0% found this document useful (0 votes)

43 views25 pages

Renssen, S. Corporate Restructuring and Corporate Dissolution of Companies in Financial Distress Ensuring Creditor Protection

Uploaded by

Iruama de Oliveira da Silva

We take content rights seriously. If you suspect this is your content, claim it here.

Available Formats

Download as PDF, TXT or read online on Scribd

0% found this document useful (0 votes)

43 views25 pages

Renssen, S. Corporate Restructuring and Corporate Dissolution of Companies in Financial Distress Ensuring Creditor Protection

Uploaded by

Iruama de Oliveira da Silva

We take content rights seriously. If you suspect this is your content, claim it here.

Available Formats

Download as PDF, TXT or read online on Scribd

You are on page 1/ 25

Corporate Restructuring and Corporate

Dissolution of Companies in Financial

Distress: Ensuring Creditor Protection. A
Comparison of the US, UK and Dutch Models
Samantha Renssen*
Maastricht University, Maastricht, The Netherlands

Abstract
Where a company is in financial distress, there are two options: rescue of the
(viable) company by restructuring or liquidation of the (unviable) company by
dissolution. In practice, the most important restructuring procedure is the US
Chapter 11. Many European jurisdictions have used Chapter 11 as a source of
inspiration for the enactment of their restructuring proceedings. However, in
Europe, national restructuring rules vary greatly in respect of the range of
procedures available to companies in financial distress aiming at restructuring.
Some European jurisdictions do not provide for formal restructuring procedures
at all. Unviable companies in financial distress are too broke to restructure. In
most European jurisdictions, unviable companies can be dissolved very quickly
and cheaply. However, these procedures also differ from each other. Copyright
© 2017 INSOL International and John Wiley & Sons, Ltd.

It is of great importance that companies in ﬁnancial distress have access to a

framework enabling them to restructure in order to prevent insolvency. Effective
restructuring of companies contributes to saving jobs and beneﬁts the wider
economy. It is also important to encourage greater coherence between the national
insolvency frameworks regarding restructuring and dissolution, as this would
maximise the returns to the creditors, and encourage cross-border investment.
Despite the fact that the development of restructuring options for viable companies
in ﬁnancial distress and quick dissolution possibilities for unviable companies is
welcome with respect to economic and labour market policies, the question arises

*E-mail: [email protected]

Copyright © 2017 INSOL International and John Wiley & Sons, Ltd Int. Insolv. Rev., Vol. 26: 204–228 (2017)
Published online 30 May 2017 in Wiley Online Library
(wileyonlinelibrary.com). DOI: 10.1002/iir.1277
10991107, 2017, 2, Downloaded from https://onlinelibrary.wiley.com/doi/10.1002/iir.1277 by CAPES, Wiley Online Library on [16/02/2024]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
Corporate Restructuring and Dissolution 205

whether creditor protection is sufﬁciently ensured. In this contribution, the

abovementioned question will be answered for the US, the UK and the Dutch
models.

I. Introduction1
Where a company is in financial distress, there are, broadly, two options: rescue of
the (viable) company by restructuring or liquidation of the (unviable) company by
dissolution or bankruptcy. Because liquidation destroys the company and its value,
restructuring is preferable. In practice, the most important restructuring procedure
worldwide is the US Chapter 11 procedure.2 Many European countries have used
Chapter 11 as a source of inspiration for the enactment of their restructuring
proceedings.3 However, in Europe, national restructuring and insolvency rules
vary greatly in respect of the range of procedures available to companies in
financial distress aiming at restructuring their business. It is of great importance
that companies in financial distress have access to a framework enabling them to
restructure with the objective of preventing insolvency.4 Effective restructuring of
viable companies in financial distress contributes to saving jobs and also benefits
the wider economy. It is also important to encourage greater coherence between
the national insolvency frameworks, as this would maximise the returns to the
creditors and investors and encourage cross-border investment.
In general, in European insolvency practice, the UK insolvency system is seen as
rather sophisticated.5 In the UK, viable companies can make use of the following
three formal procedures: the pre-pack procedure, the scheme of arrangement and
the company voluntary arrangement procedure. However, not all European
countries provide for formal rescue procedures. Current Dutch law, for example,
still lacks appropriate and efficient methods to restructure viable companies in
financial distress successfully. At present, the Dutch legislator is working on the
development of a framework for companies in financial distress. Despite the fact
that the development of restructuring options for companies in financial distress
is welcome universally with respect to economic and labour market policies, the
question of whether creditor protection is sufficiently ensured in restructuring
proceedings arises.
Unviable companies in financial distress are basically too broke to restructure.
According to the American Bankruptcy Institute Commission, Chapter 11 has
become too expensive particularly for small and medium companies.6 A prime
example of a US alternative is Delaware’s statutory dissolution scheme. Under this

1. This is a revised version of a paper that received the 2016 Ian 5. Pontian Okoli, “Rescue Culture in the United Kingdom:
Strang Founders Award from INSOL International. Realities and the Need for a Delicate Balancing Act”
2. Bob Wessels and Rolef De Weijs, “Proposed (2012) 23(2) International Company and Commercial Law
Recommendations for the Reform of Chapter 11 U.S. Bankruptcy Review 64.
Code” Ondernemingsrecht 2015/37. 6. American Bankruptcy Institute (ABI), Commission to Study
3. For example, Germany, Italy, the Netherlands and Spain. the Reform of Chapter 11 2012–2014, Final Report and
4. Commission Recommendation on a New Approach to Business Recommendations (available at http://commission.abi.org/full-
Failure and Insolvency, COM(2014) 1500 ﬁnal. report).

Copyright © 2017 INSOL International and John Wiley & Sons, Ltd Int. Insolv. Rev., Vol. 26: 204–228 (2017)
DOI: 10.1002/iir
10991107, 2017, 2, Downloaded from https://onlinelibrary.wiley.com/doi/10.1002/iir.1277 by CAPES, Wiley Online Library on [16/02/2024]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
206 International Insolvency Review

scheme, a company has a choice between formal dissolution and informal

dissolution.7 By providing directors and shareholders with protection from
personal liability, the use of the formal dissolution is incentivised. However, since
the Goldman Sachs case,8 shareholders lack an incentive to initiate formal dissolution
and are basically encouraged to dissolve the company in an informal way, which is
detrimental to the creditors.
In most European countries, unviable companies in ﬁnancial distress can be
dissolved very quickly and cheaply. In the Netherlands, a company can be
dissolved without pursuing liquidation proceedings if there are no longer any assets
at the time of dissolution. This quick and cheap dissolution procedure, laid down
in Article 2:19 sub 4 of the Dutch Civil Code (DCC), is also referred to as ‘turbo
liquidation’. In the UK, it is possible to strike off a company from the Companies
Register and thereby terminate its existence, also known as the voluntary striking
off procedure.9 This procedure is considered inexpensive and easy in its process.
The question of whether creditor protection is ensured in these quick dissolution
methods arises.
In this article, the question of whether creditor protection is sufﬁciently ensured
in restructuring and dissolution proceedings will be answered for the US, UK and
(proposed) Dutch models. First, the formal corporate restructuring procedures in
the USA (Section II) and in the UK (Section III)10 and the proposed rescue
procedures by the Dutch legislator (Section IV) will be successively reviewed.
Secondly, corporate dissolution in the USA, the UK, and in the Netherlands will
also be reviewed in turn (in Sections V, VI and VII). Thirdly, Section VIII will
contain an overview and evaluation of corporate restructuring and corporate
dissolution in the USA, the UK and the Netherlands. Section IX provides
conclusions.

II. Corporate Restructuring in the USA

A. Restructuring by a Chapter 11 plan
The United States Bankruptcy Code (USBC) Chapter 11 procedure is the most
important insolvency procedure worldwide.11 This procedure is aimed at
restructuring the company by a ﬁnancial restructuring plan. The procedure can
be commenced by the debtor (voluntary basis) or, under certain conditions, a
creditor (involuntary basis).12 The ﬁling of a voluntary petition automatically
constitutes entry of an order for relief opening the case. From that moment on, a

7. Sections 280 and 281(a)(b), Delaware General Corporation EU Member States will not be discussed. See, for example,
Law (DGCL). Jennifer Payne, “Cross-Border Schemes of Arrangement and
8. Territory of the United States Virgin Islands v. Goldman, Forum Shopping” (2013) 14 European Business Organization
Sachs & Co., 937 A.2d 760 (Del. Ch. 2007). Law Review 563–589.
9. Section 1003, Companies Act 2006 (CA 2006). 11. Wessels and De Weijs (n 2).
10. In this article, the question of whether it is possible to use the 12. Sections 301–303, Chapter 11 USBC.
English scheme of arrangement by companies registered in other

bankruptcy estate is created. The estate is comprised of all properties of the debtor,
wherever located and by whomever held.13 During a Chapter 11 procedure, the
debtor stays in possession.14 In case of fraud, incompetence or gross
mismanagement, the court can appoint a trustee to take over the management
of the debtor’s affairs,15 but such an appointment is rare.
The creditors of the company are involved in a Chapter 11 procedure. At
the inception of the procedure, the US Trustee will appoint a committee of
creditors holding unsecured claims.16 This committee monitors the debtor’s
ongoing operations and consults with the debtor on major decisions. Other
creditors and shareholders have the possibility to participate in the procedure
and to be heard on most issues as ‘parties of interest’.17 A Chapter 11 filing
triggers a worldwide automatic stay on enforcement proceedings against the
debtor or its property.18 The automatic stay provides the debtor with a
breathing spell.19 The debtor has a 120-day period during which he has the
exclusive right to file a plan after the commencement of the Chapter 11
procedure.20 This period can be reduced or extended by the court ‘for
cause’.21 A plan mostly provides that a creditor’s claim will be reduced or paid
back over a greater period of time or at a different interest rate than was
originally agreed upon.22
For purposes of voting, the creditors and shareholders have to be grouped
into one or more classes.23 The classification of creditors and shareholders into
classes is based on the premise that their claims are substantially similar.24 The
plan must provide for the same treatment for each claim in a particular
class.25 Before voting, the holders of claims must receive a court-approved
disclosure statement containing adequate information about the debtor and
the plan.26 Acceptance by a class of claims requires consent by a majority in
number and two-thirds in amount of those actually voting.27 Only creditors
and shareholders whose claims are impaired under the plan are entitled to
vote.28 Creditors and shareholders who receive nothing in the plan are not
solicited and are deemed to reject the plan.29 Finally, the plan is submitted
to the court for confirmation, after which it will bind all creditors and
shareholders.30

13. Section 541, Chapter 11 USBC. 19. Bracewell & Giuliani LLP, Chapter 11 of the United States
14. Sections 1107 and 1108, Chapter 11 USBC. Together Bankruptcy Code: Background and Summary 2012, 8.
with the worldwide automatic stay, the provisions for super- 20. Section 1121(b), Chapter 11 USBC.
priority new ﬁnance, the statutory cram down possibilities and 21. Section 1121(d), Chapter 11 USBC.
the procedure consolidation possibilities, the debtor in possession 22. Bracewell & Giuliani LLP (n 19) 18.
norm makes Chapter 11 attractive to foreign forum shoppers; 23. Section 1123(a)(1), Chapter 11 USBC.
see Gerard McCormack, “Bankruptcy Forum Shopping: the UK 24. Section 1122, Chapter 11 USBC.
and US as Venues of Choice for Foreign Companies” (2014) 25. Section 1123(a)(4), Chapter 11 USBC.
63(4) International & Comparative Law Quarterly 827. 26. Section 1125, Chapter 11 USBC.
15. Section 1104, Chapter 11 USBC. 27. Section 1126(d), Chapter 11 USBC.
16. Section 1102, Chapter 11 USBC. 28. Section 1126, Chapter 11 USBC.
17. Section 1109, Chapter 11 USBC. 29. Jennifer Payne, “Debt Restructuring in English Law:
18. Section 362(a), Chapter 11 USBC. For an example of the Lessons from the United States and the Need for Reform”
worldwide effect of the automatic stay, see In re Nortel Networks (2014) 130 Law Quarterly Review 300.
Inc. (2011) 669 F 3d 128. 30. Sections 1128 and 1129, Chapter 11 USBC.

The court will only confirm the plan if it is in compliance with all the
requirements of confirmation set forth in section 1129. Firstly, the plan has to
comply with all applicable laws. Secondly, the plan has to be feasible. Moreover,
Chapter 11 imposes a safeguard to protect the creditors.31 Even if all classes
entitled to vote on the plan have voted to accept the plan, the court must
determine whether the plan is in the best interest of the creditors and shareholders,
meaning that the dissenting creditors or shareholders are receiving under the plan
at least as much as they would receive if the debtor was liquidated under Chapter 7
of the USBC.32 Even if an impaired class rejects the plan, the plan can be
crammed down on the entire class if at least one impaired class has voted to accept
the plan and the court finds that the treatment provided for the objecting class
under the plan does not discriminate unfairly and is fair and equitable.33

B. Restructuring by a 363 sale

Although Chapter 11 is conceived as a restructuring procedure, it frequently serves
as a liquidation procedure facilitating a sale of (a part of) the debtor’s assets under
section 363 of the USBC.34 Under the aforementioned section, the debtor can sell
its assets and then propose a liquidation plan that distributes the sale proceeds to
creditors. A 363 sale typically involves identifying an initial bidder and approving
the bidding procedures.35 The bidding procedures structure the solicitation of
competing bids and the auction if any competing bids materialise.36 Once the sale
is complete, the debtor proceeds to formulate a Chapter 11 plan or ﬁles for a
Chapter 7 liquidation.37 363 sales have become very popular in practice: most
large bankruptcy proceedings involve a sale of (a part of) the company, rather than
a reorganisation plan.38 The popularity of the 363 sales is driven by two factors:
the speed of the procedure and the possibility to sell assets free and clear of most
claims.39 A 363 sale is not formally subject to the rules concerning the conﬁrmation
of a plan as set forth in the previous paragraph.40 Consequently, the rules
protecting the creditors are not applicable. It is argued that creditors are provided
with various tools to protect themselves against a detrimental sale, for example the
ability to submit competing bids and credit bids in the case of secured creditors.41
However, a 363 sale may determine distributions to creditors without creditors

31. Payne (n 29). 38. Kenneth Ayotte and David A Skeel Jr, “Bankruptcy
32. Section 1129(a)(7), Chapter 11 USBC. or Bailouts?” (2010) 35 The Journal of Corporation
33. Section 1129(b)(1), Chapter 11 USBC. Law 469.
34. Wessels and De Weijs (n 2). 39. Section 363(f), US Bankruptcy Code, provides clean titles
35. Re O0 Brien Environmental Energy, 181 F (3d) 527 at to the debtor’s assets, except for future tort claimants who
530, 1999 US App LEXIS 16652 (3d Cir 1999). could not know that they have claims: Re Trans World
36. C R Bowles and John Egan, “The Sale of the Century or a Airlines, 322 F (3d) 283, US App LEXIS 4530 (3d
Fraud on Creditors?: The Fiduciary Duty of Trustees and Cir 2003).
Debtors in Possession Relating to the ‘Sale’ of a Debtor’s Assets 40. Re Trans World Airlines, 322 F (3d) 283, US App
in Bankruptcy” (1998) 28(3) University of Memphis Law LEXIS 4530 (3d Cir 2003).
Review 805–836. 41. Section 363(k), Chapter 11 USBC; Bruce A
37. Stephanie Ben-Ishai and Stephen J Lubben, “Sales or Plans: Markell, “Owners, Auctions, and Absolute Priority in
A Comparative Account of the ‘New’ Corporate Reorganization” Bankruptcy Reorganizations” (1991) 44(1) Stanford Law
(2011) 56(3) McGill Law Journal 591. Review 69.

having a vote.42 Moreover, 363 sales are often pursued before parties in interest
have adequate information to assess the sale as well as the restructuring
alternatives.43
On 4 December 2014, the ABI presented its Final Report and
Recommendations concerning the revision of Chapter 11. The Commission
recommends that in case of a 363 sale, creditors should have similar protection
as under the process of adopting a reorganisation plan. Consequently, the court
should only approve a 363 sale if the court ﬁnds that the proposed sale is in the best
interest of the estate, complies with the applicable provisions of the USBC and has
been proposed in good faith. Moreover, adequate notice and an opportunity to be
heard have to be provided to all creditors who may be affected by the sale.44

III. Corporate Restructuring in the UK

A. Restructuring by pre-packaged administration
There is no clear statute providing the legality of a pre-pack; the pre-packaged
administration is developed in practice.45 During a pre-pack procedure, selling a
company’s business is arranged prior to the commencement of the administration
procedure, and thus, a swifter implementation and completion of the deal is laid
down in the statutory proceedings.46 There has been a huge increase in the
number of pre-packs since the Enterprise Act 2002 inserted Schedule B1 into
the Insolvency Act 1986 (IA 1986).47 One of the main goals of the Enterprise
Act 2002 was to facilitate company rescue.48 An administrator or administrative
receiver will be appointed, who will then execute the restructuring transaction
on behalf of the company in financial distress.49 According to Paragraph 2 of
Schedule B1, an administrator can be appointed by the court under Paragraph
10, by the holder of a floating charge under Paragraph 14 or by the company or
its directors under Paragraph 22.50 Whether or not the administrator is appointed
by the court, he is an officer of the court and must act as an agent of the
company.51 According to Paragraph 6 of Schedule B1, a person may be appointed
as an administrator only if he is qualified to act as an insolvency practitioner in
relation to the company.
The administrator must perform his functions with the objective of rescuing the
company as a going concern or achieving a better result for the company’s
creditors as a whole than would be likely if the company were wound up (without
42. Wessels and De Weijs (n 2). ESRC Centre for Business Research Working Paper No. 288
43. ABI (n 6) 202; Wessels and De Weijs (n 2). (available at http://papers.ssrn.com/).
44. ABI (n 6) 202. 49. Vanessa Finch, “Pre-packaged Administrations: Bargains in
45. Bo Xie, “Regulating Pre-packaged Administration—A the Shadow of Insolvency or Shadowy Bargains” (2006)
Complete Agenda” (2011) 5 Journal of Business Law 513– Journal of Business Law 568–588.
527. 50. John Armour, “The Rise of the ‘Pre-pack’: Corporate
46. Catherine Shuttleworth, “Pre-packs: The Latest Wave of Restructuring in the UK and Proposals for Reform”, in Robert
Reform” (2015) 2 Corporate Rescue and Insolvency 61–63. Austin and Fady Aoun, Restructuring Companies in Troubled
47. Xie (n 45). Times (University of Sydney Ross Parson Centre,
48. John Armour and Rizwaan Mokal, “Reforming the 2012) 43–78.
Governance of Corporate Rescue: The Enterprise Act 2002” 51. Paragraphs 5 and 69, Schedule B1, IA 1986.

ﬁrst being in administration) or realising property in order to make a distribution

to one or more secured or preferential creditors.52 Furthermore, the administrator
must perform his functions in the interests of the company’s creditors as a whole
and as quickly and efﬁciently as is reasonably practicable.53 Under Paragraph 46
of Schedule B1, the appointment of the administrator has to be announced to
the company and creditors as well as advertised in the Gazette. The administrator
shall make a statement setting out proposals for achieving the purpose of the
administration, which has to be sent to the creditors of the company accompanied
by an invitation to a creditors’ meeting.54 The meeting must be held on a 2 weeks’
notice. However, such a meeting does not need to be held in case the company is
able to pay all creditors in full, in case it has insufﬁcient property to make a
distribution to unsecured creditors or if it is not possible to rescue the company
as a going concern or to achieve better results than when winding up.
Using pre-packaged administration does not eliminate the need for the
abovementioned statutory procedures as laid down in Schedule B1, but it does
create at least the risk that the administration procedure will be reduced to a
formal role rather than one offering real protection to creditors.55 In
jurisprudence, courts try to ensure creditor protection by underlining the
importance of consulting with major creditors ahead of completing a pre-pack
sale.56 Another major criticism of the pre-pack is that the procedure lacks
transparency, is open to abuse and is morally wrong, particularly considering
concerns that the business may have been undersold with a disproportionate
prejudice towards the interests of (generally unsecured) creditors.57 The negative
impression surrounding the pre-pack was increased by the fact that in many cases
the business is bought by the company’s current or former shareholders or
directors (also referred to as phoenix pre-packs).58 Despite the criticism, a pre-pack
may prove useful in case the majority of creditors make negotiating on a scheme of
arrangement or a company voluntary arrangement impractical or impossible.59

B. Restructuring by the scheme of arrangement

A scheme of arrangement is a compromise between a company and its creditors or
members or any class of them under Part 26 of the CA 2006.60 Schemes of
arrangements originated in the UK in the 19th century.61 The scheme of
arrangement procedure commences with an application to the court, which may
be made by the company, any creditor or member of the company, or if the
52. Paragraph 3(1), Schedule B1, IA 1986. 59. Finch (n 49).
53. Paragraphs 3(2) and 3(4), Schedule B1, IA 1986. 60. Christoph Paulus, “Das Englische Scheme of
54. Paragraphs 49–51, Schedule B1, IA 1986. Arrangement—ein neues Angebot auf dem europäischen
55. Finch (n 49). Markt für aussergerichtlichen Restructurierungen” ZIP
56. DKLL Solicitors v. HM Revenue and Customs [2007] 2011, 1077 ff; Geoff O’Dea et al. (eds), Schemes of
EWHC 2067 (Ch); [2007] BCC 908; Clydesdale v. Arrangements: Law and Practice (Oxford University
Smailes (No.1) [2009] EWHC 1745 (Ch); [2010] BPIR Press, 2012), 3.
62. 61. Jennifer Payne, “The Use of Schemes of Arrangements to
57. Xie (n 45). Effect Takeovers: A Comparative Analysis” Oxford Legal Studies
58. Ibid. Research Paper No. 51/2014.

company is being wound up or an administration order is in force in relation to it,

the liquidator or administrator.62 The scheme of arrangement thus applies to
insolvent debtors as well as solvent debtors.63 The application must be
accompanied by a statement explaining the effect of the compromise or
arrangement. Moreover, the statement has to declare any material interests of
the directors of the company (whether as directors, or as members, or as creditors
of the company, or otherwise), and the effect on those interests of the compromise
or arrangement, in so far as it is different from the effect on the equivalent interests
of other persons.64 The proposing party should also determine the correct classes
of the creditors and members of the company, ‘classically based on the test that
a class should compromise those persons whose rights are not so dissimilar as to
make it impossible for them to consult together with a view to their common
interest’.65
According to section 896 of the CA 2006, the court may then order a meeting of
the creditors or of the members of the company (or any class of them). During this
meeting, the court will decide whether the division of the creditors or members
into different classes for voting purposes is appropriate.66 Section 899(1) of the
CA 2006 requires approval by at least 75% in value in each class of the creditors
or members voting on the scheme, which will also be at least a majority in number
of each class. Only the creditors and members who will be affected by the scheme
of arrangement will be able to discuss and vote on the proposed scheme.67 If the
aforementioned majority is reached, again, an application to the court has to be
made. During this second hearing, the court will decide whether to sanction the
scheme of arrangement.
According to section 899(2) of the CA 2006, such an application may be made
by the company, any creditor or member of the company, or if the company is
being wound up or an administration order is in force in relation to it, the
liquidator or administrator. During this hearing, creditors may challenge the
scheme on the ground that the meeting is improperly constituted, on the ground
that the creditors were not given sufﬁcient information or on the ground that the
scheme is unfair. The court will sanction the proposed scheme if it is fair, ‘i.e. a
scheme that an intelligent and honest person, a member of the class concerned,
and acting in respect of his interest might reasonably approve.’68 According to
section 899(3) of the CA 2006, a scheme sanctioned by the court is binding on
all creditors/members or the class of creditors/members and on the company
or, in case of a company in the course of being wound up, the liquidator and
contributories of the company.

62. Section 896(2), CA 2006. 66. Ibid.

63. Stephan Madaus, “Rescuing Companies Involved in 67. Rachel Richards and John Tribe, “Members’ Voluntary
Insolvency Proceedings with Rescue Plans” NACIIL Reports Liquidations—Part 2: MVLs Compared” (2005) 26(11)
2012. Company Lawyer 322–325.
64. Section 897, CA 2006. 68. Michelle Kierce et al., “Schemes of Arrangement and
65. Bob Wessels, “Scheme of Arrangement: A Viable European Their Ongoing Currency” (2010) Insurance and
Rescue Strategy?” Ondernemingsrecht 2010/154. Reinsurance 13–16; Wessels (n 65).

C. Restructuring by company voluntary arrangements

According to sections 1(1) and 1(3) of the IA 1986, the directors of a company, the
administrator where an administration order is in force or the liquidator where a
company is being wound up may make a proposal to the company and its creditors
for a composition in satisfaction of its debts or a scheme of arrangement of its
affairs (also referred to as a voluntary arrangement).69 A nominee has to be
appointed. The nominee must be a person who is qualiﬁed to act as an insolvency
practitioner in relation to the company.70 While the directors of the company
remain in charge of the management of the company, the nominee is responsible
for assisting the directors with the development of the voluntary arrangement and
its implementation. According to section 2(2) of the IA 1986, the nominee shall,
within 28 days after being given notice of the proposal for a voluntary
arrangement, submit a report to the court stating whether, in his opinion, meetings
of the company and of its creditors should be summoned to consider the proposal,
and the date on which, and time and place at which, he proposes the meetings
should be held. The person calling the creditors’ meeting must summon all
creditors of the company whose claims and addresses he is aware of.71
Notices are to be sent to the creditors at least 2 weeks in advance of the meeting,
together with the following documents: a copy of the proposal, a copy of the
statement of affairs or a summary statement of affairs, a voting form, a notice of
claim form and a proxy form to be completed and returned, and the nominee’s
report on the proposal. During the meeting, the creditors will decide whether to
approve the proposed voluntary arrangement.72 The proposal must be approved
by a simple majority of the shareholders and 75% in value of the creditors present
and voting. If the decisions of the meeting of shareholders and the creditors differ,
the decision of the creditors will prevail. The arrangement will bind every person
who was entitled to vote at the meetings as well as every person who would have
been so entitled if he had had notice of it, as if he were a party to the voluntary
arrangement.73 According to section 7(2) of the IA 1986, the appointed nominee
shall in principle act as the supervisor of the agreed arrangement.
Under section 6 of the IA 1986, any person entitled to vote at the creditors’ or
shareholders’ meeting is able to challenge the implementation of the arrangement
within 4 weeks of the approval being reported to the court. In order to challenge
the approved arrangement successfully, it must be shown that the arrangement
unfairly prejudices the interests of a creditor, member or contributor of the
company or that there has been some material irregularity at or in relation to
either of the meetings. An important difference with the scheme of arrangement
is that under a company voluntary arrangement, the secured and preferential
creditors cannot be bound by the scheme.74

69. See also Rizwaan Mokal and Look Chan Ho, “Interplay of 71. Section 3(3), IA 1986.
CVA, Administration and Liquidation” (2002) (available at 72. Section 4(1), IA 1986.
http://papers.ssrn.com/). 73. Section 5, IA 1986.
70. Section 1(2), IA 1986. 74. Sections 4(3) and 4(4), IA 1986.

IV. Corporate Restructuring in the Netherlands

A. Restructuring by pre-packing
Currently, Dutch insolvency law does not provide for an explicit legal basis for the
appointment of a trustee prior to the opening of formal insolvency procedures.
However, some district courts have developed a policy in which they allow pre-
packs. Since 2012, there have been a number of successful pre-pack restructurings
in the Netherlands.75 The companies were restructured through a transaction that
was prepared before the formal bankruptcy of the companies. A district-court-
appointed ‘silent’ prospective trustee prepared the transaction. Once the
transaction was agreed upon, the companies filed for their own bankruptcies.
Immediately after the companies were declared bankrupt, the transactions were
closed. The main advantage of a pre-pack is that the transaction can be prepared
relatively calmly and quickly, thus creating the best chances for continuation of the
company or of its viable parts. In order to maximise the chances of restructuring
viable companies in financial distress, the Dutch Minister of Justice and Security
proposed the Act on the Continuity of Companies I.76 The goal of the Act is to
facilitate restructuring of (the viable parts of) companies in financial distress and
to preserve the value of the companies in order to ensure a more efficient
liquidation of the company, if needed. The proposed Article 363 of the Dutch
Bankruptcy Code (DBC) provides a legal basis for the appointment of a
prospective trustee by the district court for a specific term. The appointment is
silent, that is confidential. A request for the appointment of a prospective trustee
can be made by a debtor. The district court will grant the request if it is likely that
the appointment of a prospective trustee has added value. This is the case if the
appointment is in the interest of the creditors as a whole or in the public interest,
and if the continuity of the company and the preservation of jobs will be served
(Article 363 of the DBC). The debtor also has to clarify why the appointment of
a prospective trustee is preferable to immediate bankruptcy.
During a pre-pack, the directors of the company are in full control and retain
the exclusive possession of its assets. This means that the prospective trustee has
no authority over the company nor powers to represent it. Moreover, the
prospective trustee is not an agent of the company. According to the proposed
Article 364 sub 1 of the DBC, he performs his tasks towards the interests of the
company’s creditors. The proposed trustee is not obliged to carry out the debtor’s
or company’s creditors’ instructions.77 A prospective trusteeship can only serve its
purpose if the company is willing to disclose all relevant information to the
prospective trustee. Hence, the debtor has to provide the prospective trustee with
all relevant information.78 Together with the appointment of a prospective trustee,
the district court will appoint a prospective supervisory judge, who supervises the

75. For example, the Schoenenreus retail chain, lingerie 76. Kamerstukken II 2014/15, 43 218, n 2.
manufacturer Marlies Dekkers, ﬂower exporter Florimex, the 77. Proposed Article 364 sub 2, DBC.
Dijkman printing company and the Ruwaard van Putten hospital. 78. Proposed Article 364 sub 3, DBC.

prospective trustee.79 The prospective trustee will report to the prospective

supervisory judge. According to the proposed Article 367 of the DBC, the salary
of the prospective trustee will be paid by the company, and in case of bankruptcy
out of the estate as administrative expenses. Once the prospective trustee has
prepared a transaction, the company will ﬁle for its bankruptcy. In most cases,
the asset transaction will thereupon be closed on the same day.
With regard to the proposed Act, Dutch authors have expressed several points
of criticism. Firstly, under the proposed Act, practically every company in ﬁnancial
distress can have a prospective trustee appointed by the district court.80 This all too
easy access may lead to misuse of the pre-pack.81 One conceivable form of misuse
of the pre-pack is the phoenix pre-pack. Directors of a company may sell the vital
part of the company to themselves and in doing so rid themselves of its debts. In
addition, there is a lack of transparency. The creditors are completely bypassed
during the pre-pack procedure while the objectivity of the prospective trustee is
questioned.82

B. Restructuring by the scheme of arrangement ‘Dutch style’

Currently, in order to prevent bankruptcy, companies in financial distress may
offer an arrangement to their creditors on an informal basis, which usually entails
postponement of payment or remission of debts. However, Dutch law does not
provide for an explicit legal basis for such a company voluntary arrangement.
Therefore, creditors are free in their choice of whether to accept or refuse such
a proposal. Only in very exceptional situations is a creditor obliged to cooperate
with a company’s voluntary arrangement. According to the Supreme Court, a
creditor can only be compelled to cooperate in case he abuses his right (Article
3:13 of the DCC).83 As a result, one creditor can frustrate a restructuring through
an arrangement. In order to prevent a single unwilling creditor from frustrating or
preventing a restructuring by an arrangement, even if the arrangement is accepted
by the majority of the creditors, the Dutch Minister of Justice and Security
proposed the Act on the Continuity of Companies II.84 The Act aims to ensure
efficient restructuring of companies in financial distress while guaranteeing
creditor protection.85
The proposed Article 368 of the DBC lays down provisions for a legal basis for
the scheme of arrangement between a company in financial distress and its
creditors and shareholders, whereby the creditors’ and shareholders’ rights are
amended. According to the aforementioned article, the scheme can be proposed
by the company or, if certain conditions are met, by its creditors or shareholders.

79. Proposed Article 365, DBC. 84. Voorontwerp voorstel van wet tot wijziging van de
80. Janina V Maduro, “Het wetsvoorstel Wet continuïteit Faillissementswet in verband met de invoering van de mogelijkheid
ondernemingen I: de rechtszekerheid gediend?” FIP 2013-8. tot het algemeen verbindend verklaren van een buiten faillissement
81. Bruno J Tideman, “Kritische kanttekeningen bij de pre- gesloten akkoord ter herstructurering van schulden.
pack” FIP 2013-6. 85. Ruud Hermans and Karen Sixma, “New Restructuring
82. Ibid. Opportunities in the Netherlands: The Dutch Scheme of Arrangement
83. Supreme Court 12 August 2005, NJ 2005/230 (Payroll). Is Coming” (2014) Corporate Rescue & Insolvency 231 ff.

The scheme can involve an arrangement offered to all creditors and shareholders
or just to certain classes of creditors or shareholders. A proposal for a scheme of
arrangement should at least contain the following aspects:
• The arrangement and the amount offered to the creditors and/or shareholders
• The amount that would be realised if the company were to be declared bankrupt
• Division of the creditors and/or shareholders into classes
• The procedure for voting on the proposal86
According to the proposed Article 368 of the DBC, the creditors and/or
shareholders can be divided into classes. Those classes must be conﬁned to those
persons whose rights are similar, in a way that it is possible for them to come to
an agreement together with a view to their common interests. A proposed scheme
of arrangement is accepted if all classes agree to it. A class is considered to have
agreed if at least 50% of the members of the class vote in favour, and if this
majority represents at least two-thirds of the amount of the outstanding claims
included in the class.87 If the scheme of arrangement is accepted, both the
company and the creditors and shareholders can ask the court to adopt the
scheme.88 The court will refuse to adopt a scheme in the following cases:
• The interests of one or more creditors or shareholders would be damaged
disproportionally by adopting the scheme.
• The compliance of the scheme is not sufﬁciently guaranteed.
• The scheme is based on deception.Other material reasons give grounds for refusing to
adopt the scheme.
According to Article 373 of the DBC, it is even possible to ask the court to adopt
a rejected scheme. The court will only adopt a rejected scheme if all classes of
creditors and/or shareholders receive at least the amount they would receive if
the company were to be declared bankrupt. Once a court adopts the scheme of
arrangement, it is binding on all creditors and/or shareholders within the scope,
regardless of their participation in the voting process.

V. Corporate Dissolution in the USA (Delaware)

According to the American Bankruptcy Institute Commission, Chapter 11 has
become too expensive particularly for small and medium companies.89 A US
prime example of an alternative is Delaware’s statutory dissolution scheme. Under
the Delaware dissolution statute, both directors and shareholders are able to
initiate the company’s dissolution.90 The existence of a dissolved company is
extended for a period of 3 years from the effective date of dissolution.91 After
dissolution, a choice has to be made between the formal and informal wind-up
procedures. During the formal procedure, the company is required to give notice
86. Proposed Article 370, DBC. 89. ABI (n 6).
87. Proposed Article 372, DBC. 90. Section 275(a)–(c), DGCL.
88. Proposed Article 373 sub 1, DBC. 91. Section 278, DGCL.

of its dissolution to all creditors having a claim against the company and publish in
a Delaware-based newspaper, as well as a newspaper in the company’s principal
place of business, and if the company has more than $10 million in assets, a
national newspaper.92 This notice must state the date by which such a claim must
be received by the company. Creditors who fail to timely notify the company are
barred from future recovery.93
After notice is provided to all known creditors, the corporate assets have to be
administered in accordance with section 280 of DGCL. The claims are divided
into three classes: matured or pending claims known to the company, contingent
contractual claims known to the company and unknown but reasonably
foreseeable claims. In case the directors fail to settle all known claims, they must
petition the Court of Chancery to determine the amount and form of security that
will be reasonably likely to be sufficient for any pending claims or contingent
contractual claims.94 Furthermore, the Court of Chancery has to determine the
amount and form of security that will be reasonably likely to be sufficient to
provide compensation for the unknown claims.95 After the proper amounts of
security are determined by the Court of Chancery, the directors have to distribute
the corporate assets in accordance with section 281(a) of DGCL. The directors
must pay all of the judicially determined claims in full if there are sufficient assets.
If there are insufficient assets, such claims shall be paid according to their priority
and, among claims of equal priority, rateably to the extent of assets legally
available therefore.
It is also possible to choose the informal winding-up procedure, which is less
complex and time-consuming.96 During this procedure, the directors are able to
assess the company’s claims without court supervision. Also, the notification
procedure is lacking. The directors have to adopt a plan of distribution.97 They
also have to make reasonable provisions to pay the current and pending claims,
the contingent contractual claims and the unknown but foreseeable claims. The
directors must then pay all claims in full, or if there are insufficient assets,
according to their priority and rateably among equally prioritised claims. Despite,
or in fact because, the informal winding-up procedure is less complex and time-
consuming, the use of the formal dissolution is incentivised by the legislator.
Section 282(b) of DGCL provides an additional degree of protection for
shareholders of companies that are wound up formally. The shareholders of such
a company are not liable for any claim against the company brought after the
3-year period under section 278. Also, the directors of a company that is wound
up formally are protected from personal liability with a greater degree.98 This

92. Section 280(a)(1), DGCL. Component of Delaware’s Corporate Dissolution

93. Section 280(a)(2), DGCL. Scheme?” (2011) 55 Saint Louis University Law Journal
94. Section 280(c)(1), DGCL. 1173, 1188.
95. Section 280(c)(3), DGCL. 97. Section 281(b), DGCL.
96. Edward T Pivin, “The Integrity of Delaware’s Corporate 98. Rosemary R Schnall, “Extending Protection to Foreseeable
Dissolution Statute after Territory of the United States Virgin Future Claimants Through Delaware’s Innovative Corporate
Islands v. Goldman, Sachs & Co.: Is Extended Post- Dissolution Scheme” (1994) 19 Delaware Journal of Corporate
dissolution Shareholder Liability a Necessary Law 141.

incentive provided for by the legislator also beneﬁts the creditors of the company,
because the formal winding-up procedure provides creditors with notice and an
opportunity to present their claims. However, since the Goldman Sachs case,99
shareholders lack an incentive to initiate formal dissolution and are basically
encouraged to dissolve the company in an informal way, which is detrimental to
creditors. In the Goldman Sachs case, the Court of Chancery held that sections
278 and 325(b) of DGCL preclude a company’s creditor from holding a
shareholder liable for its dissolution distributions after the dissolved company’s
3-year existence. Because sections 278 and 325(b) of DGCL provide shareholders
with the same protection as section 282(b) of DGCL, they have no reason to
initiate or approve the time-consuming and more expensive formal method of
dissolution.100

VI. The Voluntary Striking Off Procedure (the UK)101

The quickest way to dissolve a company in the UK is the voluntary striking off
procedure. According to section 1003 of the CA 2006, it is possible to strike off
a company from the Companies Register and thereby terminate its existence. This
procedure is considered inexpensive and easy.102 It is for this reason that many
directors have used the voluntary striking off procedure to terminate companies,
mostly as part of a group rationalisation process.103 The procedure commences
with a meeting of the board of directors. An application for striking off a company
must be made on behalf of the company by the majority of the directors (section
1003(2) of the CA 2006). Under section 1004(1) of the CA 2006, it is not permitted
to strike off a company if at any time in the previous 3 months, the company has
done the following:
• Changed its name
• Traded or otherwise carried on business
• Made a disposal for value of property or rights that, immediately before ceasing to trade
or otherwise carry on business, it held for the purpose of disposal for gain in the normal
course of trading or otherwise carrying on business
• Engaged in any other activity except activities necessary for the purpose of the following:
• Making an application for striking off the company or deciding whether to do so
• Concluding the affairs of the company
• Complying with statutory requirements
Because of the aforementioned section, it is not always possible to strike off a
company in ﬁnancial distress. These companies will probably be wound up by

99. Territory of the United States Virgin Islands v. Goldman, 102. Paul Davies, Gower and Davies’ Principles of Modern
Sachs & Co., 937 A.2d 760 (Del. Ch. 2007). Company Law (Sweet & Maxwell, 2003), 864–870.
100. Pivin (n 96) 1199. 103. Richards and Tribe (n 63).
101. Based on Samantha Renssen, “Turbo Liquidation of a
Company: An Open Invitation to Commit Fraud?” (2016) 3
European Company Law 92–97.

the creditor’s voluntary liquidation (CVL) procedure, which is more time-

consuming than the voluntary striking off procedure.104 Another possible
obstruction can be found in section 1005 of the CA 2006; it is not possible to strike
off a company at a time when for example an application to the court under Part
26 has been made on behalf of the company for the sanctioning of a compromise
or arrangement, when a company voluntary arrangement has been proposed
under Part 1 of the Insolvency Act 1986 or if the company is in administration
under Part 2 of the Insolvency Act 1986.
The application for striking off the company has to be made through a
prescribed form, which has to contain certain information. The Companies House
form DS01 (striking off application by a company)105 has to be signed by the sole
director (in case there is only one director), both directors (in case there are two
directors) or the majority of directors (in case there are more than two directors).
The completed form should be sent to Companies House accompanied by a
£10 fee to cover the costs of providing the service. According to section 1006 of
the CA 2006, the applicant must secure that, within 7 days from the day on which
the application for voluntary striking off is made, a copy of the application is
provided to every member of the company (usually the shareholders), employee
of the company, creditor of the company, director of the company who did not
sign the application form and manager or trustee of any pension fund established
for the beneﬁt of the company’s employees.
As soon as the Registrar has received and considered the application to strike
the company off, he will publish a notice in the London Gazette stating the intention
to strike off the company and inviting any person to show cause why that should
not be done (section 1003(3) of the CA 2006). Objections against the company’s
striking off should be lodged within 3 months with the Companies House. In case
no (reasonable) objections are lodged, the company will be dissolved, upon which
the Registrar will publish a notice thereto in the London Gazette (section 1003(5) of
the CA 2006).
One of the disadvantages of the voluntary striking off as a cheap and easy
method of dissolving a company is the liability period. The potential liability of a
company’s directors remains after the company has been struck off according to
section 1003(6a) of the CA 2006. It is not required under the voluntary striking
off procedure that the company have no assets at the moment of striking off. It
is, however, prudent to return the remaining assets to the shareholders of the

104. The CVL procedure relates to ‘insolvent’ companies. The shareholders approve the CVL, the directors have to convene a
CVL procedure commences with a meeting of the board of directors meeting of the company’s creditors under section 98, IA 1986.
under sections 84 and 89, IA 1986. During this meeting, the During this meeting, the directors of the company will present a
directors will discuss the possibility of placing the company in a statement of the company’s affairs to the creditors, whereupon
CVL. If the directors decide that a CVL is appropriate, they will the creditors will vote to appoint a liquidator. The creditors
nominate a licensed insolvency practitioner to act as a liquidator. may also appoint a committee (the liquidation committee) to
After the board meeting, the directors will convene a shareholders’ exercise the functions conferred on it by or under the IA 1986
meeting. During this meeting, the shareholders have to approve and to help the liquidator.
that the company will be wound up by a CVL. Once the 105. Available at https://www.gov.uk

company before applying to strike the company off. After all, any assets of a
dissolved company will be bona vacantia and thus belong to the Crown.
Creditor protection appears to be ensured in the voluntary striking off
procedure by sections 1003(3) and 1003(6) read together with section 1006 of
the CA 2006. Because of the provision of section 1006 of the CA 2006, the
creditors are informed about the intention to strike off the company. Because of
the provisions of section 1003(3) of the CA 2006, they may lodge objections against
striking off the company. The same applies to the company’s shareholders.
Moreover, the directors of a struck off company remain (potentially) liable. Yet,
because of the 3-month period from section 1003(3) of the CA 2006, the voluntary
striking off procedure is not as ‘turbo’ as the Dutch turbo liquidation.

VII. Corporate Dissolution in the Netherlands (‘Turbo Liquidation’)106

Since 1994, it has been possible to dissolve a company in 1 day: turbo
liquidation. Article 2:19 sub 4 of the DCC offers the option of dissolving a
company without pursuing liquidation proceedings if there are no longer any
assets at the time of the dissolution. The turbo liquidation procedure consists
of three steps. First, the general meeting of shareholders has to adopt a
dissolution resolution under Article 2:19 sub 1a of the DCC. In addition, the
board of directors has to certify that the company no longer has assets at the
time of the dissolution.107 Finally, the board of directors has to file a statement
of dissolution with the Chamber of Commerce. The company ceases to exist
immediately after the board of directors has issued this statement. As no
liquidation proceedings need to be pursued, turbo liquidation is often seen as
a quick and cheap way to dissolve a company. It is also seen as a safe way to
dissolve a company, because turbo liquidation, and thereby the disappearance
of the company, is only published in the commercial register.
The question of whether these assumptions are correct arises. In the author’s
opinion, the opposite is the case: dissolving a company through turbo liquidation
is not as easy as is often suggested.108 On the contrary, the decision whether or
not to dissolve a company through turbo liquidation requires substantial legal
knowledge. At the same time, there are several flaws in the law applicable to turbo
liquidation, for example in Article 2:19 sub 4 of the DCC. Moreover,
misunderstandings have arisen in jurisprudence and literature, especially with
regard to the question of whether it is possible to dissolve a company through turbo
liquidation if the company has outstanding debts. Because turbo liquidation is
considered a cheap, quick and safe method of dissolving a company, it is also
regularly recommended for this purpose. The latest figures from the Chamber of
Commerce (2012) show that the majority of legal persons (approximately 85%)

106. Renssen (n 101). 108. Samantha Renssen, De turboliquidatie van de Besloten

107. Supreme Court 27 January 1995, ECLI:NL:HR:1995: Vennootschap. Serie vanwege het Van der Heijden Instituut. Deel
ZC1631, NJ 1995/579 (Adjuncten Properties v. Söderqvist). 131 (Kluwer, 2016).

is dissolved through turbo liquidation.109 Because turbo liquidation is so regularly

applied in dissolution proceedings, it is important to look into the guarantees
ensuring creditor protection.

A. The absence of assets

The wording of Article 2:19 sub 4 of the DCC seems to suggest that in order to
dissolve a company through turbo liquidation only one condition needs to be
met: at the time of the dissolution, the company must not have any assets.
However, it is not always clear how the term ‘assets’ should be interpreted.
According to Bakels, the term ‘assets’ should be interpreted generously as in
‘potential assets’.110 It follows from jurisprudence and literature that the following
are regarded as assets: authorised share capital,111 a deferred tax liability,112 a
bank guarantee,113 a claim under Article 2:138/248 of the DCC,114 a claim under
Article 2:9 of the DCC,115 an annulment of a fraudulent act under Article 42 or 47
of the DBC116 and a potential order to pay litigation costs.117
Currently, the prevailing doctrine is that companies without assets, but with
outstanding debts, may be dissolved through turbo liquidation.118 According to
the Courts of Rotterdam and The Hague, a company without assets, but with
outstanding debts, is actually obliged to dissolve the company by means of turbo
liquidation.119 In these cases, the companies that did ﬁle for bankruptcy had no
(potential) assets, but they did have outstanding debts. According to the courts,
the company’s interest in ﬁling for bankruptcy is disproportionate to the interest
of the receiver to be excused, because a bankruptcy procedure would result in
the receiver not being paid for his performed duties. Most probably, a bankruptcy
procedure would in that case also result in the receiver terminating the bankruptcy
because of the condition of the insolvency estate (Article 16 of the DBC). As a

109. Miriam Y Nethe, “Attestatie de vita na toepassing van 116. Annelies de Bruijn, ‘Turbo-vereffening bij betwiste
turboliquidatie” WPNR 2013/6993, 798–802. vorderingen’, V&O 2004-12, p. 217; Court of Arnhem
110. Supreme Court 2 October 1998, NJ 1999/194. 26 July 2006, JOR 2007/29.
111. Court of Appeal of The Hague 6 September 2012, LJN 117. Court of Appeal of Arnhem-Leeuwarden 24 July 2014,
BX7085. JBPR 2014/32.
112. Court of Appeal of The Hague 6 September 2012, LJN 118. Court of Rotterdam 21 March 2014, ECLI:NL:
BX7085; Birgit Snijder-Kuipers, Groene Serie RBROT:2014:2548; Court of Rotterdam 20 May 2014,
Rechtspersonen art. 2:23c BW, aant. 2 (Kluwer, 2012). ECLI:NL:RBROT:2014:4427; Court of Rotterdam 10
113. Court of Appeal of Amsterdam 19 March 2013, 166884, February 2015 ECLI:NL:RBROT:2015:1570; Court of
HA ZA 03-1806. The Hague 10 February 2015, ECLI:NL:
114. Court of Arnhem 11 January 2006, JOR 2006/120; RBDHA:2015:1976; Court of The Hague 11 March 2015,
Court of Bois-le-Duc 21 March 2012, JOR 2012/ ECLI:NL:RBDHA:2015:2569; Court of Appeal of The
140; Court of Appeal of The Hague 2 July 2015, Hague 2 July 2015, ECLI:NL:GHDHA:2015:1846;
JOR 2016/47; Maarten J Kroeze (m.m.v. H Supreme Court 18 December 2015, ECLI:NL:
Beckman, M A Verbrugh), Mr C. Assers Handleiding HR:2015:3636.
tot de beoefening van het Nederlands burgerlijk recht. 2. 119. Court of Rotterdam 21 March 2014, ECLI:NL:
Rechtspersonenrecht. Deel I. De rechtspersoon (Kluwer, RBROT:2014:2548; Court of Rotterdam 20 May 2014,
2015), n 383 and 403. ECLI:NL:RBROT:2014:4427; Court of Rotterdam 10
115. Pieter J van der Korst, “Heropening van vereffening” February 2015 ECLI:NL:RBROT:2015:1570; Court of
Fiscaal Tijdschrift Vermogen 2009/09; Court of The Hague 10 February 2015, ECLI:NL:
Appeal of Amsterdam 31 March 2011, JOR RBDHA:2015:1976; Court of The Hague 11 March 2015,
2011/307. ECLI:NL:RBDHA:2015:2569.

consequence, a bankruptcy procedure would only result in an increase of the debts

of the company, without any chance of the receiver and the other creditors being
paid. For this reason, the courts ruled that in this situation, filing for bankruptcy
has to be considered abuse of authority.
The Dutch Supreme Court was requested to issue a ruling in respect of two
preliminary questions with regard to this matter.120 Again, the concerned
company filed for its own bankruptcy, because it did not have any assets, while
it did have outstanding debts. The appointed receiver lodged an objection against
the bankruptcy order (in accordance with Article 10 of the DBC), because it was
given that there were no assets at all, as a result of which he was not going to be
paid for his duties. According to the receiver, filing for one’s own bankruptcy
has to be considered abuse of authority, because the company’s interest in filing
for bankruptcy is disproportionate to the interest of the receiver to be excused.
Two questions arose for the Court of Overijssel:
Can the receiver q.q. be considered as an interested party under Article 10 of the
DBC?
Is the receiver q.q.—considering his neutral and independent role—able to
lodge an objection to a bankruptcy order where he established that there are no
(potential) assets?
The Supreme Court replied affirmatively to the aforementioned questions.121
According to the Supreme Court, in this event (the company has no assets but
has outstanding debts), a company is obliged to dissolve the company by means
of Article 2:19 of the DCC, because filing for bankruptcy has to be considered
abuse of authority. As the Courts of Rotterdam and The Hague, the Advocate-
General believes that a company without assets, but with outstanding debts, can
be dissolved through turbo liquidation.122 Nevertheless, in the author’s opinion,
the option to dissolve a company through turbo liquidation as offered by Article
2:19 sub 4 of the DCC is only meant for situations in which companies have
neither assets nor outstanding debts at the time of dissolution.123 Provided that it
is possible to dissolve a company with outstanding debts through turbo liquidation,
this has major consequences for creditors.

B. The lack of guarantees ensuring creditor protection124

Because turbo liquidation as a method of dissolving seems so attractive—it is quick,
cheap and safe and also easy if outstanding debts at the time of dissolution are
allowed—the board of directors of a company will try to ensure that no assets exist.
Taking steps in order to lose assets in the run-up to turbo liquidation may lead to
fraudulent acts, resulting in damage to the company’s creditors. If a company is
allowed to be dissolved with outstanding debts, it is also easy to take advantage

120. Court of Overijssel 11 May 2015, ECLI:NL: 122. Advocate-General Timmerman, Supreme Court 6 November
RBOVE:2015:2323. 2015, ECLI:NL:PHR:2015:2336.
121. Supreme Court 18 December 2015, ECLI:NL: 123. Renssen (n 108) 49–58.
HR:2015:3636. 124. Renssen (n 101).

of this dissolution method and to commit fraud. All that needs to be done is to
divert all assets out of the company in order to dissolve it cheaply and quickly
under Article 2:19 sub 4 of the DCC, resulting in the disappearance of the
company without liquidation proceedings, and to ensure the company will not
become insolvent.
As the company ceases to exist without liquidation proceedings, no insight is
obtained into the company’s administration and its financial state.125 This would
be quite different in case of bankruptcy. During a bankruptcy procedure, the
receiver will investigate the administration, financial state and affairs of the
company. The receiver will also look for any acts of fraudulent conveyance.126 If
the receiver uncovers wrongdoing on the part of the board of directors, he may
bring proceedings for wrongful or fraudulent trading and hold the directors
personally liable. The receiver has several options to hold directors personally
liable. Under Article 2:138/248 sub 1 of the DCC, the receiver may hold a
director personally liable to the estate for the amount of debts, provided these
cannot be satisfied through settlement of the other assets, if the board of directors
performed its task in an obviously improper way and it can be assumed that this is
an important cause of the bankruptcy of the company.
According to Article 2:138/248 sub 8 of the DCC, the receiver may also hold
a director personally liable by virtue of Article 2:9 of the DCC. Under the
aforementioned article, a director is personally liable to the company (in case
of bankruptcy, to the estate) in case of improper management, unless—also in
light of the tasks assigned to the other directors—no serious blame can be
attributed to him and he was not negligent in taking measures to prevent the
consequences of improper management. Finally, the receiver may hold a director
personally liable on the general provisions of wrongful acts (Article 6:162 of the
DCC) on the ground that the acts of the director were detrimental to the
collective creditors.127 In such case, the receiver has to prove that the director’s
acts qualify as serious negligence for which the director can personally be
blamed.128
The abovementioned prevailing doctrine with regard to turbo liquidation offers
fraudsters the opportunity to make a company disappear, leaving the creditors
unpaid and largely mitigating the risk of directors’ liability.129 Because of these
negative consequences of the prevailing doctrine, in the author’s view, dissolving
a company with outstanding debts through turbo liquidation under Article 2:19
sub 4 of the DCC should not be allowed. The author thinks Article 2:19 sub 4
of the DCC should be amended in order to clarify that a company may only be
dissolved through turbo liquidation when companies have neither assets nor
outstanding debts.

125. Indeed, Articles 2:23–23b, DCC, are not applicable in 128. Supreme Court 6 October 1898, NJ 1990/286
case of turbo liquidation. (Beklamel); Supreme Court 3 April 1992, NJ 1992/
126. Article 42 et seq., DBC. 411 (Van Waning v. Van der Vliet).
127. Supreme Court 14 January 1983, NJ 1983/597 129. S. Renssen, “Een BV in zwaar weer: turboliquidatie of
(Peeters q.q. v. Gatzen). faillissementsaanvraag?” Ondernemingsrecht 2014/14, 617–620.

In the jurisprudence, there is an assumption that creditors of a company are

sufficiently protected from wrongly applied turbo liquidations by Article 2:23c
sub 1 of the DCC.130 According to the aforementioned article, a dissolved
company may be restored in case the existence of an asset comes to light. In the
author’s opinion, Article 2:23c sub 1 of the DCC does not sufficiently ensure
creditor protection for several reasons.131 First of all, initiating proceedings under
Article 2:23 sub 1 of the DCC involves costs, while it is uncertain that they will be
recovered. Besides, initiating proceedings is time-consuming.
Secondly, there is a lack of transparency surrounding turbo liquidation as well
as the restoring of a dissolved company. Turbo liquidation of a company is only
published in the commercial registers. If a dissolved company is restored under
Article 2:23c sub 1 of the DCC, this restoration is not published in the commercial
register, nor anywhere else. Therefore, the creditors who did not initiate the
proceedings are unaware of the restoration of the company and consequently of
the possibility of instituting legal proceedings against the restored company.
Lastly, the creditor who wishes to restore a dissolved company by means of
Article 2:23c sub 1 of the DCC carries the burden of proof. It is difficult for a
creditor to determine whether the company has any assets, because the creditor
is not able to consult the company’s administration under Article 2:24 sub 4 of
the DCC. Moreover, there is no legal obligation for the board of directors to
prepare a financial statement for the final, shortened financial year-end of a
turbo-liquidated company.132 According to Article 2:101/210 sub 1 of the
DCC, the board of directors is required to prepare a financial statement within
5 months after the financial year-end. The general meeting of shareholders may
extend this period for a maximum of 5 months. The maximum extension for
preparing a financial statement is therefore 10 months. Next, the financial
statement must be presented and adopted by the general meeting of shareholders
within 2 months. In accordance with Article 2:394 sub 1 of the DCC, the financial
statement must be published within 8 days of adoption. As a consequence, the
financial statement must be published within a maximum of 12 months (Article
2:394 sub 4 of the DCC).
This would imply that in case of a company dissolved through turbo liquidation
the board of the directors is only required to prepare a financial statement at the
earliest 5 months (and at the latest 10 months) after the dissolution. By then, the
company does not exist anymore. Despite the current lack in the Dutch legal
system of a legal obligation for the board of directors to prepare a financial
statement for the final, shortened financial year-end of a turbo-liquidated
company, there should be such an obligation in the author’s opinion.133 This
would increase transparency towards the creditors and accommodate their burden

130. Supreme Court 26 March 2004, NJ 2004/330; 131. Renssen (n 108) 77–79.
Supreme Court 3 December 2010, RO 2011/26; 132. Raoul A Hagens, “Publicatie van de jaarrekening en
District Court Terneuzen 1 February 2012, RO ontbinding van de rechtspersoon” V&O 2011-10, 182.
2012/32; Supreme Court 14 June 2013, NJ 2013/338. 133. Renssen (n 108) 77–79.

of proof in case of an Article 2:23c sub 1 of the DCC procedure. Furthermore,

such an obligation would improve transparency towards the shareholders of the
company. Currently, the general meeting of shareholders is not involved in the
board of directors’ certification whether or not the company has assets at the time
of dissolution. In other words, the shareholders are not involved in the turbo
liquidation and the disappearance of the company. If the board of directors is
required to prepare a financial statement for the final, shortened financial year-
end before dissolving the company through turbo liquidation, the general meeting
of shareholders would in fact be involved in the turbo liquidation, because it has to
adopt the financial statement.134

VIII. Corporate Restructuring and Corporate Dissolution: The USA

Versus the UK Versus the Netherlands
In the USA and in most European countries, a company in financial distress may
be subjected to several formal rescue procedures in order to restructure its business
successfully. In practice, the most important restructuring procedure worldwide is
the US Chapter 11 procedure. Although Chapter 11 is conceived as a
restructuring procedure, it frequently serves as a liquidation procedure facilitating
a sale of (a part of) the debtor’s assets under section 363 of the US Bankruptcy
Code.135 In Europe, national restructuring and insolvency rules vary greatly in
respect of the range of procedures available to companies in financial distress
aiming at restructuring their business. In the UK, for example, whose system is
seen as rather sophisticated,136 companies can make use of three formal
procedures: the pre-pack procedure, the scheme of arrangement and the company
voluntary arrangement procedure. However, not all European countries provide
for adequate formal rescue procedures.
Current Dutch law, for example, still lacks appropriate and efficient methods to
restructure companies in financial distress successfully. At present, the Dutch
legislator is working to develop a framework for companies in financial distress.
Inspired by the UK system, the Dutch Minister of Security and Justice proposed
an Act on pre-pack proceedings137 and an Act on the scheme of arrangement
outside bankruptcy proceedings.138 Nevertheless, there are some differences
between the UK pre-pack and scheme of arrangement and the proposed Dutch
pre-pack and scheme of arrangement. In contradiction with the UK pre-pack, in
the Dutch system, the prospective trustee can only be appointed by the court
and the pre-pack procedure is subject to approval by a supervisory judge. This is
a positive development, because the disadvantages of the UK pre-pack—the
procedure lacks transparency, is open to abuse and is morally wrong—are likely

134. Samantha Renssen, “De problematiek rondom de 136. Okoli (n 5).

ontbrekende jaarrekening bij turboliquidatie” Tijdschrift voor 137. Kamerstukken II 2014/15, 43 218, n 2.
Jaarrekeningenrecht 2016/2. 138. See above (n 84).
135. Wessels and De Weijs (n 2).

to be reduced. In contradiction with all its similarities with the UK scheme of

arrangement, the Dutch proposal provides a provision on new financing necessary
for the implementation of a scheme of arrangement. In principle, new financing
during the process of the scheme of arrangement cannot be declared voidable as
an act detrimental to the general body of creditors.139 In the UK, there is still a
need for more securities for the providers of new financing in case of
restructuring.140
Despite the fact that the development of possibilities to restructure companies in
financial distress in Europe is welcome in respect of economic and labour market
policies, the question of whether creditor protection is sufficiently ensured in the
USA, the UK and the proposed Dutch restructuring proceedings arises. In the
author’s opinion, creditor protection is not (yet) sufficiently ensured in the UK
pre-pack nor in the proposed Dutch pre-pack. In the UK, the courts try to ensure
creditor protection by underlining the importance of consulting with major
creditors ahead of completing a pre-pack sale.141 Furthermore, the UK Insolvency
Service drafted the SIP 16 Report, in order to ensure that creditors are informed
on the reasons why a practitioner decided on a pre-packaged sale.142 Nevertheless,
some legal experts still think that the UK pre-pack procedure lacks transparency
and is open to abuse.143
In the Dutch proposal, the creditors are not at all involved in a pre-pack
procedure. As a result, creditor protection is lacking. Creditor protection is also
lacking in the US 363 sale. A 363 sale may determine distributions to creditors
without creditors having a vote,144 and the sale is often pursued before parties in
interest have adequate information to assess the sale as well as the restructuring
alternatives.145 However, the ABI Commission has recognised this lack of creditor
protection. In its Final Report and Recommendation concerning the reform of
Chapter 11, the Commission recommends an increase of creditor involvement
and participation in the 363 sales.146
Creditor protection is ensured in the US Chapter 11 procedure, in the UK
scheme of arrangement procedure and in the proposed Dutch scheme of
arrangement. In the USA, even if all classes entitled to vote on the plan have voted
to accept the plan, the court must determine whether the plan is in the best interest
of the creditors and shareholders, meaning that the dissenting creditors or
shareholders are receiving under the plan at least as much as they would receive
if the debtor was liquidated under Chapter 7 of the US Bankruptcy Code.147
Furthermore, the plan has to be fair and equitable. In the UK, creditors can
challenge the proposed scheme of arrangement on the ground that the meeting

139. Proposed Articles 42 and 47, DBC. 143. Xie (n 45).

140. O’Dea et al. (eds) (n 60) 6. 144. Wessels and De Weijs (n 2).
141. DKLL Solicitors v. HM Revenue and Customs [2007] 145. ABI (n 6) 202; Wessels and De Weijs (n 2).
EWHC 2067 (Ch); [2007] BCC 908; Clydesdale v. Smailes 146. ABI (n 6) 202.
(No.1) [2009] EWHC 1745 (Ch); [2010] BPIR 62. 147. Section 1129(a)(7), Chapter 11 USBC.
142. Available at https://www.gov.uk/government/
publications/statements-of-insolvency-practice-16-sip-16

is improperly constituted, on the ground that the creditors were not given sufﬁcient
information or on the ground that the scheme is unfair. The court will sanction the
proposed scheme if it is fair, ‘i.e. a scheme that an intelligent and honest person, a
member of the class concerned, and acting in respect of his interest might
reasonably approve.’148 According to the proposed Article 373 of the DBC, in
the Netherlands, the court will refuse to adopt a scheme if the interests of one or
more creditors or shareholders would be damaged disproportionally by adopting
the scheme.
Incorporating a company is quite easy nowadays. Not surprisingly, therefore,
Delaware provides for an informal way of dissolution. This dissolution method is
less time-consuming and cheaper than the formal way of dissolution. However,
the formal wind-up procedure does provide a greater degree of creditor
protection. During the formal wind-up procedure, creditors receive notice of the
dissolution and have the opportunity to present their claims. By providing directors
and shareholders with protection from personal liability, the use of the formal
wind-up procedure is incentivised. However, since the Goldman Sachs case,149
shareholders lack an incentive to initiate formal dissolution and are basically
encouraged to dissolve the company in an informal way, which is detrimental to
the creditors.
Several European legal systems include methods for dissolving companies just as
easily as they can be incorporated. In the Netherlands, a company can be dissolved
without pursuing liquidation proceedings if there are no longer any assets at the
time of dissolution. This quick and cheap dissolution procedure, laid down in
Article 2:19 sub 4 of the DCC, is also referred to as turbo liquidation. Because
turbo liquidation is seen as a quick and cheap method of dissolving a company,
it is regularly applied. Turbo liquidation is not only quick and cheap but also
appears to be easy. The wording of Article 2:19 sub 4 of the DCC seems to suggest
that only one condition has to be met in order to dissolve a company by turbo
liquidation: the absence of assets at the time of the dissolution.
In contrast to the Dutch system, the legal system of the UK does not offer the
option to dissolve and liquidate a company in just 1 day. According to section
1003 of the CA 2006, it is possible to strike off a company from the Companies
Register and thereby terminate its existence, also known as the voluntary striking
off procedure. This procedure is considered inexpensive and easy.150 The
procedure commences with a meeting of the board of directors. An application
for striking off a company must be made on behalf of the company by the majority
of the directors (section 1003(2) of the CA 2006). The application has to be made
through a prescribed form, which has to contain certain information. According to
section 1006 of the CA 2006, the applicant must secure that, within 7 days from
the day on which the application for voluntary striking off is made, a copy of the

148. Kierce et al. (n 68) 13–16; Wessels (n 65) 154. 150. Davies (n 102) 864–870.
149. Territory of the United States Virgin Islands v. Goldman,
Sachs & Co., 937 A.2d 760 (Del. Ch. 2007).

application is provided to every creditor of the company. Creditors are then able to
lodge objections as to why the company should not be struck off. In case no
(reasonable) objections are lodged, the company will be dissolved.
In the author’s opinion, the Dutch turbo liquidation is an open invitation to
commit fraud and to circumvent a bankruptcy procedure. Because of the
presumed ease, swiftness, and inexpensiveness of turbo liquidation, the board of
directors of a company might try to ensure that no assets exist at the moment of
dissolving the company. Taking steps in order to lose assets in the prelude to a
turbo liquidation may lead to fraudulent acts. Currently, the prevailing doctrine
is that companies without assets, but with outstanding debts, may be dissolved
through turbo liquidation.151 If a company is allowed to be dissolved while there
are outstanding debts, it is easy for fraudsters to take advantage of this method
of dissolution, because it enables them to avoid bankruptcy by making the
company disappear. This is quite different in the UK legal system. In the UK legal
system, creditor protection is ensured because of the requirement that creditors
and shareholders must be informed about the intention to strike off the company.
They may lodge objections against striking off the company. Furthermore, the
potential liability of the board of directors remains after dissolution. However,
sections 1003 and 1005 of the CA 2006 may form an obstruction for striking off
companies in ﬁnancial distress.

IX. Conclusion
In conclusion, it is desirable to encourage greater coherence between the national
insolvency frameworks regarding restructuring of viable companies in financial
difficulties, as this would maximise the returns to the creditors and investors and
encourage cross-border investment. It is also important to revise the current
systems and proposals regarding restructuring in order to ensure transparency
and creditor protection, especially with regard to the US 363 sale and the
corresponding UK pre-packaged administration and the Dutch pre-pack. In the
USA, the ABI Commission has already taken the first step: on 4 December
2014, the Commission presented its Final Report and Recommendations
concerning the revision of Chapter 11, pleading for increasing creditor
involvement and participation in a 363 sale. Creditor protection is already ensured
in the US Chapter 11 procedure, the UK scheme of arrangement and the Dutch
proposed scheme of arrangement. However, the UK legislator has possibly
overdone the degree of creditor protection. The UK scheme of arrangement lacks
the possibility to cram down across classes, which makes the procedure less
effective than the US Chapter 11 procedure and the Dutch proposed scheme of
arrangement.
151. Court of Rotterdam 21 March 2014, ECLI:NL: RBDHA:2015:1976; Court of The Hague 11 March 2015,
RBROT:2014:2548; Court of Rotterdam 20 May 2014, ECLI:NL:RBDHA:2015:2569; Court of Appeal of The
ECLI:NL:RBROT:2014:4427; Court of Rotterdam 10 Hague 2 July 2015, ECLI:NL:GHDHA:2015:1846;
February 2015 ECLI:NL:RBROT:2015:1570; Court of Supreme Court 18 December 2015, ECLI:NL:
The Hague 10 February 2015, ECLI:NL: HR:2015:3636.

Because of the fact that nowadays companies can be incorporated very quickly,
it is not surprising that they can be dissolved in a quick way as well. However, the
frequently used US informal dissolution method and the Dutch turbo liquidation
lack guarantees ensuring creditor protection. Moreover, the Dutch turbo
liquidation, for example, is in fact an open invitation to commit fraud and to
circumvent a bankruptcy procedure. A balance should be sought between time-
consuming and cost-effective dissolution methods and guarantees ensuring creditor
protection. In the UK, this balance seems to be found in the voluntary striking off
procedure. However, not all companies in ﬁnancial distress may have access to this
procedure. In short, there is yet more work to be done by the USA, the UK and
the Dutch legislator.

How Chapter 11 Saved The US Economy: "Bankruptcy Was Seen As The Study of Dead or Dying Companies"
No ratings yet
How Chapter 11 Saved The US Economy: "Bankruptcy Was Seen As The Study of Dead or Dying Companies"
2 pages
Selective Strategy Restructuring
No ratings yet
Selective Strategy Restructuring
30 pages
CBRWP 197
No ratings yet
CBRWP 197
65 pages
Lecture. Introduction To EIIL
No ratings yet
Lecture. Introduction To EIIL
52 pages
Corporate: Restructuring & Turnarounds
No ratings yet
Corporate: Restructuring & Turnarounds
15 pages
Corporate Insolvency Guide
No ratings yet
Corporate Insolvency Guide
317 pages
Final - Banking
No ratings yet
Final - Banking
36 pages
CS Professional - CRI
No ratings yet
CS Professional - CRI
20 pages
Insolvency and Bankruptcy Laws
No ratings yet
Insolvency and Bankruptcy Laws
30 pages
Cri Part 2
No ratings yet
Cri Part 2
340 pages
GURREA-MARTINEZ. The Future of Reorganization Procedures in The Era of Pre-Insolvency Law
No ratings yet
GURREA-MARTINEZ. The Future of Reorganization Procedures in The Era of Pre-Insolvency Law
26 pages
Chapter 11 - Not Perfect But Better Than The Alternative - 2005
No ratings yet
Chapter 11 - Not Perfect But Better Than The Alternative - 2005
6 pages
Comparative Corporate Insolvency
No ratings yet
Comparative Corporate Insolvency
30 pages
Corporate Restructuring Under Ibc by Ms Himanshi S Sharma
No ratings yet
Corporate Restructuring Under Ibc by Ms Himanshi S Sharma
14 pages
7675-Article Text-20165-1-10-20240213
No ratings yet
7675-Article Text-20165-1-10-20240213
11 pages
Week 4 Reading - Elements of Bankruptcy, 6th (Concepts and Insights Series) Douglas Baird - Chapter - 11 - Forming - The - Plan - of - Reorganization
No ratings yet
Week 4 Reading - Elements of Bankruptcy, 6th (Concepts and Insights Series) Douglas Baird - Chapter - 11 - Forming - The - Plan - of - Reorganization
17 pages
Mzilwa Lumka 2019
No ratings yet
Mzilwa Lumka 2019
68 pages
Comparitive Analysis of Insolvency and Bankruptcy Laws in India, US and Germany.
No ratings yet
Comparitive Analysis of Insolvency and Bankruptcy Laws in India, US and Germany.
7 pages
Bankruptcy Law Dilemma
No ratings yet
Bankruptcy Law Dilemma
77 pages
Insolvency and Bankruptcy Code
No ratings yet
Insolvency and Bankruptcy Code
27 pages
Dissertation 1&2
No ratings yet
Dissertation 1&2
95 pages
Unit 9
No ratings yet
Unit 9
19 pages
Zero Sum Game
No ratings yet
Zero Sum Game
43 pages
Ibc Nots
No ratings yet
Ibc Nots
17 pages
Corporate Insolvency
No ratings yet
Corporate Insolvency
12 pages
Law215 (Group D)
No ratings yet
Law215 (Group D)
30 pages
JOKUBAUSKAS. The Concept of A Fresh Start in The Discharge of Debt Procedure in European Union Insolvency Law
No ratings yet
JOKUBAUSKAS. The Concept of A Fresh Start in The Discharge of Debt Procedure in European Union Insolvency Law
26 pages
Shivam Sharma IBC
No ratings yet
Shivam Sharma IBC
10 pages
The Untenable Case For Chapter 11
No ratings yet
The Untenable Case For Chapter 11
54 pages
Corporate Insolvency Law in The Twenty First Century State Imposed or Market Based PDF
No ratings yet
Corporate Insolvency Law in The Twenty First Century State Imposed or Market Based PDF
39 pages
Weil Bankruptcy 101 Presentation (2019)
100% (1)
Weil Bankruptcy 101 Presentation (2019)
72 pages
Lecture2 Bankruptcy For Repro Mar12 2021
No ratings yet
Lecture2 Bankruptcy For Repro Mar12 2021
75 pages
The Evolution of Corporate Bankruptcy
No ratings yet
The Evolution of Corporate Bankruptcy
23 pages
SSRN 3667317
No ratings yet
SSRN 3667317
38 pages
22BBL075 and 22BBL120 Research Article - Company Law 2
No ratings yet
22BBL075 and 22BBL120 Research Article - Company Law 2
16 pages
Corporate Insolvency Resolution Procedure Under Indian Insolvency and Bankruptcy Code, 2016: A Comparative Perspective
No ratings yet
Corporate Insolvency Resolution Procedure Under Indian Insolvency and Bankruptcy Code, 2016: A Comparative Perspective
8 pages
Comparative Corporate Insolvency Law: Horst Eidenmüller
No ratings yet
Comparative Corporate Insolvency Law: Horst Eidenmüller
63 pages
Cross-Border Restructuring Insights
No ratings yet
Cross-Border Restructuring Insights
5 pages
Bankruptcy
No ratings yet
Bankruptcy
18 pages
Notes Ibc
No ratings yet
Notes Ibc
14 pages
Corporate Rescue Proceedings
No ratings yet
Corporate Rescue Proceedings
26 pages
Efficacy of India's Bankruptcy Code
No ratings yet
Efficacy of India's Bankruptcy Code
116 pages
Bankruptcy & Reorganization Guide
No ratings yet
Bankruptcy & Reorganization Guide
14 pages
444B Unit 12 Supplementary Readings
No ratings yet
444B Unit 12 Supplementary Readings
11 pages
Web Appendix 7B
No ratings yet
Web Appendix 7B
7 pages
Liquidation of Companies: Riara Law School
No ratings yet
Liquidation of Companies: Riara Law School
30 pages
10 Fundamental Principles of Bankruptcy and Insolvency Law
No ratings yet
10 Fundamental Principles of Bankruptcy and Insolvency Law
19 pages
38LLM22 IBC Project PDF
No ratings yet
38LLM22 IBC Project PDF
23 pages
Navigating and Comparing Bankruptcy Laws Aqound World
No ratings yet
Navigating and Comparing Bankruptcy Laws Aqound World
24 pages
SENGUPTA CorporateInsolvencyResolution 2016
No ratings yet
SENGUPTA CorporateInsolvencyResolution 2016
11 pages
Law of Insolvency: Bankruptcy
No ratings yet
Law of Insolvency: Bankruptcy
6 pages
Corporate Finance
No ratings yet
Corporate Finance
12 pages
Debt Restructuring
100% (4)
Debt Restructuring
518 pages
Slides
No ratings yet
Slides
16 pages
WPR 2 Vaishali
No ratings yet
WPR 2 Vaishali
6 pages
Bankruptcy CH 11
No ratings yet
Bankruptcy CH 11
9 pages
Comparative Analysis of Winding Up of A Company Perspectives in Uk Usa India NLR PDF
No ratings yet
Comparative Analysis of Winding Up of A Company Perspectives in Uk Usa India NLR PDF
23 pages
Winding Up UK and India
No ratings yet
Winding Up UK and India
34 pages
Factsheet 2023 Kotva
No ratings yet
Factsheet 2023 Kotva
8 pages
Andhra Pradesh Court Fees and Suits Valuation Act, 1956
No ratings yet
Andhra Pradesh Court Fees and Suits Valuation Act, 1956
144 pages
Book 15 - Test 3 - Reading - Wordlist
No ratings yet
Book 15 - Test 3 - Reading - Wordlist
6 pages
Assignment Report
No ratings yet
Assignment Report
4 pages
Windsheild Survey
No ratings yet
Windsheild Survey
4 pages
Year 3 Daily Lesson Plans: By:Missash
No ratings yet
Year 3 Daily Lesson Plans: By:Missash
6 pages
Gourma Freidora GAF588
No ratings yet
Gourma Freidora GAF588
136 pages
Kapil CPF
No ratings yet
Kapil CPF
3 pages
Q2 DLP For UCSP MELC BASED
No ratings yet
Q2 DLP For UCSP MELC BASED
3 pages
Yang 2021 PDF
No ratings yet
Yang 2021 PDF
34 pages
En - Synergis Master Controller Configuration Guide 2.1
No ratings yet
En - Synergis Master Controller Configuration Guide 2.1
52 pages
Productivity Concept
No ratings yet
Productivity Concept
70 pages
Assignment 1 - ST36252 Testing of Hypothesis
No ratings yet
Assignment 1 - ST36252 Testing of Hypothesis
4 pages
MGNT314 Subject Outline PDF
No ratings yet
MGNT314 Subject Outline PDF
28 pages
IGCSE Grade 10: Chemical Reactions
No ratings yet
IGCSE Grade 10: Chemical Reactions
75 pages
Sodium Hypochlorite Solution (5.25 - 16.0 % W/W) : Section 1 - Chemical Product and Company Identification
100% (1)
Sodium Hypochlorite Solution (5.25 - 16.0 % W/W) : Section 1 - Chemical Product and Company Identification
9 pages
PHY568 Lec 4 Curvelinear Orthogonal Coordinates
No ratings yet
PHY568 Lec 4 Curvelinear Orthogonal Coordinates
38 pages
Chinese Firm
No ratings yet
Chinese Firm
13 pages
FAA Advisory Circular 120-85A
No ratings yet
FAA Advisory Circular 120-85A
97 pages
C-Band Antenna Specs & Manual
No ratings yet
C-Band Antenna Specs & Manual
9 pages
Building Construction Materials and Techniques P. Purushothama Raj Instant Download Full Chapters
100% (2)
Building Construction Materials and Techniques P. Purushothama Raj Instant Download Full Chapters
141 pages
Diode Characteristics Lab Guide
No ratings yet
Diode Characteristics Lab Guide
5 pages
Banking Abbriviation
No ratings yet
Banking Abbriviation
4 pages
Goyal Surampalli 2018 Impact of Climate Change On Water Resources in India
No ratings yet
Goyal Surampalli 2018 Impact of Climate Change On Water Resources in India
10 pages
To, Charles Moore Dear Mr. Moore,: Morning )
No ratings yet
To, Charles Moore Dear Mr. Moore,: Morning )
3 pages
PA 304 HRD - IT and HRIS
No ratings yet
PA 304 HRD - IT and HRIS
23 pages
In 2006, Montana State University
No ratings yet
In 2006, Montana State University
2 pages
The Quantum Software Lifecycle: Benjamin Weder Johanna Barzen Frank Leymann
No ratings yet
The Quantum Software Lifecycle: Benjamin Weder Johanna Barzen Frank Leymann
8 pages
Teacher Level 2
No ratings yet
Teacher Level 2
6 pages
Hydraulic Seal Catalogue 2022
100% (3)
Hydraulic Seal Catalogue 2022
423 pages

Renssen, S. Corporate Restructuring and Corporate Dissolution of Companies in Financial Distress Ensuring Creditor Protection

Uploaded by

Renssen, S. Corporate Restructuring and Corporate Dissolution of Companies in Financial Distress Ensuring Creditor Protection

Uploaded by

Corporate Restructuring and Corporate

Dissolution of Companies in Financial

It is of great importance that companies in ﬁnancial distress have access to a

whether creditor protection is sufﬁciently ensured. In this contribution, the

scheme, a company has a choice between formal dissolution and informal

II. Corporate Restructuring in the USA

B. Restructuring by a 363 sale

III. Corporate Restructuring in the UK

ﬁrst being in administration) or realising property in order to make a distribution

B. Restructuring by the scheme of arrangement

company is being wound up or an administration order is in force in relation to it,

62. Section 896(2), CA 2006. 66. Ibid.

C. Restructuring by company voluntary arrangements

IV. Corporate Restructuring in the Netherlands

prospective trustee.79 The prospective trustee will report to the prospective

B. Restructuring by the scheme of arrangement ‘Dutch style’

V. Corporate Dissolution in the USA (Delaware)

92. Section 280(a)(1), DGCL. Component of Delaware’s Corporate Dissolution

VI. The Voluntary Striking Off Procedure (the UK)101

the creditor’s voluntary liquidation (CVL) procedure, which is more time-

VII. Corporate Dissolution in the Netherlands (‘Turbo Liquidation’)106

106. Renssen (n 101). 108. Samantha Renssen, De turboliquidatie van de Besloten

is dissolved through turbo liquidation.109 Because turbo liquidation is so regularly

A. The absence of assets

consequence, a bankruptcy procedure would only result in an increase of the debts

B. The lack of guarantees ensuring creditor protection124

In the jurisprudence, there is an assumption that creditors of a company are

of proof in case of an Article 2:23c sub 1 of the DCC procedure. Furthermore,

VIII. Corporate Restructuring and Corporate Dissolution: The USA

134. Samantha Renssen, “De problematiek rondom de 136. Okoli (n 5).

to be reduced. In contradiction with all its similarities with the UK scheme of

139. Proposed Articles 42 and 47, DBC. 143. Xie (n 45).

You might also like