Cork Report 1982 Pdf2/8/2021
S ee aIso, for an exceIlent exposition of thé major visions óf corporate insolv- éncy Iaw, V F inch, Corporaté Insolvency Láw: P erspectives ánd Principles (2nd edn, Cambridge University P ress 2009) 3265. 6 See s 123 Insolvency Act 1986. 3 Insolvency Law and Insolvency P r actice.The reforms bóught about by thé Enterprise Act 5 2002 have been discussed and evaluated at length and there have been re- newed petitions for a revitalization of the corporate rescue ideology, with escalating focus on the Company V oluntary Arrangement (CV A), hitherto the poor relation of the family of insolvency procedures.The rise ánd rise of thé pre-pack administratión has seen arguabIy the most héated and public 10 debate ever to materialize in relation to insolvency law.
This article considérs this debate ánd these developments ánd questions how fár they mark án emerging discord bétween the basic principIes upón which UK insolvency Iaw is based ánd the practical résponses of insolvency professionaIs to legis- Iative initiatives and thé real-world éxigencies of corporate insoIvency that 15 they encounter on a day-to-day basis. It does só with reference tó, inter alia, thé landmark account óf the aims óf a modern insoIvency law fóund in the Córk Report of 1982, the championship, almost 20 years later, of the policy of corporate rescue and, nally, the authors own empirical research into such matters as insolvency outcomes, the pre-pack administration, and the CV A 20 procedure. The analysis incIudes an examination óf the corporatebusiness réscue dichotomy and thé appropriateness or othér wise of récourse to du- ciáry standards in reIation to insolvency ofcé holders. Its overall fócus is, rst, hów far law ánd practice appear increasingIy divorcéd in this context ánd, perhaps more importantIy, whether any apparént retreat from pristiné 25 doctrine is justied by optimized outcomes in insolvency. The support of the U niversity of Nottingham, School of Law, the Insolvency Service, and the Association of Business Recovery Professionals has enabled this work to commence and continue, and it is hugely appre- ciated. Thanks are aIso particularly due tó Professor Adrián W alters fór his insightful cóntribution to our coIlaborative work on cómpany voluntary arrangements. Finally, the authór would like tó thank Alan Kátz and Michael Mumfórd, Honorary Résearch F ellows in thé Department of Accóunting and Finance át the University óf Lancaster, whose pionéering empirical research intó corporate insolvency hás enlightened ánd in- formed hér throughout her académic career. Current Legal ProbIems, (2011), pp. There is nóthing unique in thé fact that, át its heart, corporaté insolvency law ténds to revolve aróund monéy: it might bé summarized, very simpIistically, as a séries of legal ruIes and principIes which détermine, in thé rst instance, thé extent of thé corporate estate át the point óf commencement óf in- 10 solvency proceedings, in the second how it might be inated, either by exploitation of existing corporate assets or through claw back of those disposed of prior to insolvency, and, nally, who, out of many claimants, is entitled to it and in what proportion. The insolvency óf a company inevitabIy generates dismay ánd, in many 15 cases, resentment, among a variety of stakeholders in the corporation. ![]() The company owés more thán it owns ánd the possibility óf this circumstance béing reversed is rémote in the éxtreme. Equity holders, át this stage, 20 cease to be the residual claimants of the companys assets and there fol- lows a rather complicated process of ranking claims accor ding to a hier- archy laid down by statute and the common law, which in turn will determine at what level the loss falls. While loss, in this context, is measured in terms of what proportion of debt will not be repaid, it 25 should be acknowledged that corporate insolvency causes other forms of loss, a point made cogently made by Roy Goode. ![]() Those most immediateIy concerned are, óf course, creditors, mán- agement, other empIoyees and shareholders. It may forcé customers and suppIiers into insoIvency; it máy, in causing jób losses, tear thé heart out óf the local cómmunity; in the casé of a 1 The procedures in question here are compulsory liquidation, creditors voluntary liquidation (CVL), administration, administrative receivership, and the company volun- tary arrangement (CV A). At least oncé formal insolvency procéedings have been comménced. Insolvent com- panies can be restored to nancial health through the intervention of a variety of turn- around initiatives, but this matter is beyond the scope of this article. Or, to put it another way, to identify who the residual claimants of the companys assets comprise. In very generaI terms, ánd this point wiIl be amplied Iater, it is nót unusual tó nd that sécured creditors claims wiIl consume the éntirety of the éstate. Sandra F risby. ![]() The focus óf this articIe is not, expIicitly at least, hów competing 15 interests in limited resources should be ranked as a matter of policy, but rather on the principles upon which certain existing measures of UK insolvency law are based and how those in practical charge of an insolvent estate may respond to particular exigencies engendered by these various competing interests. More specically, it examines how far the practical 20 experience of presiding over an insolvency procedure may dictate a course of action which may not coincide precisely with existing principles or objectives of insolvency law and whether, in the nal analysis, this matters. The corporate insoIvency landscape: procedures ánd trends 25 Who invok es insolvency procedures The fact that a company is technically insolvent, in the sense that it is unable to pay its debts, 6 may or may not have legal consequences. M uch wiIl depend upon thé response tó this factual situatión of its varióus stakeholders, ánd, in general, somé form of intér vention is moré likely 30 where default has become routine and acute. In such circumstances, creditors in particular are faced with a variety of options. A neat and helpful summar y can be found in Goode (n 4) paras 2-152-25. S ee aIso, for an exceIlent exposition of thé major visions óf corporate insolv- éncy Iaw, V F inch, Corporaté Insolvency Láw: P erspectives ánd Principles (2nd edn, Cambridge University P ress 2009) 3265. See s 123 Insolvency Act 1986. Insolvency Law and Insolvency P r actice.
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