Corporate Insolvency Regimes

Project Stream 1 · Jannis Poetzsch-Heffter

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The comparative analysis of corporate insolvency law concerns plan voting schemes and priority regimes. Debt restructuring implies financial rescue in a situation of financial distress. However, it might also serve more broadly as a turning point—a reorientation of the corporation and its role within economy and society. Plan voting schemes, e. g., voting rights, majority thresholds, cram-down, establish the procedural conditions under which stakeholders can collectively agree on a restructuring plan. Priority regimes decide upon the ranking of a wide range of debt relations in insolvency, including derivatives, secured credit, employee wages, taxes, or new financing granted during restructuring. The ranking of creditors guides the distribution of assets among creditors in insolvency. Priority decisions between creditors become necessary since insolvent corporations cannot fully satisfy all claims. The comparative sample reveals the diverse social rationalities behind insolvency law and how legal orders resolve debt conflicts between debtor, creditors and other stakeholders. Ultimately, the analysis highlights the reflective capacity of insolvency law: priority regimes and plan voting schemes mediate and balance competing social rationalities.