Legal and Practical Impact of Insolvency

Legal and hardheaded Impact of InsolvencyIntroductionThe dissertation is going to consider the local area of insolvency and the impact that it has on contracts that are in place with the insolvent company. A company may ship insolvency proceedings either voluntarily or be forced into the emplacement by creditors and/or members. Similar processes exist for breaknerships1.However, when a company enters into a position of insolvency, this creates a potenti altogethery difficult position in relation to the contracts that have been entered into on behalf of the company, prior to the company entering into insolvency and ultimately be dissolved. This question paper will look at the effects that insolvency has on these contracts, both in terms of commercialized contracts and employment contracts. It will consider not only the efficacious impact but also the earth of how these situations are dealt with regarding the concreteities2.Hypothesis It is suggested that when a company en ters into insolvency proceedings, whether on a voluntary basis or on a compulsory basis, the heavy structure of what should happen to the pertinent contracts is not, in fact, in line with what genuinely occurs. In reality, those involved in company insolvency will ensure that the contracts simply do not stop but rather that economic value which exists in the contracts is maintained as much as is doable in the circumstances3.ObjectivesThe main objectives of this interrogation are to consider the legal and real impact of insolvency proceedings on contracts that are in place with the newly insolvent company. As a company can enter into contracts as its own distinct legal entity, this can result in a position where single company of the contract ceases to exist4.The aim of the research is to consider what should happen from a purely legal indicate of view in relation to the contracts that a company has entered into when it becomes insolvent and how this relates to the reality of what actually occurs. Due to the personality of commercial and employment contracts and the different legal principles that apply to these types of contracts and the potentially different implications that may arise from the treatments of these contracts, they should be analysed independently.It is suggested that the strict legal position is rarely followed due to the complex nature of the situation and this research aims to go out whether or not this farmingment is accurate5.MethodologySeveral different methods will be followed during this research. Initially, research and analysis will be conducted into what the strict legal position should be. This will involve looking at the relevant legislation and the way in which this should be interpreted strictly in relation to both types of contracts6. later the strict legal position has been ascertained, the causal agent law relating to how this legislation has been applied, practically, in the courts will be established. A range of contracts (both commercial and employment) will be considered and looked at in order to ascertain what the agreed clauses state should happen during insolvency and how these issues are dealt with during court cases.At this point, it would also be helpful to consider what happens in other(a) jurisdictions, both across the European Union and in one other developed country, in discovericular, much(prenominal) as the USA. Research will also be conducted as to what is employ as the main utility(a) to insolvency, i.e. distressed business sales or carving up of assets.Perceptions are important in this field. Therefore, part of the research will be conducted with first hand interviews and questionnaires of business people (ideally company directors) on how they consider the contracts would work in the resultant of insolvency. This perception will then be compared with what is written in the contracts to canvass if the real perceptions meet with the legal drafting7.The research will focus on gaining a strict legal view as well as an understanding of what happens, in reality, in relation to the basic principles of contract, i.e. is thither any difference between executed and non-executed contracts? Are there any differences, in reality, to the way contracts that are now frustrated are dealt with, in comparison to ones that could be performed adequately by another party?LimitationCommercial and employment contracts are often sensitive in their nature and not pronto available for analysis. More specifically, companies that are entering into an insolvency scenario will be extremely reluctant to give nurture readily that relates to their commercial contracts. Many deals that are done with a company which is entering insolvency will be negotiated rapidly and with commercial secrecy, making the research particularly difficult to undertake.Insolvency is often something that businesses are simply extemporaneous to consider or discuss, as discussion of such issues can be seen as a home of weakness. On this basis, it may prove difficult to speak to a sufficient number of directors about insolvency nutrition8.ResourcesResources used in this research will be relatively variable. Firstly, and arguably the most important resource, will be the legislation that underlies the area of insolvency law9. This is the fundamental part of the legal area of insolvency and will be the background for the rest part of the research.Case law and analysis of legislation will then form the secondary part of the research when looking at the way in which the legislation actually operates on a practical level. Once the legal position has been established, direct contact will have to be made with private companies.These resources will include questionnaires, direct analyses of the relevant contracts and perceptions of the contractual terms that are in place, in the event of insolvency. Commercial and employment contracts will be looked at separately due to their consid erable differences in content, legal position and scope10.TimetableThis research is expected to span a period of at least 8 months. The sign part of the research considering the legal context and provisions of the relevant legislation will create the excogitation of the research and will be undertaken in the first 2 months of the research timetable. Towards the end of the first 2-month period, the case law and journals analysing the relevant legislation will provide the supplemental part of this initial research.After a full understanding of the legislation has been obtained, the research will move on to considering the practical reality of what happens in insolvency situations. Questionnaires and interviews will be conducted over a period of 2 months, with the remaining 3 months of the research being used to consolidate and conclude, based on the tuition gathered.Suggested ChaptersSuggested initial chapters will include methodology and research background. In the main body of th e research, the findings will be broken down to contain legislative provisions (both employment and commercial), case law and legal analysis relating to the legislation, directors perceptions, contractual provisions and overall conclusions drawing all information together11.It is anticipated that the conclusion section will draw together all of the above information and findings to establish whether or not the legal provisions relating to insolvency are followed, in practice, when a company enters into a position of insolvency.BibliographyBrousseau, Eric, Glachant, Jean-Michel, The economics of annunciations Theories and Applications, Cambridge University Press, 2002Dickerson, A. Mechele, Insolvency Principles and the Odious Debt Doctrine The Missing Link in the Debate, honor and Contemporary Problems, 70, 2007Fletcher, Ian F., Insolvency in Private foreign lawfulness National and multinational Approaches, Oxford University Press, 1999Goode, Royston Miles, Principles of Corpor ate Insolvency Law, Sweet Maxwell, 2005Marsh, S.B., Soulsby, J., Business Law, Nelson Thornes, 2002McKendrick, Ewan, Commercial Aspects of Trusts and fiduciary Obligations, Oxford University Press 1992Schwartz, Alan, A Contract Theory Approach to Business Bankruptcy, Yale Law Journal, 107, 1998Schwartz, Alan, Bankruptcy Contracting Reviewed, Yale Law Journal, 109, 1999Thorpe, Chris P., Bailey, John C.L., Commercial Contracts A Practical Guide to Deals, Contracts, Agreements and Promises, Institute of Directors, Kogan Page Publishers, 1999Unt, Lore, International Relations and International Insolvency Cooperation Liberalism, Institutionalism, and Transnational Legal Dialogue, Law and insurance policy in International Business, 28, 1997Yemin, Edward, Bronstein, Arturo S., The Protection of Workers Claims in the Event of the Employers Insolvency, International Labour Office, International Labour Organization, 1991Footnotes1 Fletcher, Ian F., Insolvency in Private International Law N ational and International Approaches,Oxford University Press, 19992 Brousseau, Eric, Glachant, Jean-Michel, The Economics of Contracts Theories and Applications, Cambridge University Press, 20023 Yemin, Edward, Bronstein, Arturo S., The Protection of Workers Claims in the Event of the Employers Insolvency, International Labour Office, International Labour Organization, 19914 Marsh, S.B., Soulsby, J., Business Law, Nelson Thornes, 20025 Schwartz, Alan, A Contract Theory Approach to Business Bankruptcy, Yale Law Journal, 107, 19986 Dickerson, A. Mechele, Insolvency Principles and the Odious Debt Doctrine The Missing Link in the Debate, Law and Contemporary Problems, 70, 20077 Goode, Royston Miles, Principles of Corporate Insolvency Law, Sweet Maxwell, 20058 Schwartz, Alan, Bankruptcy Contracting Reviewed, Yale Law Journal, 109, 19999 Thorpe, Chris P., Bailey, John C. L., Commercial Contracts A Practical Guide to Deals, Contracts, Agreements and Promises, Institute of Directors, Kogan Page Publishers, 199910 Unt, Lore, International Relations and International Insolvency Cooperation Liberalism, Institutionalism, and Transnational Legal Dialogue, Law and Policy in International Business, 28, 199711 McKendrick, Ewan Commercial Aspects of Trusts and Fiduciary Obligations, Oxford University Press, 1992