Funding Corporate Rescue: the Impact of the Financial Crisis

摘要

Insolvency reform across many jurisdictions over the last twenty years has focused on the development of legislation to facilitate business reorganizations. However, any regime which involves rescue requires a degree of support from the commercial environment. The rescue regimes may therefore be severely tested in situations where there is a general economic downturn such as the world has experienced in the last two years. This article evaluates empirically the perceived impact of the Global Financial Crisis on the opportunities for rescue on the basis of a survey we set out among insolvency professionals worldwide. Most of the 562 respondents to the survey from 56 jurisdictions agree that the credit crisis of 2007 stifled the access of distressed business to financial facilities so needed for successful restructuring. It retrenched the access to financial facilities and thus impacted negatively the prospects for pre-venting or even ending the bankruptcy procedure with reorganization instead of winding up of the estate assets. Several reasons that have been pointed out by the insolvency professionals in our survey are discussed in this article. We conclude that somewhat paradoxically just when rescue is needed the most, the practical reality may be that businesses will not be saved if there is insufficient support available either by way of additional credit or because other (funding) creditors are so financially stressed themselves that they are unable or unwilling to support any potential rescue.