4.2 Management of Risk: General Remarks 97“cash” (England),^44 others would regard the market value of the debt as a consid-
eration “other than cash” (Germany).^45
The restructuring of bond issues on a contractual basis depends on the govern-
ing law and the terms of the loan. It typically requires either consensus or a major-
ity decision.
In the German case of Deutsche Nickel AG, the restrictive terms of the German Bond Act of
1899 (Schuldverschreibungsgesetz, SchVG) forced the company to move to England and
finish its restructuring there. As the old Act is less flexible than English law, it is in the
process of being modernised.^46 The “London Approach“, the INSOL principles, and debt
restructurings under English law in general can better be discussed in specialist books.^47
In many countries, restructuring can be based on insolvency laws and proceedings
modelled on Chapter 11 of the US bankruptcy code. In the past, the insolvency laws
of European countries were very severe. The board of a company that became un-
able to pay its debts often had a duty to file for insolvency within a short period of
time and insolvent companies often ended up being liquidated. Many countries have
introduced reforms for the purpose of rescuing firms (see Volume I).
The Regulation on insolvency proceedings has, in effect, made it easier for
creditors and firms to seek insolvency in countries other than a company’s official
home. The Regulation applies to “collective insolvency proceedings which entail
the partial or total divestment of a debtor and the appointment of a liquidator”^48
and therefore also to collective proceedings for the restructuring of firms.^49 The
Regulation provides for the international jurisdiction of courts (or similar bodies)^50
and sets out the governing law.
The Regulation enables the main insolvency proceedings to be opened in the
Member State where the debtor has the centre of his main interests and secondary
proceedings to be opened in the Member State where the debtor has an establish-
ment. However, the main rule is that the law of the Member State of the opening
of the proceedings (lex concursus) determines all the effects of the insolvency
(^44) Sections 589(5)(a) and 583(3) of the Companies Act 2006.
(^45) Hüffer U, AktG (2002) § 27 number 25: “Die Probleme liegen nicht in der Einlagefähig-
keit, sondern der Bewertung.” “Werthaltig ist die Forderung nur insoweit, als die AG
imstande wäre, sie ohne Kapitalerhöhung zu bezahlen ...”
(^46) In February 2009, a Bill for a new Bond Act was passed (“Gesetz zur Neuregelung der
Rechtsverhältnisse bei Schuldverschreibungen aus Gesamtemissionen und zur ver-
besserten Durchsetzbarkeit von Ansprüchen von Anlegern aus Falschberatung”).
(^47) For the “London Approach”, see Finch V, Corporate Insolvency Law. Perspectives and
Principles. Cam U P, Cambridge (2002) pp 218–229. See also INSOL International,
Statement of Principles for a Global Approach to Multi-Creditor Workouts.
(^48) Article 1(1) of Regulation 1346/2000 (Regulation on insolvency proceedings).
(^49) Article 2(a) and Annex A of Regulation 1346/2000 (Regulation on insolvency proceed-
ings).
(^50) Recital 10 of Regulation 1346/2000 (Regulation on insolvency proceedings): “Insol-
vency proceedings do not necessarily involve the intervention of a judicial authority; the
expression ‘court’ in this Regulation should be given a broad meaning ...”