The Experts below are selected from a list of 15 Experts worldwide ranked by ideXlab platform
R.j. De Weijs - One of the best experts on this subject based on the ideXlab platform.
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Harmonization of European Insolvency Law: Preventing Insolvency Law from Turning against Creditors by Upholding the Debt–Equity Divide
European Company and Financial Law Review, 2018Co-Authors: R.j. De WeijsAbstract:In essence, insolvency law is collective debt collection law. By means of a collective procedure, insolvency law seeks to ensure that the going concern value is captured for the creditors. Where the Shareholders possess the dominant voice outside of insolvency, in insolvency creditors take over this position and become the economic owners of the company. In three different settings Shareholders can interfere with the insolvency process and try to capture all the value in the company or at least leave the creditors with the liquidation value and usurp the going concern surplus. These three settings are (i) Shareholders as secured lenders, (ii) Shareholders as acquirers out of pre-packs or other asset sales and (iii) Shareholders under composition plans. The proposed EU Directive on Preventive Restructuring Frameworks and Second Chance (November 2016) contains measures in the field of composition plans as part of a preventive restructuring. The proposed directive addresses the potential problem that Shareholders would usurp the going concern surplus by introducing the Absolute Priority Rule. The proposed directive should be considered a first step in the right direction. It should, however, be realized that the protection offered in the proposed directive could easily be circumvented by a Shareholder Financing not with capital but with secured Shareholder loans. Also, if pre-pack sales or other sale processes do not limit interference by Shareholders, Shareholders will prefer the route of an asset sale above a restructuring.
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Harmonization of European Insolvency Law: Preventing Insolvency Law from Turning Against Creditors by Upholding the Debt-Equity Divide
SSRN Electronic Journal, 2017Co-Authors: R.j. De WeijsAbstract:In essence, insolvency law is collective debt collection law. By means of a collective procedure, insolvency law seeks to ensure that the going concern value is captured for the creditors. Where the Shareholders possess the dominant voice outside of insolvency, in insolvency creditors take over this position and become the economic owners of the company. In three different setting Shareholders can interfere with the insolvency process and try to capture all the value in the company or at least leave the creditors with the liquidation value and usurp the going concern surplus. These three settings are: (i) Shareholders as secured lender, (ii) Shareholders as acquirers out of pre-packs or other asset sales and, (iii) Shareholders under composition plans. The proposed EU Directive on Preventive Restructuring Frameworks and Second Chance (November 2016) contains measures in the field of composition plans as part of a preventive restructuring. The proposed directive addresses the potential problem that Shareholders would usurp the going concern surplus by introducing the Absolute Priority Rule. The proposed directive should be considered a first step in the right direction. It should, however, be realized that the protection offered in the proposed directive could easily be circumvented by a Shareholder Financing not with capital but with secured Shareholder loans. Also, if pre-pack sales or other sale processes do not limit interference by Shareholders, Shareholders will prefer the route of an asset sale above a restructuring.
Caren Sureth - One of the best experts on this subject based on the ideXlab platform.
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the impact of thin capitalization rules on Shareholder Financing
2008Co-Authors: Alexandra Masbaum, Caren SurethAbstract:From a tax planner's point of view, it is often attractive to choose debt over equity Financing. As this has led to an increase of debt Financing of corporations, many countries have introduced thin capitalization rules to secure their tax revenues. We analyze the influence of section 8a of the German Corporate Tax Code on corporate capital structure decisions. Furthermore, the impact of the new interest barrier is taken into consideration. The existence of the Miller equilibrium as well as definite Financing effects depend significantly on the fraction of long-term debt, of substantial Shareholders and when capital gains are realized.
Ginevri - One of the best experts on this subject based on the ideXlab platform.
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Substance vs. Form in Shareholder Financing: How Does This Affect the Corporate Interest? *
2014Co-Authors: Ferruccio, Maria, Sbarbaro, Andrea, Sacco, GinevriAbstract:This article analyzes the “substance versus form” contrast in the context of Shareholders’ Financing, exploring how it simultaneously affects both the corporate creditors’ protections and the long-term growth of the company. In particular, the paper describes the role of Shareholders’ Financing in the corporation capitalization and its qualification under the current “substance versus form” debate; then it illustrates the substantial approach commonly taken by the case law and explores the effects of the above mentioned debate on the corporate creditors’ protections; finally, the paper examines the impact of this practice on the governance side. This article argues that, in a context where substance should govern over form, the most acceptable standards of review should be those that refuse a mechanical application of the formal factors and privilege a comprehensive approach that can lead to a common sense evaluation of the facts and circumstances surrounding a transaction. In other words, the so-called “substantial factors” should certainly be helpful in reaching such a common sense understanding of the transaction since they may show the objective intent of the parties. In short, judicial tools that legitimate and expand the recharacterization of debt to equity are advisable devices because at the same time (1) they strengthen the (actual) corporate creditors’ protections; and (2) they foster a long-term growth of the company which benefiting from a conversion of its financial resources into equity (i.e., perpetual capital), may pursue a business strategy more focused on a sustainable and careful development of the enterprise.
Alexandra Masbaum - One of the best experts on this subject based on the ideXlab platform.
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the impact of thin capitalization rules on Shareholder Financing
2008Co-Authors: Alexandra Masbaum, Caren SurethAbstract:From a tax planner's point of view, it is often attractive to choose debt over equity Financing. As this has led to an increase of debt Financing of corporations, many countries have introduced thin capitalization rules to secure their tax revenues. We analyze the influence of section 8a of the German Corporate Tax Code on corporate capital structure decisions. Furthermore, the impact of the new interest barrier is taken into consideration. The existence of the Miller equilibrium as well as definite Financing effects depend significantly on the fraction of long-term debt, of substantial Shareholders and when capital gains are realized.
Ferruccio - One of the best experts on this subject based on the ideXlab platform.
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Substance vs. Form in Shareholder Financing: How Does This Affect the Corporate Interest? *
2014Co-Authors: Ferruccio, Maria, Sbarbaro, Andrea, Sacco, GinevriAbstract:This article analyzes the “substance versus form” contrast in the context of Shareholders’ Financing, exploring how it simultaneously affects both the corporate creditors’ protections and the long-term growth of the company. In particular, the paper describes the role of Shareholders’ Financing in the corporation capitalization and its qualification under the current “substance versus form” debate; then it illustrates the substantial approach commonly taken by the case law and explores the effects of the above mentioned debate on the corporate creditors’ protections; finally, the paper examines the impact of this practice on the governance side. This article argues that, in a context where substance should govern over form, the most acceptable standards of review should be those that refuse a mechanical application of the formal factors and privilege a comprehensive approach that can lead to a common sense evaluation of the facts and circumstances surrounding a transaction. In other words, the so-called “substantial factors” should certainly be helpful in reaching such a common sense understanding of the transaction since they may show the objective intent of the parties. In short, judicial tools that legitimate and expand the recharacterization of debt to equity are advisable devices because at the same time (1) they strengthen the (actual) corporate creditors’ protections; and (2) they foster a long-term growth of the company which benefiting from a conversion of its financial resources into equity (i.e., perpetual capital), may pursue a business strategy more focused on a sustainable and careful development of the enterprise.