Claims, Classes, Voting, Confirmation and the Cross-Class Cram-Down
|Author(s):|| doc. JUDr. Tomáš Richter LL.M., Ph.D., Thery, Adrian|
|ISSN / ISBN:|
|Published in:||INSOL Europe|
|Abstract:||This Guidance Note has been written in order to provide assistance to legislative drafters in
the 27 Member States of the European Union tasked with implementing into their national
laws the restructuring frameworks envisaged in Title II of EU Directive 2019/1023 on
restructuring and insolvency.
That task is as difficult as it is important.
Implemented well, the Directive might bring a lot of good to the Member States' credit
markets and economies in general, facilitating early restructurings of financially distressed
businesses and averting the social costs which are often incurred when financial distress is
allowed to develop into full-blown insolvency that must be dealt inside formal court
procedures. If implemented poorly, the Directive might stifle the market process of
reallocation of resources used by failing businesses to more productive uses or even make
credit less available (or more costly) to certain types of business debtors.
What means of implementation will be correct or wrong will to an overwhelming degree
depend on the pre-existing institutions available in the individual Member States. This
includes both the pre-existing legal rules applicable to the resolution of corporate financial
distress and insolvency, and the actual practices through which those rules are being applied
by the respective public authorities and market players. A specific implementing solution that
might work perfectly well in one Member State might bring about disappointing outcomes in
However, certain threshold questions will be very similar across jurisdictions when it comes
to particular topics relevant to corporate restructurings.
In the context of agreeing and adopting a restructuring plan, some of the key questions arise
in relation to classification of investors' claims and interests, grouping these claims and
interests into classes, voting in the classes, and obtaining an official approval of the
restructuring plan after investors have expressed their opinions on it via the voting
It is the purpose of this Guidance Note to flag some of the key issues that national legislators
will want to consider in this particular context when implementing the restructuring
frameworks prescribed by Title II of the Directive, and, at least at times, also to respectfully
suggest which approaches, in the authors' humble opinions, might perhaps be explored more
productively than others.