On 27 June 2019, the University of Cambridge Faculty of Law hosted the 2nd SMU–3CL Cambridge Roundtable on Corporate Insolvency Law. This roundtable is an initiative jointly organised by the Singapore Management University´s Centre for Cross–Border Commercial Law in Asia (CEBCLA) and the University of Cambridge´s Centre for Corporate and Commercial Law (3CL) as part of a new initiative launched by both centres with the purpose of promoting the study of corporate insolvency law.
The event was opened by Eilís Ferran (Pro–Vice–Chancellor of the University of Cambridge) followed by an introduction by Felix Steffek (University of Cambridge) and Aurelio Gurrea–Martínez (Singapore Management University), convenors of this event. The organisers explained that this roundtable series seeks to serve as a global forum for the discussion of corporate insolvency law from a comparative, interdisciplinary, practical, and policy–oriented perspective. By gaining insights from academia and the industry, the series aims to contribute to the better understanding of the challenges for corporate insolvency law around the world.
The 1st SMU–3CL Cambridge Roundtable on Corporate Insolvency Law took place in Singapore on 5 April 2019. It focused on regulatory competition and insolvency reforms around the world, with particular emphasis on Singapore, the United Kingdom, the European Union, Latin America, and the United States. The 2nd Roundtable, held in Cambridge on 27 June 2019, focused on ‘Building Debt Restructuring Hubs’. The event brought together scholars and practitioners from the United Kingdom, Continental Europe, the United States and Singapore, including Mark Arnold (South Square), Eilís Ferran (University of Cambridge), Julian Franks (London Business School), Aurelio Gurrea–Martínez (Singapore Management University), Aart Jonkers (University of Amsterdam), Sarah Paterson (London School of Economics), Felix Steffek (University of Cambridge), Richard Squire (Fordham University), Wai Yee Wan (Singapore Management University), Lars Westpfahl (Freshfields Bruckhaus Deringer) and Andrea Zorzi (Unversity of Florence).
The event started with an analysis of the new restructuring frameworks in Singapore and the European Union. The speakers emphasized that both regions have introduced some features of the US Chapter 11 procedure. They also pointed out that, even though the new restructuring frameworks represent an improvement from their previous regime, the success of these new restructuring tools will depend on a variety of factors. These factors include the ability of the industry and the judiciary to apply the rationales and underlying principles of the new provisions. Another development to monitor in the application of the new rules is how they will work in countries with controlling shareholders.
The second part of the roundtable focused on regulatory competition and how countries may attract foreign companies to conduct a debt restructuring. Most of the speakers emphasized that, in addition to having an appropriate restructuring framework in place, courts and insolvency practitioners play a major role when making a country attractive for debt restructurings. Namely, it was mentioned that, in order to become a leading restructuring hub, both debtors and creditors need to believe in the ability of the country to provide a desirable outcome to all relevant parties. For that purpose, it is essential to have a sophisticated judiciary and a qualified body of insolvency practitioners to bring expertise, value, speed, and certainty to the restructuring process.
As the afternoon progressed, a list of relevant issues emerged, which regulators interested in building debt–restructuring hubs might wish to consider. They are: (i) availability of experts and practitioners offering expertise and experience; (ii) efficient court proceedings in terms of costs and time; (iii) experienced and confident judiciary, usually in the form of centralised insolvency courts; (iv) legitimacy not only of restructuring outcomes but also of the underlying procedures; (v) certainty of law, for example established precedents; (vi) predictability of outcomes, for example as regards classing; (vii) early access to restructuring proceedings; (viii) possibility to restructure not just finances, but also operations; (ix) familiarity of investors with rules and practices; (x) high reputation of the restructuring hub; (xi) adaptability of institutions, actors and regulators to new developments; (xii) a regulatory framework able to cater to different needs, for example of large companies and small and medium sized enterprises (SMEs); (xiii) integration of technology; and (xiv) international recognition and willingness to assist other jurisdictions;
Other aspects discussed in the event included the impact of the rule in Gibbs in the future of cross-border insolvencies, the effectiveness of contracts to deal with the resolution of financial distress, the particular challenges of SMEs facing financial trouble, the impact of Brexit for the leadership of the UK in the restructuring market, as well as the challenges faced by EU Member States to implement the new Directive on Preventive Frameworks recently approved by the European Parliament.
The next SMU–3CL Cambridge Roundtable on Corporate Insolvency Law will be held in the United States in 2020.
Felix Steffek is a University Lecturer at the Faculty of Law of the University of Cambridge and a Senior Member of Newnham College.
Aurelio Gurrea–Martínez is an Assistant Professor of Law at Singapore Management University and the Director of the Ibero-American Institute for Law and Finance.