Insolvency Regulation and the Judgments Regulation in this regard. As part of this analysis, the recognition and enforcement of English schemes of arrangement in other Member States is discussed. Second, it considers whether this use of English schemes by companies registered in Germany, Spain, Italy and elsewhere gives rise to issues of forum shopping. This paper rejects the idea that forum shopping should be regarded as a concern in this context. [ABSTRACT FROM AUTHOR]

This paper examines earnings management by dividend-paying firms in cases where pre-managed earnings would fall below the expected dividend, and by non-dividend paying firms aiming to avoid reporting losses. We find that within the UK market the likelihood of upward earnings management is significantly greater in the former case than the latter, though both are drivers for earnings management. Large firms are less likely to upwardly manage earnings to reach dividend thresholds, consistent with prior UK evidence on the ability of the largest firms to avoid restrictive debt covenants. We also find that earnings management is more clearly observable through examining working capital discretionary accruals than through examining total discretionary accruals. [ABSTRACT FROM AUTHOR]

Personal insolvency rates vary considerably across local areas of England and Wales but the reasons for this have barely been explored. This paper presents an empirical study of the factors determining variations in personal insolvency rates in 2006 utilising newly available data. The results suggest that a number of economic and demographic factors are important including income, social benefits, age, occupation, public-sector and armed forces employment and level of local entrepreneurship. Significant spatial autocorrelation is evident in the dataset and three sub-regional clusters of local authorities are identified; one in the South West is characterised by adjacent areas with a high insolvency rate and two others in Wales and the North West that are characterised by low insolvency rates. [ABSTRACT FROM AUTHOR]

The paper traces the development of the law relating to liquidated damages in Australia, New Zealand, England, and Singapore. The examination reveals that there is little difference because the courts in each jurisdiction have drawn on common precedents. The paper canvasses the distinction between a genuine pre-estimate of the likely damage and a penalty. Where a party has sought to guarantee compliance with a contract by use of a liquidated damages provision that coerces his or her contractual partner, there is a potential for the clause to be held to be void as a penalty. However, there is a developing reluctance on the part of the courts to interfere with the bargain made by the parties. The use of liquidated damages clauses adds to the predictability of the outcomes of construction contracts. The consequences of a liquidated damages provision being held to be void are discussed. The work concludes with an examination of situations where a party can elect to claim the damages assessed by common law principles in lieu of liquidated damages. [ABSTRACT FROM AUTHOR]

Over the past 20 years UK and Swedish insolvency law has moved in the direction of company rescue rather than enforcing secured creditor priority. However, both countries show a low take up rate of rescue procedures. This paper uses a cost-benefit approach to examine the choices faced by key stakeholders using the now conventional transaction cost paradigm. The paper argues that it is predominantly the ex post indirect and time costs which explain the poor take up of customised rescue procedures. In both countries the ex ante cost of delay in filing also presents a tough challenge not fully addressed by policymakers. [ABSTRACT FROM AUTHOR]

This paper investigates the relation between insider trading and the likelihood of insolvency with a specific focus on the directors’ sale and purchase transactions preceding insolvency. We use a unique data set on directors’ dealings in 474 non-financial UK firms, of which 117 filed for insolvency, over the period 2000–2010. We show that the directors of insolvent firms increase their purchase transactions significantly as the insolvency approaches. The results also reveal a significant relation between three different measures of insider trading activity and the likelihood of insolvency, which is observed to be positive only during the last six-month trading period. The relation is negative for the earlier trading periods. While the earlier purchase transactions appear to be motivated by superior information held by insiders, the purchase trades closer to the insolvency date are possibly initiated by directors’ motives to influence the market's perception of the firm in an attempt to avert or delay insolvency. [ABSTRACT FROM AUTHOR]

This paper uses data from the British Household Panel Survey to investigate the duration of self-employment spells in Britain. The results suggest that 40% of self-employment ventures started since 1991 have not survived their first year in business. Evidence is produced showing that a substantial proportion of self-employment spells are not terminated through bankruptcy, but through moves to alternative employment. The fittest, in terms of self-employment survival, are those with no previous unemployment experience but with some work experience, who quit their previous job, and who entered self-employment with some initial capital. [ABSTRACT FROM AUTHOR]

Purpose – This study aims to examine the role the structure of corporate boards plays in the failure of the firm. Specifically, it examines whether the remuneration committee is related to corporate failure in the UK. Design/methodology/approach – The study uses 1,835 firm-year observations for 98 failed and 269 non-failed UK-listed non-financial firms between the periods of 1994 and 2011. This study used pooled cross-sectional, fixed and random effects LOGIT models to estimate whether corporate failure is related to remuneration committee in the UK. Findings – The findings indicate that corporate failure is negatively related to the independence of the remuneration committee chairman and remuneration committee’s effectiveness but not remuneration committee’s presence, size and meetings. However, a positive and significant relationship was observed between corporate failure and remuneration committee independence. Practical implications – The findings of the study provide support for the appropriateness of agency theory as analytical lens through which to study the efficacy of remuneration committee, especially the independence of the remuneration committee chairperson, as a board monitoring device, in the context of corporate failure. Originality/value – The paper adds to existing literature on corporate governance by establishing the likely causes of corporate failure in the UK. [ABSTRACT FROM AUTHOR]

Following a five-year provincial tour, the popular actor-comedian Charles Collette acquired the lease of the Torquay Theatre Royal in August 1885 only to be declared bankrupt little more than one year later. This paper examines the circumstances surrounding his failure as a model case for analysing insolvency in the Victorian theatre, set against the backdrop of the changes in legislation that characterise the period. This study also emphasises that for the correct historical understanding and interpretation of theatrical insolvency and its complex relationships, a methodology and theoretical framework is essential. [ABSTRACT FROM AUTHOR]

A large literature has adumbrated the value-added role of private equity (PE) firms in backing buyouts. The present paper examines a different and hitherto unexplored issue: the role of financial restructuring in PE buyouts in the UK both before and after the financial crash of 2007. The UK evidence indicates that while PE buyouts had greater financial risk than comparable public limited companies (PLCs), they (1) already contained provisions to optimize recovery rates under insolvency, raising their recovery rates significantly relative to controls; and (2) rapidly adjusted the capital structures of new deals in response to the changes in financial and economic climate from 2007 onward resulting in failure rates somewhatlowerthan PLCs and non-PE buyouts. Non-PE management buyins (MBIs) by contrast have much higher failure rates than any other category throughout the 12-year period. Our analysis offers important implications for policymakers. First, it shows that there has been greater adjustment over time in the leverage and cash position of buyouts than for other private companies and matched PLCs. Second, policymakers need to recognize that while PE buyouts are highly leveraged, non-PE-backed buyouts are more or less well managed. Third,ceteris paribus, PE-backed deals are not riskier than the population of non-buyouts; active involvement by PE firms in helping portfolio companies deal with trading difficulties plays an important role. Fourth, the governance mechanisms in PE buyouts result in greater preservation of value when a portfolio firm enters formal bankruptcy than is the case for PLCs. [ABSTRACT FROM AUTHOR]

Company insolvencies can lead to potential financial losses for consumers. Insolvency can clearly also create a severe problem for consumers who are disappointed because the travel that they were anticipating cannot take place or has to be interrupted. Insolvency may create a negative image for the entire travel sector as well; as a result, the sector itself has developed a variety of guarantee mechanisms. Moreover, governments in some legal systems have also intervened to guarantee compensation to consumers who are confronted with an insolvent travel company. The mechanisms in this respect are quite divergent. In addition, this phenomenon of providing security in the case of insolvency in the package travel sector has not yet been analysed from an economic perspective. Nevertheless, these mechanisms pose interesting questions from an economic viewpoint, inter alia with respect to the rationale for creating such a mechanism, but also related to the issue of whether either the sector itself or the government should organise a security mechanism. The goal of this paper is therefore to examine mechanisms geared to ensure financial compensation to consumers in instances of insolvencies in the package travel sector. A law and economics approach will be used to critically review these security mechanisms. In this ambit, the different mechanisms opted for in the UK, The Netherlands, and Sweden will be displayed and analysed. [ABSTRACT FROM AUTHOR]

The relative priority of creditors in the administration of the estate of a person who died domiciled in the Caribbean is governed by rules that are substantially taken from outmoded common law and old English statutes. This paper examines those rules and offers a critique of their content, before using goals of efficiency and social policy to propose a structure for law reform. [ABSTRACT FROM AUTHOR]

We investigate the early development of English cotton spinning by analysing about 700 bankruptcies and 1300 dissolutions of partnership reported in the London Gazette, 1770-1840. The data show three temporal cycles, peaking in the early to mid-1800s, in the later 1820s and again in the later 1830s, near the ends of investment booms. Both earlier peaks were absolutely higher than the later ones, despite industry expansion. Over time both bankruptcies and dissolutions show rising concentration of spinning in greater Lancashire, and within greater Lancashire in the surrounding towns rather than in Manchester. The industry was throughout dominated by single proprietors or firms with only two partners. Integration with weaving was increasing steadily. The paper demonstrates the potential of the Gazette, now searchable online, as a source for business and industrial history. [ABSTRACT FROM AUTHOR]

This paper identifies five types of insolvency in English football: clubs that have failed to cope with relegation; failed to pay monies due to the UK government; seen 'soft debts' become 'hard debts'; lost the ownership of their stadium; or have been 'repeat offenders'. As the second of a three-phase research project, the paper concludes with an indication of the final phase research and implications of the findings so far for other professional sports. [ABSTRACT FROM AUTHOR]

A pre-pack administration is one where a deal has already been agreed prior to the company entering administration. The company's business will commonly be sold to the incumbent management team immediately the company is placed into administration. The business survives relatively intact but will have managed to jettison its unsecured debt. The business is saved and jobs are saved. The pre-pack will usually require the support of the company's bankers. Recent research suggests that pre-packs may constitute between 50% and 80% of all insolvent going concern sales. The UK version of a pre-packaged administration appears to have been rare until the administration process under the Insolvency Act 1986 was significantly amended in 2002, permitting a company to be placed into administration without a court order. The UK version of pre-packaged administration does not involve any plan being approved by different classes of creditor nor for the court to be involved in approving activities of the administrator before or after the plan is put into effect. The paper considers whether or not pre-pack administrations fit into the statutory framework of the Insolvency Act, the professional ethics requirements of being an insolvency practitioner and the equitable rules governing fiduciaries. Some aspects of the policy underpinning pre-packs are also considered in particular the decision to allow insolvency practitioners to claim pre-appointment fees as an expense of the administration. This decision appears to herald a change in government policy. This policy change is also considered. Copyright © 2009 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

This paper provides an answer to the basic question of why in the United Kingdom the traditional techniques for the maintenance of banking stability appeared to fail in the Northern Rock episode. It also considers how the techniques may need to be changed or supplemented to prevent such problems in the future. We propose the following actions to make the banking system robust. First, there should be arrangements for prompt and orderly closure of a bank as it approaches problems, before it would otherwise be forced to close by either insolvency or illiquidity. Second, there should be reform of deposit insurance, such that whatever sum is guaranteed is completely guaranteed, and can be accessed without any significant delay. Third, arrangements need to be made such that customers retain access to all core banking services either through speedy transfer of all accounts or the continued operation in some guise of the troubled bank.Journal of Banking Regulation (2009) 10, 89–127. doi:10.1057/jbr.2008.28 [ABSTRACT FROM AUTHOR]

The article discusses the two papers presented by professors Adrian Walters and Edward R. Morrison which highlight the significant differences of insolvency costs in the Great Britain and in the U.S. It provides an overview of the presentation. It cites the views and arguments of Estelle Guyon-Abinal, Dirk Zetzsche, and Klaus J. Hopt and the presenters' explanation on the subject matter.

The UK Pension Protection Fund (PPF), established by the 2004 Pensions Act to protect beneficiaries of defined benefit pension schemes when the sponsor becomes insolvent and the scheme is underfunded, is required to finance itself through a levy on participating schemes. In July 2005, the PPF issued a consultative document setting out its proposal for the structure of the levy. In this paper, we provide a critique of the proposal and, in particular, its heavy reliance on securing levy income from the weakest schemes. We propose an alternative structure for the levy that recognises the limits on capacity to pay and also mitigates some other undesirable features of the proposal. [ABSTRACT FROM AUTHOR]

This paper explores the American bankruptcy system--especially the Chapter 11 code--which since 1978 has allowed insolvent companies the opportunity to restructure and reorganise with the benefit of court protection from creditors. Particular attention is focused on asbestos companies, such as Johns-Manville, which have been among the most consistent and controversial filers for bankruptcy under Chapter 11. The history of asbestos and Chapter 11 is explored, against the backdrop of the burgeoning asbestos "crisis", caused by increasing mortality and litigation. Some of the business and ethical issues involved are highlighted by examining in detail a recent bankruptcy (Federal Mogul/T&N in 2001) that has implications in both Britain and America. Chapter 11 bankruptcy is evaluated, particularly in the light of the trend towards similar mechanisms of insolvency in the UK, Europe and the rest of the world. It is concluded that, certainly as regards the experience with asbestos, Chapter 11 offers an inefficient and inequitable method of rehabilitating or rescuing failing businesses. [ABSTRACT FROM AUTHOR]

Previous studies on the relationship between macroeconomic aggregates and business failures have been restricted to the description of the short-run relationships among the variables. This paper uses an error-correction model (ECM) to investigate the determinants of UK corporate failures by modelling the short-run and long-run behaviours of corporate failure rates in relation to macroeconomic phenomena over the period 1966-1999. The findings indicate that failure rates are associated with interest rates, credit, profits, price, and corporate birth rates both in the short run and in the long run. Of these macroeconomic variables, interest rate appears to be an important factor influencing failure rates and can be used as a feasible policy instrument to reduce the incidence of corporate failures. The impact of the Insolvency Act 1986 has also been examined and its mitigating effect on corporate failures has been identified. [ABSTRACT FROM AUTHOR]

This article provides a long-term demographic analysis of the principal members of the population of companies quoted on the UK stock exchanges in 1948. Motivated by theories of natural selection and of corporate governance, it traces the survival records of the 1948 population over the biblical 'threescore years and ten' to 2018. Of the population of 1513 companies in 1948, only 19 survived for the full seventy years. The survival rate, as captured by the half-life of companies in the population, is remarkably stable over the period. As well as charting death rates over time, the study explores the causes of death – takeover, failure, etc. Also it analyses the relationship between survival and the characteristics of the firm and its environment. [ABSTRACT FROM AUTHOR]

This article examines both the methodological problems associated with the previous research on business failure prediction and reports the results of a study carried out on share price data relating to 20 British companies that failed over the period 1960-1971. Various statistical failure prediction models have been developed in different countries including Great Britain. However, it was observed that the data used to develop the models were purely accounting data which only represents part of the data set available to market agents. In practice, the identification of impending failure is a much more gradual process than appears to be implied by discriminant and similar models. On the evidence of the behavior of share price residuals of 20 British companies which failed between 1960 and 1971, it appears that on average the market begins to perceive a firm's financial difficulties as early as five years prior to failure.

Companies across the globe are often started and, at the end of their operations, undergo a legal process identified as winding up. The legal process of starting a business or company differs greatly from the ending or winding-up process. Some common practices identified with closing a business entail compulsory winding up and voluntary winding up based on their jurisdictions. An investigation of some of the nations to be applied in the study include the European Union, the United States, and the United Kingdom of Great Britain. The research will also examine the efficacies associated with the legal processes in these three jurisdictions. The study will explore the legal provisions associated with the Insolvency & Bankruptcy Code and the Companies Act practiced in the European Union. An emphasis on the challenges companies faces when in the winding-up process or insolvency will be highlighted. It will offer an opportunity to navigate the intricacies of insolvency laws alongside their historical evolution. The underlying provisions and principles governing the operations of winding up a company in these three nations will be discussed to offer valuable information for the study. Lastly, the article will tabulate the variations and similarities in the three regimes. [ABSTRACT FROM AUTHOR]

We investigate the effect of risk management (reinsurance) on the corporate cost of equity using panel data drawn from the United Kingdom's (UK) non-life insurance industry. Our results show that use of reinsurance lowers the cost of equity but that the relation is non-linear. We find that the rate of reduction declines as the level of premiums ceded relative to total gross premiums written increases. We also find that the reinsurance-cost of equity relation is moderated by the risk of financial distress/bankruptcy. This moderating relation is robust to the use of three alternative measures of financial distress and bankruptcy risk. [ABSTRACT FROM AUTHOR]

This article examines how legal regime may affect the market’s reaction to the auditor’s going-concern (GC) opinion. We hypothesize that, ceteris paribus, investors in a creditor-friendly bankruptcy regime (the United Kingdom) will react more adversely to a first-time GC opinion indicating increased risk of loss associated with bankruptcy than do investors in a debtor-friendly bankruptcy regime (the United States). Our empirical results are consistent with this expectation. These findings are strengthened by additional analysis of the impact of the recent convergence in bankruptcy regime between the United States and United Kingdom on the market reaction to GC opinions in the United States. Our findings demonstrate a specific situation where the auditing standards and institutional factors interact, with their joint impact affecting the market’s reaction to the GC opinion. [ABSTRACT FROM AUTHOR]