Module description
AVAILABLE TO LAW STUDENTS ONLY
The module is premised on an understanding of corporate insolvency law as a mechanism to address both a ‘tragedy of the commons’ and the ensuing ‘tragedy of the anti-commons’. In order to prevent a ‘creditors’ run on the debtor’s assets, creditors are forced into a collective procedure where they have to decide as a collectivity how to realize a potential going concern surplus. In this situation, strategic bargaining and hold-ups may result in a ‘tragedy of the anti-commons’ which, in turn, may be addressed through information rights, majority voting and a potential cramdown of creditor rights.
However, financial innovation resulting in increased fragmentation and fluidity of debt and increased complexity of property rights amplifies the anti-commons problem and makes cooperation more difficult. As a consequence, market based restructuring solutions have emerged, using both traditional and innovative techniques, that can be analysed on the basis of certain ‘contractualization of bankruptcy’ models.
These patterns of modern restructuring practice are the focus of the module. In addition to purely contractual arrangements (intercreditor agreements, security enforcement and release provisions), the module will analyse the statutory mechanisms utilized in modern restructuring practice, notably (pre-pack) administrations, schemes of arrangement and company voluntary arrangements. The international context (transfer of the centre of main interest under the EU Insolvency Regulation, jurisdiction of English courts for sanctioning a scheme of arrangement) will be taken into account.
In order to provide students with a comprehensive picture of corporate insolvency law, winding up procedures will be covered as well. Students following the module will obtain a deeper understanding and critical awareness of the mechanisms and techniques utilized in this context.
This is essential for anyone who aspires to work in the corporate, finance or restructuring departments of any major international law firm, or in-house in international financial institutions.
Assessment details
2-hour written exam (closed book)
Educational aims & objectives
This module aims to introduce students to the principles of corporate insolvency law with a particular focus on modern debt restructuring practice. It is firmly grounded in bankruptcy theory and analyses the relevant legal issues through the lens of a combination of a ‘commons/anti-commons’ approach and ‘contractualization of bankruptcy’ models.
Learning outcomes
Knowledge and Understanding
The module will provide students with a detailed understanding of the substantive elements of debt restructuring and corporate insolvency law and the policy considerations underlying this field.
Students will also acquire a detailed knowledge of the interplay of several different sources of law in this field, notably statute (Insolvency Act 1986) and case law as well as EU law; and understand how to assess the wider policy implications as they affect other areas of corporate and commercial law
Cognitive and Intellectual Skills
Students taking this module will develop the skills to critically engage a complex and dynamic area of law. Through discussion of legislation and case-law they will learn of the difficulties of doctrinal legal analysis in such a context and the range of questions posed for lawyers. These problems will be discussed through policy clashes, jurisdictional clashes and substantive legal clashes. Students will learn to address these questions by synthesising materials from different academic disciplines and then applying their analysis to on-going policy debates.
Key/Transferable Skills
In class discussion based on readings and presentations will be key parts of the module. The former will help students develop oral communication skills while the latter will require them to learn how to work as part of a group of researchers. The module will draw on a range of resources (literature, electronic and print media, and audio-visual materials) and students will learn to critically evaluate with these resources. Each seminar will end with a reflection on where that week’s materials fit with the overall objectives of the course and students will be encouraged to reflect on their learning each week.
Practical Skills
A range of practical skills will be developed including solving legal problems, the presentation of legal arguments both orally and in written form and the necessary skills to engage in collaborative research. The module aims to develop skills that will be of benefit to those students who seek to enter professional practice after their degree, and those who would prefer a policy-orientated focus, such as the civil service. The module should also be of benefit to students who seek to proceed to a higher (research) degree.
Teaching pattern
Contact hours 30: lectures (1 x 2 hour per week); tutorials (1 x 1 hour per week)
Suggested reading list
M Schillig, ‘Corporate Insolvency Law in the 21st Century – State Imposed or Market Based?’ (2014) 14 Journal of Corporate Law Studies 1-39.
R Goode, Principles of Corporate Insolvency Law (London: Sweet & Maxwell, 2011).