This renders the informal rescue a fragile device which is dependent on a high degree of cooperation among a disparate range of parties.91 Another concern with the informal approach is its potential to prejudice the interests of less well-placed creditors, for there may be an absence of investigative powers and a lack of inquiry into the role the directors played in bringing a company to the brink of disaster.92, The ‘London Approach’, developed in the 1970s and designed to secure the cooperation of financial support for companies with liquidity problems,93 has been successful in resolving financial distress with large UK companies, especially for the large multi-bank financed companies.94 The British Bankers Association defined the ‘London Approach’ as ‘a non statutory and informal framework introduced with the support of the Bank of England for dealing with temporary support operations mounted by banks and other lenders to a company or group in financial difficulties, pending a possible restructuring’.95 The rescue work is organised on a contractual basis, through which the potentially conflicting problems of company creditors are resolved through voluntary cooperation and coordination between the participating parties96 without having to resort to statutory backing.97, The process generally involves four phases. 13 McCormack, Corporate Rescue Law: An Anglo-American Perspective, 4–5. In contrast, the overriding objective of a Chapter 11 case, at least in theory, is the formulation and confirmation of a reorganisation plan agreed between creditors and shareholders. means proceedings to facilitate the rehabilitation of a company that is financially distressed by providing for- For example, the company must be in “financial distress” to apply for rescue. Corporate Business Rescue Services South Africa, on The Differences between Business Rescue and Company Liquidation, on Business Rescue and the Companies Act – Part 1, on Information Included in a Business Rescue Plan, on The Fundamentals of Business Rescue Proceedings, The Differences between Business Rescue and Company Liquidation, Business Rescue and the Companies Act – Part 1, Information Included in a Business Rescue Plan, The Fundamentals of Business Rescue Proceedings. Business rescue is often a viable alternative to insolvency. Business rescue is a relatively new system within South Africa’s legal landscape. Additionally, we can expect higher success rates as the system continues to evolve. 88 Workout was defined as ‘borrower’s efforts to negotiate with its lenders for a restructuring of its debts outside of bankruptcy or other court proceedings’. See further J Rawls, A Theory of Justice (Harvard University Press, Harvard 1971). 6 synonyms of rescue from the Merriam-Webster Thesaurus, plus 23 related words, definitions, and antonyms. Benefits of Corporate Governance. When the firm failed, those parties were left with the costs as the parties with formal legal rights against the debtor never completely internalise the full costs of a business failure.35 Therefore it is argued that insolvency law should look beyond pre-insolvency rights and recognise the interests of parties who lack formal legal rights in the pre-insolvency scenarios as the protection insolvency law gives to these parties is derivative in nature and limited in scope.36, In his later work, Professor Donald Korobkin offered an alternative contractarian model, insisting on his proposition that the main purpose of bankruptcy law is to exist as a distinct system that deals with the general problems of financial distress, and not to specifically address the problem of recovering debt.37 Instead of viewing insolvency law as the set of rules that contractual creditors would agree to from behind the veil of ignorance,38 Korobkin considered bankruptcy legislation to be ‘the product of social exigency, moral conflict, and political compromise’.39 He propounded a normative framework for bankruptcy law based on a hypothetical bargain struck by the representatives of all interests that might be affected by a company’s decline.40 There should be some ‘normative foundations’ of bankruptcy law on which conflicting parties develop their arguments.
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