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Insolvency proceedings and issues relating to personal and business insob vencies are the daily subject of scholarly work and insolvency practice. But what is an insolvency proceeding? And why is this an important question? This article deals with a specific regulatory problem that is raised by these questions, namely: the necessary features of a proceeding in a cross-border context for the proceedings effects to merit immediate, universal recognition. The article's goal is normative, i.e. it seeks to shape insolvency policy and lawmaking. Existing approaches to the regulatory problem examined in this article are used as a stepping-stone to develop a more convincing regulatory model. The article's main thesis is that: in a cross-border context, only fully collective' proceedings should be characterized as insolvency proceedings such that their effects merit immediate universal recognition. Proceedings are fully collective in that sense if individual claim enforcement of all creditors is impeded, e.g., by a stay or by the possibility of rights modifications. Based on this test, U.S. Chapter 11 and the German Insolvenzordnung are insolvency proceedings. The French procedure de sauvegarde financiére accélérée, by contrast, is not an insolvency proceeding, and the English Scheme of Arrangement is not one either.
I. INTRODUCTION
Across the globe, procedures to restructure financially distressed busi' nesses are increasing in importance. In Europe, for example, many Member States are experimenting with novel rescue procedures to save (more) viable but financially distressed businesses.1 Prima facie, many of these procedures are very different from 'classical' insolvency proceedings.2 Unlike classical in' solvency proceedings, restructuring procedures now usually begin before in solvency (as measured on a cash flow or balance sheet test), are conducted by the debtor in possession (DTP.)3 without the appointment of an insolvency administrator, feature only minimal court involvement, and often only affect certain creditors or groups of creditors. The European Commission has re' cently proposed a Directive on 'preventive restructuring frameworks' ('Draft Restructuring Directive', D.R.D.) that seeks to harmonize key features of such 'frameworks' in the European Union.4 The question thus arises: should such procedures nevertheless be characterized as insolvency proceedings?
It is important to clarify this question and thus frame its theoretical and practical relevance before answering it. The characterization problem raised in the preceding paragraph may relate to how insolvency...