Receivership

Abstract: This new edition of Corporate Insolvency Law builds on the unique and influential analytical framework established in previous editions - which outlines the values to be served by insolvency law and the need for it to further corporate as well as broader social ends. Examining insolvency law in the fast-evolving commercial world, the third edition covers the host of new laws, policies and practices that have emerged in response to the fresh corporate and financial environments of the post-2008 crisis era. This third edition includes a new chapter on the growing issue of cross border insolvency and deals with a host of recent developments, notably; the consolidation of the rescue culture in the UK, the rise of the pre-packaged administration, and the substantial replacement of administrative receivership with administration. Suitable for advanced undergraduate and graduate students, professionals and academics, Corporate Insolvency Law offers an organised basis for rising to the challenges of an ever-shifting area of the law.

Abstract: Modern Chapter 11 places control decisions in the hands of the bankruptcy judge and insists on rigid adherence to absolute priority in all cases. In both respects, modern Chapter 11 departs sharply from the equity receivership. The equity receivership governed the reorganization of railroads and other large firms in the 19th Century, and it was fashioned in a way that strongly suggests that it vindicated the creditors' bargain. This paper suggests that, when a speedy auction of the firm is not possible, these twin principles of the equity receivership continue to make sense. When the managers and shareholders cannot be easily separated, control rights should lie in the hands of someone whose loyalties are aligned with the creditors, but the reorganization itself should not affect the value of the managers' equity interest. To use the language of the equity receivership, the "relative priority" of their interests should be preserved. The focus of modern scholarship on the absolute priority rule neglects the question of who controls the assets during the reorganization. It also fails to take account of the role that existing manager/shareholders will play in firms that possess going concern value and cannot be resold in the market. In this environment, the absolute priority rule triggers costly renegotiations that may yield no off-setting advantages over the relative priority rule.

Abstract: This work sets out the fundamental concepts and problem areas of corporate insolvency, considering the basic concept of corporate insolvency in detail. "The Insolvency Act 1986" is analyzed in the context of the general law of property and obligation. The author discusses the legal rules relating to administrative receivership, the grounds by which transactions prior to liquidation of administration may be rendered void or liable to be set aside, and the responsibility of the management of a company to its creditors.

Abstract: This paper is concerned with insurance company insolvency and the ability to identify a firm with a high probability of financial distress. Financial distress is defined as a firm that entered into liquidation, receivership, conservatorship, or rehabilitation during the time period of the study (1966-1971). Multiple discriminant analysis was used in this study to classify firms into two groups (solvent or distress). The model developed was able to classify correctly forty-nine out of fifty-two firms included in the study. One solvent firm was classified as being distress while two of the distress firms were classified as belonging to the solvent group. The six variables that were used to classify firms were: 1) agents balances/total asset ratio, 2) stocks-cost (preferred and common) /stocks-market (preferred and common) ratio, 3) bonds-cost/bonds-market ratio. 4) (loss adjustment expenses paid + underwriting expenses paid) /net premiums written ratio, 5) combined ratio, and 6) premiums written direct/surplus ratio. Insurance regulation involves at least three distinct activities; agent and company licensing, rate regulation, and company solvency. This paper is concerned with the latter of these three responsibilities of the insurance commissionerinsurance company solvency. More specifically, it is concerned with those property-liability insurance companies that experienced financial distress in the time period 1966 to 1971. Financial distress is defined as those firms that entered into liquidation, receivership, conservaThe authors are respectively: Assistant Professor of Risk Management and Insurance in the University of Georgia, and Associate Professor of Finance and Faculty Research Associate, University of Missouri-Columbia. The authors would like to express their appreciation to the University of Missouri Research Council and the Insurance Departments of the states of Arkansas, Illinois, Indiana, New York, Ohio, Pennsylvania, Texas, and especially Missouri for their support and cooperation. This paper was presented at the 1972 Annual Meeting of A.R.I.A. torship, or rehabilitation during this period. Insurance company insolvency has been a major concern of regulators, consumers, and insurance company executives for many years. L. B. Brainerd, past president of the National Association of Casualty and Surety Executives (NACSE), said that insurance company insolvency is the main area of concern of insurance regulation, and that regulation in this area has been lax compared with the other areas of insurance company regulation.' He advocates stricter supervision, rather than reimbursing of policyholders for their losses due to insurance company insolvency. Presently, the National Association of Insurance Commissioners (NAIC) has a model bill that will reimburse policyowners for losses up to $50,000 due to insurance company insolvency. This or simiI Business Insurance. October 25, 1971. n28