The Wall Street Journal reported that Steven Pearson, joint administrator for Lehman Brothers International (Europe) has proposed a plan to distribute assets in Europe. Check out the story here.
Because Lehman Brothers had assets in different countries, the process of untangling all these assets has been snarled for over a year. This example shows the importance for debtors and creditors to obtain good counsel in structuring their businesses.
Wednesday, October 7, 2009
Tuesday, September 29, 2009
Pittsburgh Summit 2009 Leaders' Statement
Take a look at the Leaders' Statement of the 2009 Pittsburgh G20 Summit
We often hear rhetoric from world leaders about change and improving the world, but this statement is unique because of the backdrop of the global financial crisis. Other bloggers have already picked the statement apart, so I just wanted to point out three interesting things:
1) Recital 19 of the Preamble states that the G20 forum will now serve as the primary forum for international financial cooperation. This has major implications, as it gives new voice to developing nations, especially China, India, Brazil, and Mexico.
2) Recital 5 of the Preamble makes the claim regarding the efforts of various nations to inject capital into their financial systems in order to stay the tide of financial collapse: "It worked". Very interesting. Very bold claim. All I can say to that is, I sure hope so!
3) The most interesting thing to me in all of this was the encouragement of large financial firms to put in place contingency and resolution plans (found under the last bullet point under Recital 13):
"Addressing cross-border resolutions and systemically important financial institutions by end-2010: Systemically important financial firms should develop internationally-consistent firm-specific contingency and resolution plans. Our authorities should establish crisis management groups for the major cross-border firms and a legal framework for crisis intervention as well as improve information sharing in times of stress. We should develop resolution tools and frameworks for the effective resolution of financial groups to help mitigate the disruption of financial institution failures and reduce moral hazard in the future. Our prudential standards for systemically important institutions should be commensurate with the costs of their failure. The FSB should propose by the end of October 2010 possible measures including more intensive supervision and specific additional capital, liquidity, and other prudential requirements."
It is always important for international financial firms to have in place contingency and resolution plans. It will be interesting to see how this requirement plays out in the international bankruptcy sector. Europe and the U.S. have made major steps toward harmonizing international bankruptcy regulations with Chapter 15 of the U.S. Bankruptcy Code and EC Regulation 1346/2000 on cross-border insolvency.
However, international bankruptcy is still fraught with pitfalls for businesses. Perhaps this statement will give impetus to the drive to further harmonize bankruptcy regulations.
We often hear rhetoric from world leaders about change and improving the world, but this statement is unique because of the backdrop of the global financial crisis. Other bloggers have already picked the statement apart, so I just wanted to point out three interesting things:
1) Recital 19 of the Preamble states that the G20 forum will now serve as the primary forum for international financial cooperation. This has major implications, as it gives new voice to developing nations, especially China, India, Brazil, and Mexico.
2) Recital 5 of the Preamble makes the claim regarding the efforts of various nations to inject capital into their financial systems in order to stay the tide of financial collapse: "It worked". Very interesting. Very bold claim. All I can say to that is, I sure hope so!
3) The most interesting thing to me in all of this was the encouragement of large financial firms to put in place contingency and resolution plans (found under the last bullet point under Recital 13):
"Addressing cross-border resolutions and systemically important financial institutions by end-2010: Systemically important financial firms should develop internationally-consistent firm-specific contingency and resolution plans. Our authorities should establish crisis management groups for the major cross-border firms and a legal framework for crisis intervention as well as improve information sharing in times of stress. We should develop resolution tools and frameworks for the effective resolution of financial groups to help mitigate the disruption of financial institution failures and reduce moral hazard in the future. Our prudential standards for systemically important institutions should be commensurate with the costs of their failure. The FSB should propose by the end of October 2010 possible measures including more intensive supervision and specific additional capital, liquidity, and other prudential requirements."
It is always important for international financial firms to have in place contingency and resolution plans. It will be interesting to see how this requirement plays out in the international bankruptcy sector. Europe and the U.S. have made major steps toward harmonizing international bankruptcy regulations with Chapter 15 of the U.S. Bankruptcy Code and EC Regulation 1346/2000 on cross-border insolvency.
However, international bankruptcy is still fraught with pitfalls for businesses. Perhaps this statement will give impetus to the drive to further harmonize bankruptcy regulations.
Monday, September 28, 2009
Bankruptcy Tourism in the UK - Thanks to Regulation 1346/2000
On May 29, 2000, Regulation 1346/2000 of the European Council went into effect. The Regulation was intended to harmonize insolvency proceedings throughout the EU and to discourage "bankruptcy shopping", where potential bankrupts transfer their companies or actual persons to jurisdictions that have more lenient insolvency laws. The Regulation has helped with the former goal, but the latter goal is proving to be a tricky matter.
Check out this story from thisismoney about bankruptcy tourists who are leaving other European countries in droves to start new lives in England in order to take advantage of England's more lenient insolvency laws. Kent seems to be the hot spot right now, especially for German bankrupts.
This situation has many potential implications for the future of the Regulation. Primarily, if this situation continues and expands, England could eventually change its own insolvency laws. This could also lead to further amendments in the Regulation.
Insolvency practices almost always raise questions of legal ethics, and this is no exception. As the article points out, the ethics of this situation in England are questionable, but the practice is technically legal.
What are your thoughts about this? Is it ethical for insolvency practitioners to encourage this behavior? Will this situation lead to changes in English or EU law?
Check out this story from thisismoney about bankruptcy tourists who are leaving other European countries in droves to start new lives in England in order to take advantage of England's more lenient insolvency laws. Kent seems to be the hot spot right now, especially for German bankrupts.
This situation has many potential implications for the future of the Regulation. Primarily, if this situation continues and expands, England could eventually change its own insolvency laws. This could also lead to further amendments in the Regulation.
Insolvency practices almost always raise questions of legal ethics, and this is no exception. As the article points out, the ethics of this situation in England are questionable, but the practice is technically legal.
What are your thoughts about this? Is it ethical for insolvency practitioners to encourage this behavior? Will this situation lead to changes in English or EU law?
Tuesday, August 25, 2009
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