Business rescue legislation elsewhere in the world
There are two main schools of thought regarding business rescue:
- In the USA, where business rescue falls under Chapter 11 of the Bankruptcy Act, directors remain in charge of the distressed company. Canada and Germany follow a similar approach. South Africa's business rescue model is based on this approach with a supervisor, who can be appointed by the company.
- In contrast, most other countries remove authority from the directors and management, and place the distressed company in the hands of a business administrator.
Unification of Company and Insolvency laws is the approach taken by most countries implementing new rescue legislation overseas. South Africa seems to moving in this direction (see new company business rescue legislation and future uniform insolvency legislation at History of business rescue legislation reform in South Africa).
The documents listed in the table below describe business rescue approaches overseas. For a quick-and-dirty overview of the issues at hand, see "Culture of Vulture?". The Corporate Rescue document from New Zealand provides a more comprehensive overview.
Overseas business rescue practice
European business rescue models |
Insolvency Outcomes: Research Findings (Dr. Sandra Frisby, Baker & McKenzie Lecturer in Company and Commercial Law, University of Nottingham, 27 July 2006) |
Administrative receivership and administration (UK) 2006 |
Are More Restructuring Regimes Becoming Like the U.S. Chapter 11 System? Keynote Address at Corporate Restructuring: International Best Practices (World Bank) 2004 |
Explaining the choice between alternative insolvency regimes for troubled companies in the UK and Sweden (2006) |
The rapid transformation of European restructuring and insolvency practices |
Culture or Vulture? |
‘U.S. Invasion’ Influences European Insolvency Practices Major Hurdles Remain to Chapter 11-type Restructurings - Journal of Corporate Renewal - September 2004 (TMA member access only). |
Australia’s Insolvency Laws Submission to the Parliamentary Joint Committee on Corporations and Financial Services by Pacific Capital Corporation Ltd - September 2004 |
Turnaround Bright Eyes: Chapter 11 - is it a viable alternative to voluntary administration? - December 2004 (Australia) |
Insolvency law reform - a key issue for business turnaround - October 2003 (Australia) |
Business Turnaround Association - June 2003 [Australian Development] |
Corporate Rescue - Report for the Ministry of Economic Development - New Zealand - November 2002. |
The Choice Among Traditional Chapter 11, Pre-packaged Bankruptcy, and Out-of-Court Restructuring (Keven Yost, School of Business, University of Wisconsin – Madison Krannert Graduate School of Management, Purdue University September, 2002) |
Insolvency - A Second Chance (UK) July 2001 |
Contact Group on the Legal and Institutional Underpinnings of the International Financial System - Trends in the Area of Insolvency Laws - September 2002 |
United Nations Commission on International Trade Law (UNCITRAL): For a complete list of downloadable papers and programs from previous UNCITRAL colloquia and symposia. (The two most important papers can be opened directly below). |
UNCITRAL Draft Legislative Guide on Insolvency Law View A/CN.9/WG.V/WP.70 (Part I) |
UNCITRAL Draft Legislative Guide on Insolvency Law View A/CN.9/WG.V/WP.70 (Part II) |
Insolvency abuse - regulating the insolvency industry (UK) 2000 |
A Review of Company Rescue and Business Reconstruction Mechanisms (UK) May 2000 |
Corporate rescue (New Zealand) November 2000 |
Outcomes in Pre-packaged Bankruptcies (Ronald C. Lease, Professor of Finance, University of Utah, David Eccles School of Business; John J. McConnell, Professor of Management, Purdue University, Krannert School of Management; Elizabeth Tashjian, Associate Professor of Finance, University of Utah, March 2000) |
Insolvency systems in Asia an efficiency perspective (Germany) 2000 |
Orderly & Effective Insolvency Procedures - International Monetary Fund - 1999 |
An Empirical Examination of Pre-packaged Bankruptcy (Brian L. Betker is Assistant Professor of Finance at Ohio State University, 22 March 1995 ) |
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