Likelihood of Insolvency and the Duties of Directors in the European Directive on Restructuring and Insolvency

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Abstract

If the preventive restructuring frameworks enable viable enterprises to restructure at an earlier stage, do specific director’s duties arise to implement these preventive measures? Corporate law and corporate insolvency law are based on different paradigms that must be carefully balanced. Before a company is insolvent, directors promote the purpose and activities of the company. Yet, when a court declares a company insolvent, the assets of that company become fully directed at addressing creditor’s interests and legal rights. From this moment on, the creditors interests determine the director’s duties. Moreover, the challenge of preventive restructuring is not only one of compliance with the duties imposed by legal provisions but also one of perception. A company that admits to facing difficulties and wants to dialog with creditors must not be having to be forcefully liquidated or in need of new directors.
Original languageEnglish
Pages (from-to)158-169
JournalInsolvency Law Journal
Publication statusPublished - 20 Sep 2021

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