As a monetary capital provider, creditors play an important role in external governance with shareholders, although they have no legal voting right outside of the bankruptcy process. Chapter 8 will compare the legal institutions and practices regarding the roles of creditors in the three countries by dividing them into ex ante monitoring of solvent firms, renegotiation in financially distressed firms, legal bankruptcy, and debtor directors’ fiduciary duty during the zone of insolvency. In the United States, banks play an active role in the governance of the firm whose business stumbles, by using the loan agreements for the revolving credit facilities. In Japan, contingent governance by main banks as representative of monetary capital providers worked well during Japan’s rapid economic growth era, but was not able to monitor their client companies’ use of free cash flow after the economic growth stopped. Although China is a bank-centered economy and state banks keep a dominant position, Chinese banks play a limited role in monitoring borrowers, especially borrowers who are SOEs, which can be supported financially by the government with cheap credit.

Where the reason for dismissal concerns business reorganisation rather than individual fault, there is a statutory right for employees with a qualifying period of continuous service to claim redundancy payments based on the number of years of service. In some cases of economic dismissal, the reason for dismissal may not fall within the statutory concept of redundancy, but in such cases dismissal can be regarded as fair as dismissal for some other substantial reason. There is statutory protection for wages and some compensation for dismissal in the event of the employer’s insolvency. Dismissals in connection with the sale of the business or outsourcing to a different contractor are automatically unfair dismissals unless the transferor or transferee can demonstrate that the workers were dismissed for redundancy unconnected to the sale.

The Desolate Boedelskamer was an innovative institution. It introduced a new approach to insolvency. Rather than punishing the insolvent debtor, the Desolate Boedelskamer sought to raise him up. Even though it remained firmly embedded in the early modern mental world and its communal culture of governance, the Amsterdam Desolate Boedelskamer is a clear example of how professionalization and good governance were able to provide systemic trust in a world of growing complexity. This new institution was part of the moral economy of seventeenth-century Amsterdam and relied upon it to function, but it also helped to shape that moral economy. Through a careful balancing act of trust and power, this institution was able to support the proliferation of credit, granting numerous insolvents in seventeenth-century Amsterdam a true stay of execution. In this analytical conclusion, the impact and wider implications of the book's argument will be discussed in a broader context.

This chapter describes the daily functioning of the Desolate Boedelskamer. It examines the Amsterdam insolvency procedure through the eyes of the actors involved. How did the court evolve over time, and where is it possible to discern the influence of its staff on such changes? Social and cultural attitudes towards overindebtedness and the insolvents themselves softened during the seventeenth century. While one might expect that such developments were detrimental to the position of creditors, they actually went hand in hand with important changes to Amsterdam’s legal institutions that also sought to protect the creditors’ interests. This chapter discusses to what extent the introduction of the Desolate Boedelskamer had an impact on the management of the insolvent estates that were placed in its care. Through a careful combination of formal work instructions and archival evidence from the daily practice, it analyzes the functioning of the court as part of its broader legal and institutional context.

Seventeenth-century Amsterdam was a city of innovations. Explosive economic growth and the expansion of overseas trade went hand in hand with a high level of religious tolerance. In this world of increasing complexity, legal and governmental innovations were essential in order to adapt the urban institutional landscape to the challenges posed by these great social, economic, and cultural changes. The topic of insolvency legislation, as a crucial junction of the fundamental contextuality of commercial law, is most suitable to shed new light on the precise circumstances under which the most striking and seminal developments in the rise of a modern commercial order took place. This introductory chapter explains how new empirical evidence from Amsterdam's legal archives can help understand how innovative governance and legal practices interacted with moral thought in order to produce a liberal, open-access insolvency regime.

This is the first of three chapters dealing in depth with directors’ duties, following the overview provided in Chapter 10. The duties are divided into two themes: duties of care, skill and diligence, and duties of loyalty and good faith. The focus in this chapter is on the duties of care, skill and diligence. These duties are imposed by the common law, equity and the Corporations Act. This chapter commences with the common law and equitable foundations of the duty of care, skill and diligence, and considers their adoption into statute and the current law. It examines the safe harbour provided by the business judgment rule, and recent discussion on the scope and application of that rule. This chapter examines the ability of directors to delegate their duties and to reasonably rely on the information or advice provided by certain types of persons. Finally, the chapter considers the requirements imposed on directors and officers as a company approaches insolvency. The chapters which follow then consider the duties of loyalty and good faith.

The focus of EU lawmakers with regard to cryptoassets has been largely regulatory. Reflecting the fact that private law is predominantly under the control of the Member States, and without seeking to be comprehensive, Section 13 takes a comparative view on the private law topics most relevant to cryptoassets. It covers efforts to harmonise national private laws, refers to principles issued by UNIDROIT and the European Law Institute, and considers relevant MiCA provision with private law effects in mind. Section 13.2 covers property law, including the important rules of title and transfer when multiple parties have competing claims to the same cryptoasset. Section 13.3 addresses contract law, including “smart contracts”. Section 13.4 on company law discusses decentralised autonomous organisations (DAOs) and the prospect of collaboration on the blockchain constituting a partnership as the default legal form of business organisation. Section 13.5 covers tort law, before Section 13.6 provides an overview of the difficulties often faced with enforcement of claims related to cryptoassets. Section 13.7 concludes with a perspective on the prospects of a uniform private law for cryptoassets.

Chapter 5 focuses on the enforcement of credit contractual agreements and questions the meaning of trust in credit networks. Despite the norms of solidarity, cooperation, and fairness that characterized pre-industrial society, breach of agreement did occur. When lenders and debtors had exhausted all the possibilities available to settle their disagreement, taking the matter to court was often the last resort. The aim was to recover the money owed, but often the emotional and social implications of a lawsuit went beyond the simple economic dimension. Throughout the period, the burden of debt increased rapidly, as well as the number of discontented creditors. The apparent dichotomy is intriguing: on the one hand, financial arrangements were flexible and renegotiable, but on the other, contract enforcement at court was sought after. These lawsuits are rich sources of information for the historian. They highlight the shortcomings and failures of debtors, and the (im)patience of creditors. But above all, they display the dynamics of complex and multiple layers of social and economic relationships. Overall, this chapter reconstructs both transactional and dispute resolution practices in

The insolvency of a party has considerable effects on all its legal relationships. The restriction imposed by the national insolvency law naturally also affect the ability to pursue claims in arbitration. The entry discusses in its first parts the various types of restrictions contained in the national insolvency laws and their effect on the arbitration agreements, the arbitral tribunals jurisdiction, the arbitration proceedings and the parties involved as well as the underlying policies. In presenting the various approaches adopted, which often differ considerably, exemplary provisions and cases for each approach are presented without focusing on specific jurisdictions. The second part is devoted to the important conflict of laws questions in international cases where the place of arbitration and the place of the insolvency are located in different jurisdictions. They are adressed both from the perspective of the state courts as well as from the perspective of the arbitral tribunal.

This chapter explores the legal framework governing security interests over personal property, which is a major aspect of business finance. The focus will be on the Personal Property Securities Act 2009 (Cth) (PPSA). The chapter will explain how its concepts and registration system (PPSR) apply to priority disputes between security interests in personal property. It will also examine the impact of the PPSA on insolvency.

The company form of business structure is one of the most common in the world today. As discussed in the previous chapter, there are a variety of benefits that make the corporate form the most appealing for many business operators, and also for investors and other stakeholders. This chapter examines this dominant business structure in detail, and explains the regulations in place around it. It identifies the legislation and other regulatory tools that enable the formation of companies in Australia, the process of incorporation and its legal consequences, what it means to be a member of a company, how companies are managed and the duties that are owed by the persons in control, companies financial reporting obligations, and the processes involved when a company becomes insolvent or otherwise needs to be wound up. You will follow a practical example across the course of this chapter, identifying how the company business structure would affect this startup business, and the impact that the legal regulation in this area will have on the individuals within and associated with this business.

Chapter 21 covers the effect of bankruptcy and insovency laws on IP licensing transactions. It covers the automatic stay of proceedings (US v. Inslaw), what is included in the bankruptcy estate, the effect of bankruptcy on executory contracts, including Lubrizol and Section 365(n) of the Bankruptcy Code (Prize Frize), the assignment by the bankruptcy estate (Pioneer Ford), the ban on ipso facto clauses and the use of technology escrow agreements to avoid some of these issues.

Godwin’s chapter considers the experience to date of convergence in the area of financial law and, specifically, the UNCITRAL Model Law on Cross-Border Insolvency (‘Model Law’). In particular, the chapter examines the factors that prevent convergence in the area of financial law or, to put it differently, the factors behind divergence. It is suggested that through an examination of these factors, it is possible to assess the practicalities – and the relative merits - of convergence. Such an examination also offers insights into the appropriateness of mechanisms that might be used to achieve convergence and the extent to which the mechanisms need to be tailored to the particular circumstances or legal terrain. The experience of the Model Law shows that full convergence in law (in terms of absolute uniformity) is neither realistic nor practicable and that there is a need to accept a degree of divergence in law between jurisdictions. It also suggests that divergence in law is not a negative as it often leads to convergence in outcomes. Further, divergence – or diversity - is positive if it achieves convergence in outcomes that could not otherwise be achieved as a result of fundamental differences between national legal systems.

This chapter compares the U.K. and U.S. approaches to fiduciary duty and clawback as they relate to transactions when the firm is in the vicinity of insolvency. Historically the U.S. and the U.K. have balanced directors’ duties and trustee’s avoidance powers in opposite ways. In the U.K., officers and directors have a duty of fairness to creditors in the vicinity of insolvency; in Delaware no such duty to creditors arises. The U.S. takes a strict approach to avoidance of preferential and fraudulent transfers; the U.K. requires culpability. This chapter suggests that, on both sides of the pond, the duty and clawback regimes are under stress due to their failure to appreciate the importance of equitable treatment in the vicinity of insolvency and that the current emphasis on insolvency and pre-insolvency regimes oriented toward “rescue” highlights this shortcoming. The chapter concludes, that both jurisdictions fail to appreciate that duty and clawback serve complementary functions in the vicinity of insolvency—equitable treatment of creditors; and that a more balanced approach would be better than either of the lopsided approaches taken by the U.S. and the U.K.

Financial markets litigants may, for different reasons, seek to bypass the legal landscape discussed thus far. Where parties have agreed to contracts expressly selecting English law and, in some version of a jurisdiction clause, the English courts, this may give rise to a preliminary dispute about the effects of the parties’ contractual choices. If so, the result is a classic example of what Robert Wai refers to as ‘“touchdown” points’ between a private regime and state law. The concern of the current and the following chapter is how the English courts navigate challenges to the choice of jurisdiction and governing law provided for in derivatives contracts, and the related legal issues that arise as a result of the global reach of the modern OTC markets. The principal focus here is claims arising out of or connected to the parties’ contract; where allegations relate to a broader, fraudulent scheme, the tort of conspiracy or deceit different principles will apply to determine governing law and jurisdiction.