Crises, Creditors and Cramdowns: An evaluation of the protection of minority creditors under the WHOA in light of Directive (EU) 2019/1023

Covid-19 has severe economic consequences, leading to an increasing amount of businesses facing overwhelming debts. Since the financial crisis of 2008 the European Union has taken on a more rescue-oriented approach towards bankruptcy, resulting in Directive (EU) 2019/1023. This Directive creates a f...

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Autor principal:	Hidde Volberda
Formato:	article
Lenguaje:	EN
Publicado:	Utrecht University School of Law 2021
Materias:	restructuring directive whoa smes insolvency corporate rescue covid-19 Law in general. Comparative and uniform law. Jurisprudence K1-7720
Acceso en línea:	https://doaj.org/article/f0b76c5b2374438db61b9dd0aa0c922a
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spelling	oai:doaj.org-article:f0b76c5b2374438db61b9dd0aa0c922a2021-11-08T08:17:05ZCrises, Creditors and Cramdowns: An evaluation of the protection of minority creditors under the WHOA in light of Directive (EU) 2019/10231871-515X10.36633/ulr.638https://doaj.org/article/f0b76c5b2374438db61b9dd0aa0c922a2021-10-01T00:00:00Zhttps://www.utrechtlawreview.org/articles/638https://doaj.org/toc/1871-515XCovid-19 has severe economic consequences, leading to an increasing amount of businesses facing overwhelming debts. Since the financial crisis of 2008 the European Union has taken on a more rescue-oriented approach towards bankruptcy, resulting in Directive (EU) 2019/1023. This Directive creates a framework for pre-insolvency restructuring, thereby avoiding unnecessary bankruptcies. Accordingly, pre-insolvency restructuring is a valuable instrument in mitigating the negative economic effects of Covid-19. The Netherlands has recently adopted the Act on the Confirmation of Private Plans (WHOA), National Legislation on pre-insolvency restructuring. In order to balance the rights of secured and unsecured creditors the 20%-rule was adopted. This rule guarantees small-scale Small-to-Midsized (SME)-creditors the right to satisfaction of 20% of their claims in restructuring proceedings. In this paper, I evaluate whether the 20%-rule is in accordance with the Directive. I argue that the 20%-rule is in line with the Directive, but that the overly restrictive system of judicial review under the WHOA hampers its application in practice. Therefore, the Dutch legislator should allow for more room for judicial interpretation on the suitability of the application of the 20%-rule. This more nuanced approach better aligns the 20%-rule with the European Restructuring Directive.Hidde VolberdaUtrecht University School of Lawarticlerestructuring directivewhoasmesinsolvencycorporate rescuecovid-19Law in general. Comparative and uniform law. JurisprudenceK1-7720ENUtrecht Law Review, Vol 17, Iss 3 (2021)
institution	DOAJ
collection	DOAJ
language	EN
topic	restructuring directive whoa smes insolvency corporate rescue covid-19 Law in general. Comparative and uniform law. Jurisprudence K1-7720
spellingShingle	restructuring directive whoa smes insolvency corporate rescue covid-19 Law in general. Comparative and uniform law. Jurisprudence K1-7720 Hidde Volberda Crises, Creditors and Cramdowns: An evaluation of the protection of minority creditors under the WHOA in light of Directive (EU) 2019/1023
description	Covid-19 has severe economic consequences, leading to an increasing amount of businesses facing overwhelming debts. Since the financial crisis of 2008 the European Union has taken on a more rescue-oriented approach towards bankruptcy, resulting in Directive (EU) 2019/1023. This Directive creates a framework for pre-insolvency restructuring, thereby avoiding unnecessary bankruptcies. Accordingly, pre-insolvency restructuring is a valuable instrument in mitigating the negative economic effects of Covid-19. The Netherlands has recently adopted the Act on the Confirmation of Private Plans (WHOA), National Legislation on pre-insolvency restructuring. In order to balance the rights of secured and unsecured creditors the 20%-rule was adopted. This rule guarantees small-scale Small-to-Midsized (SME)-creditors the right to satisfaction of 20% of their claims in restructuring proceedings. In this paper, I evaluate whether the 20%-rule is in accordance with the Directive. I argue that the 20%-rule is in line with the Directive, but that the overly restrictive system of judicial review under the WHOA hampers its application in practice. Therefore, the Dutch legislator should allow for more room for judicial interpretation on the suitability of the application of the 20%-rule. This more nuanced approach better aligns the 20%-rule with the European Restructuring Directive.
format	article
author	Hidde Volberda
author_facet	Hidde Volberda
author_sort	Hidde Volberda
title	Crises, Creditors and Cramdowns: An evaluation of the protection of minority creditors under the WHOA in light of Directive (EU) 2019/1023
title_short	Crises, Creditors and Cramdowns: An evaluation of the protection of minority creditors under the WHOA in light of Directive (EU) 2019/1023
title_full	Crises, Creditors and Cramdowns: An evaluation of the protection of minority creditors under the WHOA in light of Directive (EU) 2019/1023
title_fullStr	Crises, Creditors and Cramdowns: An evaluation of the protection of minority creditors under the WHOA in light of Directive (EU) 2019/1023
title_full_unstemmed	Crises, Creditors and Cramdowns: An evaluation of the protection of minority creditors under the WHOA in light of Directive (EU) 2019/1023
title_sort	crises, creditors and cramdowns: an evaluation of the protection of minority creditors under the whoa in light of directive (eu) 2019/1023
publisher	Utrecht University School of Law
publishDate	2021
url	https://doaj.org/article/f0b76c5b2374438db61b9dd0aa0c922a
work_keys_str_mv	AT hiddevolberda crisescreditorsandcramdownsanevaluationoftheprotectionofminoritycreditorsunderthewhoainlightofdirectiveeu20191023
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Crises, Creditors and Cramdowns: An evaluation of the protection of minority creditors under the WHOA in light of Directive (EU) 2019/1023

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