This article is part of the author's report to the 2nd Annual Conference of the Netherlands Association for Comparative and International Insolvency Law (www.naciil.org) in Amsterdam on 8 Nov. 2012.
Reconsidering the Shareholder's Role in Corporate Reorganisations under Insolvency Law†
Article first published online: 18 JUN 2013
Copyright © 2013 INSOL International and John Wiley & Sons, Ltd
International Insolvency Review
Volume 22, Issue 2, pages 106–117, Summer 2013
How to Cite
Madaus, S. (2013), Reconsidering the Shareholder's Role in Corporate Reorganisations under Insolvency Law. Int. Insolv. Rev., 22: 106–117. doi: 10.1002/iir.1209
- Issue published online: 4 JUL 2013
- Article first published online: 18 JUN 2013
A corporate reorganisation under insolvency law is commonly achieved by virtue of a reorganisation plan that provides for the distribution and sacrifice of value among all stakeholders in an insolvent company. Although the creditors' right to vote on such plans and to participate in the wealth distribution according to such plans is universally accepted, the role of old equity in a corporate reorganisation remains a topic that jurisdictions all over the world define very differently. This article first explores possible approaches to shareholders' treatment under insolvency law and supports their inclusion in insolvency proceedings that pursue corporate reorganisations. It then argues that equity interest should not solely be treated according to its economic value and consequently that no absolute priority rule should be applied against them as such treatment would ignore the fundamental difference between liquidation and reorganisation. Finally, it proposes a new cram-down rule for a class of equity holders. Copyright © 2013 INSOL International and John Wiley & Sons, Ltd.