01.05.09
Posted in Uncategorized at 1:17 am by Eric
The Economist recently ran a piece about problems with European bankruptcy laws. From what I gather, the EU is looking more and more at America’s Chapter 11, which is “well tested, predictable and accepted by debtors and creditors alike.” Well, it’s “accepted,” but I’m not sure it’s acceptable, though I like Chapter 11 more than Chapters 7 and 13 (where individual consumers are able to abuse the system the most, the 2005 Reform Act notwithstanding).
Anyway, I found this piece of information interesting:
Because of the stark differences in treatment of creditors in Europe—Britain, Ireland, the Netherlands and Scandinavian countries are the friendliest, with Belgium, Germany, Portugal and Switzerland in the middle and France, Italy and Spain the worst, according to S&P—the next few years are likely to see jurisdictional battles. According to European Union law, a company can request to file for bankruptcy in the country where it has its “centre of main interest”, and creditors will fight to avoid the worst regimes. In countries where creditors cannot avoid a raw deal, companies’ cost of capital could rise sharply.
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