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University Degree: Insolvency Law
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Commerce among nations will be greatly enhanced and facilitated by an international understanding that particular principles or guidelines in recovering properties, assets in cases of insolvency will be available in the event of a business failure. Therefore with the increasing recognition that an agreed jurisdictional framework is the way forward, the Insolvency Act 1986 and the EC Regulation 2002 were enacted and has since played a huge part in insolvency proceedings and especially in cross border conflicts. Two formal cooperation mechanisms are recognised under English law and under the laws and this include Section 426 of the Insolvency Act and the European Council Regulation on Insolvency Proceedings.
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In the United Kingdom, the rules relating to jurisdiction, recognition and enforcement are likely to undergo profound change, in so far as Britain's partners in the European Union are concerned, with the passing of the Insolvency Regulation. The practical impact of the Insolvency Regulation has already been felt, with the adoption of detailed practice rules that take into account the structure of the Insolvency Regulation in adapting practice conditions in line with the advent. But in choosing which organization is decisive in a flawed environment with deficient beings and inadequate resources.
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Pari-Passu. The parripassu principle has been described as a most fundamental principle of corporate insolvency law which holds that in a winding up, creditors shall share rateably in the common pool
Hence, it avoids the costs of dealing with claims on their individual merits. Moving on to the justification on the grounds of fairness, it has been seen as a way of preventing an intra-class race to enforce claims,( which will only benefit the first few) and can therefore be described as bringing about equality of treatment between unsecured creditors. In the light of the given statement, and for the purpose of clarity, this discussion would therefore focus firstly, on whether the parri- passu principle in fact provides an efficient and fair ground rule for allocating the insolvency estate, and secondly,
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Does the laws concerning directors of insolvent companies strike the right balance of protecting between protecting the public and encouraging entrepreneurship
where at some time before the commencement of the winding up of the company, they knew or ought to have concluded that there was no reasonable prospect that the company would avoid going into insolvent liquidation.3 Courts are not to make an order against directors if satisfied that after the directors first knew or ought to have concluded that there was no reasonable prospect that the company would avoid going into insolvent liquidation, they took every step with a view to minimising the potential loss to the company's creditors as they ought to have taken.4 The section was designed to
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option for insolvent companies, however, as companies became critically important to commerce, legislation as seen above was developed which introduced other options to troubled companies.10 If insolvent companies are liquated as soon as possible and the creditors are paid out, one of the basic aims of corporate insolvency law is ignored; 'to facilitate the recovery of companies in times of financial crisis and to stimulate the rehabilitation of insolvent companies and businesses as going concerns,'11 The main aim of this text is to provide an outline of the various options available to the debtors that can significantly aid in the rescuing of an insolvent company.
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