European Insolvency Law Harmonisation and Theory
Preference law, rules on reorganisation or composition plans, claim validation rules and insolvency of groups of companies are included amongst the topics identified as apt for harmonisation in INSOL Europe's report to the European Parliament, Harmonisation of Insolvency Law at EU Level.
They are also the topics discussed in a paper by Roelf Jakob De Weijs in an Amsterdam Law School research paper, Harmonisation of European Insolvency Law and the Need to Tackle Two Common Problems: Common Pool & Anticommons.
Arguing for a European debate on bankruptcy theory, De Weijs explains creditors frustrating reorganisation or composition plans, creditors creating nuisance value by filing exorbitant claims and the problem of office-holders’ hold out in the case of the insolvency of a group of companies by reference to the tragedy of the anticommons (where multiple owners are each endowed with the right to exclude others from a scarce resource).
In practice, skilled practitioners are adept at circumventing or mitigating the effect of such blocking rights. Care should be taken on harmonisation to consider what affects parties' behaviour and to avoid unintended consequences. A European debate on bankruptcy theory is a good thing.
Date: 1st November, 2011
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