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Informal Workouts as a Means for Addressing Legal Shortcomings

Informal Workouts as a Means for Addressing Legal Shortcomings. Forum for Asian Insolvency Reform Seoul – 10 November 2003. 1. The need for a global solution. The Ammanati insolvency in 1302 The Herstatt insolvency in 1974 The lessons. 2. Workouts may offer a global solution.

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Informal Workouts as a Means for Addressing Legal Shortcomings

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  1. Informal Workouts as a Means for Addressing Legal Shortcomings Forum for Asian Insolvency Reform Seoul – 10 November 2003 1

  2. The need for a global solution • The Ammanati insolvency in 1302 • The Herstatt insolvency in 1974 • The lessons 2

  3. Workouts may offer a global solution • International provisions of Bankruptcy laws deal with cross-border assets of one single entity but do not deal with group of companies • Example: the EU Regulation of 29 May 2000 on International Insolvency

  4. The « Enron » example • A unique filing in New-York for all US entities • A filing in London for Enron Europe

  5. The Sisas insolvency Sisas Italy Pantochim (B) Sisas Lux

  6. Another advantage • The absence of stigma

  7. How to implement a workout? • Set up a task force to assess the difficulties (lawyers, auditors, etc.) • Convening all or the major creditors to obtain a “stay”

  8. Pool of creditors • One single estate • Different committees

  9. Negotiation and implementation of the plan • Social plan • Sale of assets • Debt/equity swaps • Focus on profitable activities

  10. The risks • Process rests on consent • If not controled, individual actions may lead to the « grab-rule » and to liquidation.

  11. The challenges • Lawmaker promotion of workouts • But beyond what the law can do: “A fire remains a fire” • And hope: “the earth hardens after the rain

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