The Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as IBC, 2016) has been enacted to give effect to a highly time bound process for insolvency resolution of corporate persons, partnership firms and individuals. The objective is speedy resolution and maximizing recovery for lenders. The IBC, 2016 provides for a framework in which an Interim Resolution Professional shall carry on the business operations of the corporate as a going concern until the Committee of Creditors proposes a resolution plan that would keep the business of the corporate post insolvency resolution. On incidence of failure of the resolution plan, liquidation of the corporate person takes place. However, when liquidation of a corporate person takes place by sale of corporate debtor or its business as going concern; the person does not get dissolved and continues to exist in market as a going concern entity. The provision for this feature of liquidation was first inserted by the Insolvency and Bankruptcy Board of India (Liquidation Process) (Amendment) Regulations, 2018 w.e.f. 1-4-2018 under Regulation 32 which provided for ‘Manner of sale’. Further, the provision was amended by the Insolvency and Bankruptcy Board of India (Liquidation Process) (Second Amendment) Regulations, 2018, w.e.f 22-10-2018. The Second Amendment substituted the previous title of ‘Manner of Sale’ with ‘Sale of Assets, etc.’ the provisions which provides for liquidation as going concern are clause (e) and (f) of Regulation 32 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016. ‘Going Concern’ is a concept of accounting and it’s relation with the Insolvency and Bankruptcy law will be examined in this study, with primary focus upon, the need for the concept of liquidation as going concern under Insolvency and Bankruptcy Law.

The need for a special restructuring procedure for insolvent entrepreneurs due to SARS-CoV-2 - Adamus - Sociopolitical Sciences Sociopolitical Sciences ISSN 2223-0092 (Print) ISSN 2310-7065 (Online) Pay with User Username Password Remember me Forgot password? Register Notifications View Subscribe Subscription Login to verify subscription Your IP address: 203.17.87.41 Metrics Search Search Search Scope All Authors Title Abstract Index terms Full Text Browse By Issue By Author By Title By Sections Other Journals Categories Keywords China Russia artificial intelligence civil society culture digital technologies digitalization education family globalization identity international relations law patriotism public administration religion society state sustainable development trust youth Home > Archives > Vol 10, No 2 (2020) > The need for a special restructuring procedure for insolvent entrepreneurs due to SARS-CoV-2 The need for a special restructuring procedure for insolvent entrepreneurs due to SARS-CoV-2 Authors: Adamus R. 1 Affiliations: University of Opole Issue: Vol 10, No 2 (2020) Pages: 128-131 Section: Articles URL: https://journals.eco-vector.com/2223-0092/article/view/538078 DOI: https://doi.org/10.33693/2223-0092-2020-10-2-128-131 ID: 538078 Cite item Full Text Open Access Access granted Subscription or Fee Access (Russian) Abstract Full Text About the authors References Supplementary files Statistics Abstract This text refers to the need for simple restructuring proceedings for entrepreneurs due to the crisis caused by the coronavirus epidemic. Some countries may be more deeply affected by the crisis, others may be more resilient to economic shocks. The comments are abstract. They do not refer to any particular legal system. Their purpose is to provoke a general discussion on the need to introduce into the legislation special rules regarding business insolvency as a result of the SARS-CoV-2 pandemic. The main assumption is as follows. The main purpose of insolvency law is to maximize creditors’ satisfaction. Meanwhile, in the event of a common, structural crisis, a more important value may be maintaining the entrepreneur’s business activity. Due to the need to quickly overcome the crisis, the entrepreneur’s restructuring should be preferred rather than bankruptcy resulting in liquidation. Keywords bankruptcy , restructuring , coronavirus financial crisis Full Text About the authors Rafal Adamus University of Opole Email: radamus@uni.opole.pl Doctor of Law, Professor; Head at the Department of Commercial and Tax Law Opole, Poland References Adamus R. Zarys ogólny historii prawa upadłościowego w Polsce. In: Historia testis temporum, lux veritatis, vita memoriae, nuntia vetustitas. Księga Jubileuszowa dedykowana Profesorowi Włodzimierzowi Kaczorowskiemu. E. Kozerska, M. Maciejewski, P. Stec (eds.). Opole, 2015. Р. 609. Adamus R. Potrzebna jest uproszczona restrukturyzacja dla przedsiębiorców dotkniętych skutkami epidemii. Dziennik Gazeta Prawna. 30.03.2020. Busch D., van Rijn M. The single resolution mechanism, in judicial protection in the single resolution mechanism. Cambridge, 2017. Рp. 77-119. Lehmann M. Bail-in and private international law: How to make bank resolution measures effective across borders, international and comparative law quarterly. 2017. Рp. 107-142. Ringe W.-G. Bank bail-in between liquidity and solvency. American Bankruptcy Law Journal. 2018. Рp. 299-334. Supplementary files Supplementary Files Action 1.

According to some economists, the deglobalization of the world has commenced. While that is true of trade and of ideas, it may not reflect the experience of existing companies undergoing restructuring which have in a sense been locked into a previous matrix where its assets and stakeholders were widely dispersed throughout the globe. This has created anomalies in the handling of worldwide insolvency cases which comes up against both protectionism, including judicial competition for such cases leading to less universalism in some situations, as well as the realignment of interests between the various corporate constituencies due to Covid-19, which may have further strengthened the hands of shareholders at the expense of other stakeholders as companies are kept afloat. In Singapore the government decided to develop Singapore into an international center for debt restructuring as part of its strategy to export its services and for this purpose embarked on an ambitious project to reform both its domestic and crossborder insolvency laws. The hybrid scheme was created by injecting some US bankruptcy law elements into the ‘English’ scheme of arrangement. The UNCITRAL Model Law on Cross-border Insolvency, in the form of the Third Sch of the Insolvency, Restructuring and Dissolution Act 2018 (IRDA 2018), was also adopted. Providing a forum for distressed companies in the region to restructure their debts without having to travel to London or New York is a positive development for Singapore and the region. The hybrid scheme is a path-breaking innovation so challenges to its design and operation are unavoidable. But its structure is flexible enough to allow for judicial creativity to fill gaps and to prevent its abuse. The courts face less challenges in interpreting the Third Sch, and has achieved some success in fostering cooperation and communication in cross-border insolvency matters between courts, but the domination of family companies, fragmentation of credit and weak legal institutions in the region may be more difficult challenges to Singapore’s aspiration to serve as the regional restructuring hub.

We propose a two-step filtering process using interest coverage ratio and default prediction models to measure the extent of “zombieism” globally: a phenomenon that describes the existence of companies that are insolvent but continue to survive due to unusual market conditions and the support of financial institutions and government. We find that the average share of publicly traded zombie firms in the world's 20 largest economies increased significantly in the past 30 years, at above 7% at the end of 2020. We also find that financial market development, creditor rights, and debt enforcement efficiency help explain cross-country variations in zombie ratios. Using staggered bankruptcy reforms in eight countries after 2000 as an exogenous variation to the modernization of bankruptcy law, we find that the zombie ratio declines by 1.5 percentage points after the reforms in those countries, specially if the reforms aim to strengthen creditor rights.