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The law of not registering fiduciary creditors has significant consequences for the enforceability and validity of fiduciary guarantees. Based on Law Number 42 of 1999 concerning Fiduciary Guarantees, creditors receiving fiduciaries must be registered as members of the Fiduciary Guarantee Council. Failure to register a fiduciary creditor can give rise to legal problems in terms of executing fiduciary guarantees, because the guarantee cannot be used as evidence or a legal resource. Therefore, efforts need to be made to prevent this from happening and ensure that creditors who receive fiduciaries meet the requirements to be registered as members of the Fiduciary Guarantee Council. This research uses a qualitative data analysis approach to conduct normative legal studies. The main legal sources in this research are primary legal sources. The conclusion of this research is that an unregistered fiduciary agreement has legal consequences, where the creditor does not have a preferred position in the event of bankruptcy and only acts as a concurrent creditor. And if the debtor defaults, the creditor does not have direct executorial rights over the fiduciary collateral, if the debtor is unable to pay off the entire debt at the agreed time. [ABSTRACT FROM AUTHOR]

There are various ways by which a company can raise funds. The easiest is through debt financing, that is creating debt securities. When a debt is created, a security equivalent to the debt amount is given by the debtor as "collateral." The "collateral" can either be a tangible or intangible asset. Tangible assets are those which could be perceived by senses while intangibles include intellectual property rights of a company. Usually, the documents of IP rights are used to create security interest. The created IP sometimes will be again used to create a pledge, in that case, the question as to who will have the authority of the property is still not clarified in Indian laws. The paper tries to cover international principles that could be applied such rule of perfection to cater to the development of a solution. [ABSTRACT FROM AUTHOR]

The Japanese government has established an advisory body to amend the laws concerning security interests for facilitating borrowing by companies (especially small- to medium-sized enterprises). This new legislation is expected to be enacted as early as 2023. This article explains the background and current discussions concerning the new legislation, which will have a significant impact on insolvency and bankruptcy practices. [ABSTRACT FROM AUTHOR]

Studies indicate that a consistent rise in insolvency risk should be addressed at the strategic level. Vigilant boards can use leverage maturity structure as a tool to control insolvency risk. However, according to the information asymmetry theory, leverage acquisition is subject to the presence of fixed assets which can be used as collateral. The current study focuses on the relationship between board vigilance and insolvency risk, mediated by debt maturity and moderated by fixed collaterals in Pakistan based non-financial firms. A data set of 284 firms is constructed between the years 2013 and 2017. Hierarchical multiple regression analysis is used to test the proposed hypothesis using ordinary least squares (OLS) and panel corrected standard errors (PCSE) regression estimators. The results indicate that debt maturity mediates the relationship between board vigilance and insolvency risk. New information is generated about the fixed collaterals, and these negatively moderate the relationship between leverage maturity and emerging market z-score indicating inefficiency in the usage of fixed assets as collaterals. These results are robust to both regression techniques confirming that the non-productive fixed collaterals overshadow the positives of tangible assets in asset structure. [ABSTRACT FROM AUTHOR]

The article offers information on the sales tax claim in the determination of the insolvency. It mentions a scenario where B-KG (KG), a company that provided taxable services, agreed to an assignment of payment claims from its business activities as security for the loans granted to it. It discusses the regulation of collateral delimitation agreement.

Prior to enactment of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, one of the most vexing and controversial questions in the consumer bankruptcy arena was whether a debtor who was current on her payments to a secured lender could retain the collateral both during and after the bankruptcy case by continuing to make the scheduled payments on the loan and otherwise avoid any act or omission that might pose a threat to the value or security of the collateral. No fewer than nine of the eleven circuit courts of appeals addressed this question and split as evenly as nine courts possibly could (5-4). The practice is known as "ride-through" and the 2005 Act, itself a screed against perceived debtor abuse of the bankruptcy law, set out to resolve the matter by eliminating the practice. However, as was true in connection with many other areas that the legislation addressed, Congress made a hash of it. The result has been nearly 15 years of continued litigation and even more confusion, unpredictably, and inconsistency than pervaded prior to the 2005 Act as courts have struggled to make sense of the poorly and illogically drafted amendments. The current situation compromises the integrity of the system and exposes debtors and creditors alike to costly uncertainty. Recognizing that the law governing individual bankruptcy needs to be tailored to have predictable and sensible consequences, this Article, after considering the myriad permutations that ride-through cases have taken since 2005, maps out a solution that it is contended takes into account of the legitimate interests of creditors as well as debtors. It also measures the consonance of the proposed approach for court-protected ride-through within the framework of the larger normative goals of the consumer bankruptcy system. [ABSTRACT FROM AUTHOR]

Before the global financial crisis, the proportion of households defaulting on the mortgage while remaining current on the unsecured loan was almost the same as the proportion of households current on the mortgage but defaulting on the unsecured loan. After the crisis, the former ratio became higher than the latter. By using a heterogeneous agent model with the mortgage and the unsecured loan, I examine how the order of defaults changed before and after the crisis. I then analyze the impacts of unsecured credit policies on households' mortgage and unsecured loan defaults. My quantitative exercise shows that both default rates can decrease as the cost for unsecured loan defaults increases. [ABSTRACT FROM AUTHOR]

This paper studies how the ease of repossessing collateral in bankruptcy affects corporate leasing policy. Using plausibly exogenous variation of the ability to repossess assets generated by state antirecharacterization laws, I find that the antirecharacterization laws, which make collateral repossession easier for secured lending, reduces corporate leasing. Consistent with the argument that only financially constrained firms value additional debt capacity because of the increased ability to repossess assets, I find that the effect concentrates in financially constrained firms. I also find that the effect is much stronger for firms with less specific assets. In addition, I find that the laws also affect leverage, cash holding, and corporate investment. This paper was accepted by Gustavo Manso, finance. [ABSTRACT FROM AUTHOR]

While filing for bankruptcy does not seem appealing for any debtor or creditor regardless of the jurisdiction, the reluctance to use the bankruptcy system varies across countries. This article explores the underlying reasons and economic effects of the low usage of bankruptcy procedures in Spain, where the rate of business bankruptcies is one of the lowest in the world. Some authors have argued that the low usage of bankruptcy procedures in Spain is due to a "cultural" problem faced by Spanish entrepreneurs. According to this hypothesis, the lack of a "bankruptcy culture" makes Spanish entrepreneurs afraid to use of the bankruptcy system. In this paper, however, I advocate for a totally different hypothesis. In my opinion, the low rate of business bankruptcies in Spain is not due to a "cultural" problem but to an institutional one. Namely, I argue that the low rate of business bankruptcies is better explained by the unattractive insolvency regime for debtors and creditors traditionally existing in Spain, as well as other legal and institutional factors including a creditor-friendly corporate law, an efficient mortgage system, a rigid labor law, and a poor law of secured transactions. All these factors encourage both debtors and creditors to avoid the use of insolvency proceedings either by minimizing the risk of insolvency or by postponing--if possible, and even avoiding--the bankruptcy system once a debtor becomes insolvent. By exploring the underlying reasons for the low use of the bankruptcy system in Spain, this paper seeks to contribute to the general understanding of the low rate of business bankruptcies around the world while assessing the economic effects potentially associated with this low usage of bankruptcy procedures. The paper concludes with several recommendations to make use of the bankruptcy system more appealing for debtors and creditors. [ABSTRACT FROM AUTHOR]

A vendor who fails to comply with UCC Article 9's strict requirements does so at the risk of forfeiting rights in its consigned inventory to the consignee's secured creditors with a perfected blanket security interest in the consignee's inventory, and being left with a low priority general unsecured claim. [ABSTRACT FROM AUTHOR]

Copyright of Revista E-mercatoria is the property of Universidad Externado de Colombia, Departamento de Derecho Comercial and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

This article is concerned with debate in England as to whether English law has tipped too far in favour of promoting corporate bankruptcy law’s policy concerns to the detriment of an effective secured transactions law regime, and debate in America as to whether reform to secured transactions law has tipped too far in favour of secured transaction law’s policy concerns to the detriment of an effective corporate bankruptcy regime. Through a detailed analysis of the evolutionary history of secured transactions and corporate bankruptcy law and policy in both America and England, the article analyses why each jurisdiction approaches balancing the policy objectives in a fundamentally different way, and the role which the very different institutional environments in corporate bankruptcy have played in mediating between them. It argues that this legal and institutional evolutionary history suggests relatively modest ongoing reform in both jurisdictions, closely adapted to local conditions. [ABSTRACT FROM AUTHOR]

Copyright of Revista E-mercatoria is the property of Universidad Externado de Colombia, Departamento de Derecho Comercial and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

This Article offers a theory of secured credit that aims to answer fundamental questions that have long percolated in the bankruptcy and secured transactions literatures. Are security interests property rights, contract rights, or something else? Why do secured creditors enjoy a priority right that, in bankruptcy, requires them to be paid in full before other debt holders recover anything? Should we care that secured credit creates distributional unfairness when companies cannot pay their debts? This Article argues that security interests are best understood as a form of "limited liability property." Limited liability--the privilege of being legally shielded from liability that would normally apply--has long been considered the quintessential feature of equity interests. But limited liability is in fact a critical feature of security interests as well. When examined closely, security interests enable their holders to assert several privileges of ownership without bearing any of ownership's concomitant burdens. In seeking to explain security interests, this Article offers a comprehensive account of capital investment more generally, systematically examining the various property-like interests held in corporate capital structures. Though critics have bemoaned the inequity associated with the priority right in bankruptcy--a secured debtholder can get all its assets back in the event of a bankruptcy while unsecured creditors like unpaid employees get nothing--this priority right is an inevitable consequence of recognizing security interests as a form of direct ownership. The real problem lies in the scope of secured debt holders' limited liability protections. While equity holders enjoy limited liability, in return they are paid only after other claims in the event of insolvency. Secured lenders, by contrast, collect first, and are thus arguably overprotected. Understanding security interests as limited liability property, then, offers a more elegant way to understand capital investment at the theoretical level while also helping us recognize when and where our system of secured debt may need reform. [ABSTRACT FROM AUTHOR]

This paper argues that the decision of the U.S. Court of Appeals for the 9th Circuit in the case involving confirmation of the cram down plan proposed by Sunnyslope Housing Ltd. Partnership in its Chapter 11 bankruptcy case, has failed in properly interpreting the Supreme Court's holding in Associates Commercial Corp. v. Rash and in understanding the text and structure of the Bankruptcy Code. Topics covered include collateral valuation in reorganizations and Sunnyslope as a lien priority issue.

The article focuses on the maintenance of risk of a systemic economic collapse. Topics discussed include genesis of equality in insolvency law and its impact on creditors; fundamental concepts of commercial law as applicable to secured and unsecured creditors; and maintenance of secured transactions. It also mentions about Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.

Four developments warrant revisiting the debate on full priority and taking steps to implement a partial priority system. The first development is that secured credit increasingly results in a complete lack of funds to cover the expenses of the insolvency procedure. The second development is that secured credit is often not doing what the proponents of full priority argue that it is doing, namely facilitating growth. Instead, it is increasingly used to simply facilitate the leverage of the company without any intent to invest in the company. Thirdly, the plight of unsecured creditor is deteriorating in new ways. Trade creditors in particular are increasingly forced into the position of being suppliers of credit, turning non-adjusting creditors into what can be referred to as adjustable creditors. The fourth development is that these trade creditors find insolvency laws increasingly working against them instead of for them. [ABSTRACT FROM AUTHOR]

While bankruptcy protection remains an instrument of last resort, a recent wave of petitions has aroused the interest of key participants in the municipal bond market. To date, 12 states unconditionally authorize municipalities to file for bankruptcy protection, 15 states require that municipalities satisfy certain threshold requirements, while the remaining 23 states either explicitly prohibit or have not specifically provided this authority to municipal governments. As bankruptcy protection rules influence bondholder risk exposures, we empirically test the significance of the state-specific bankruptcy eligibility requirements on borrowing costs. In a representative sample of general obligation bonds, empirical results suggest that municipalities eligible to file for bankruptcy protection pay a premium. The premium is higher if issuers are unconditionally authorized to file for bankruptcy protection, especially for debt with longer maturities. Findings also show that there are benefits associated with statutory liens; however, these benefits diminish with maturity. [ABSTRACT FROM AUTHOR]

Secured transactions that cross national borders often involve assignments of receivables. Lawyers dealing with these transactions face the question of which law is applicable to the proprietary effects of assignment. This problem takes on new dimensions when insolvency issues are relevant to the case as well. This article discusses the possible approaches governing the effectiveness of assignments against third parties. For this purpose, the authors investigate both the EU law and the recently adopted UNCITRAL Model Law on Secured Transactions, weighing the respective provision's advantages and disadvantages. The general considerations are each followed by case examples. After an outline of the regulations set by the EU Insolvency Regulation and their interplay with the proprietary effects of assignments, it is proposed that an alignment of the law applicable to the proprietary effects of the assignment with the law governing insolvency would provide the best solution. In any case, the authors argue, there should be some kind of legal regulation on the European level. [ABSTRACT FROM AUTHOR]

This article discusses the legal framework for financial collateral arrangements, which play a pivotal role in the world s financial markets. Part I sets out the multiple pieces of European and international legislation relating to these arrangements and maps complexities inherent in the current legal framework. Difficulties arise in part due to the sheer number of currently applicable legislative instruments, but also because they reflect three stages of legal policy enshrined in traditional property and insolvency law rules, the liberal rules introduced towards the end of the 1990s and early 2000s, and the regulatory approach taken after the global financial crisis. Part II gives concrete examples of the resulting complications that market participants face in relation to issues such as possession or control of collateral, the right to use collateral, enforcement, insolvency, recovery and resolution, and the conflict of laws. Part II also suggests ways to improve the current European legislative framework. Key issues to be considered to this end include personal scope, the experiences of the financial crisis, international compatibility, and technological developments. [ABSTRACT FROM AUTHOR]

The article examines the nexus between bankruptcy law and the federal crop insurance program by analyzing some of the key issues litigated in court. It mentions that the issues of replacement liens on crops; allegations of misrepresentation and its effects on a bankruptcy proceeding. It also mentions that setoffs; adequate protection of security interests; statutes of limitations and the crop insurance proceeds as a part of the bankruptcy estate and preemption.

Successive amendments to the Spanish Insolvency Act, carried out by the Spanish Government and Parliament over 2014 and 2015, as well as new judicial interpretations in insolvency-related matters, have led to a state of scarce regulatory consistency and interpretative doubts that affect, among others, the rules concerning secured creditors upon insolvency. In this article, we offer a selection of legal issues related to this class of creditors--pre-insolvency stays, distinction between "security" and "claim" in terms of priority under financial collateral arrangements, "value " of the security in the new insolvency and pre-insolvency systems, pledges on future receivables, and recent developments in the Supreme Court's case law on avoidance Law--as an up-to-date guide which should be of interest to foreign investors facing the risk of insolvency of companies in Spain. [ABSTRACT FROM AUTHOR]

Converting an unsecured debt into a secured debt instinctively seems like it could be an unfair preference since it advantages one creditor over others. However, one of the requirements for an unfair preference stipulated in s 588FA is that the preferential dealing be “in respect of an unsecured debt”. This may present a difficulty for the simple reason that the debt is no longer unsecured after it has been converted into a secured debt and hence the preferential dealing is not “in respect of an unsecured debt”. This article considers the history, text and policy of s 588FA and argues that the words “in respect of an unsecured debt” present no obstacle to the conversion of an unsecured debt into a secured debt constituting an unfair preference. [ABSTRACT FROM AUTHOR]

Secured credits have a key importance in insolvency proceedings. Their treatment varies from jurisdiction to jurisdiction depending on policy considerations. However, in general each jurisdiction seeks a balance between the protection of the individual rights of the secured creditor on the collateral and the protection of the integrity and value of the estate. The main mechanism to protect the estate is the stay of proceedings or enforcement actions, which may affect the secured creditors to a greater or lesser extent. The following provides a brief comprehensive description of the types of security interests available in Argentina and the treatment of secured creditors in insolvency proceedings in the same country. [ABSTRACT FROM AUTHOR]

The article proposes a property-based methodology for distinguishing sales of receivables from security interests that secure an obligation (SISO). It describes a securitization transaction and summarizes commentary and defenses of securitization. An explanation on the potential legal consequences if a true sale is recharacterized outside bankruptcy is also offered. A review of the approach toward recharacterization of a purported sale of receivables is presented.

The article focuses on the New Zealand court cases Gibbston Downs Wines Ltd. v. Perpetual Trust Ltd. and Strategic Finance Ltd. (in rec & liq) v. Bridgman, which dealt with the New Zealand Personal Property Securities Act of 1999 (PPSA). Topics include security interest priorities under security interest agreements, subordination agreements, and the use of assignments in bankruptcy administration.

The article focuses on the vesting of personal property under the Commonwealth Personal Property Securities Act of 2009 and the Commonwealth Corporations Act of 2001. Topics include the vesting of security interests during bankruptcy, voluntary bankruptcy administration, and the nonperformance of security interests for personal property.

The article focuses on the protection of prepaid buyers in cases of seller insolvency in Australia. Topics include the recovery of prepayment, the justification for providing preferential treatment to the prepaid buyer, and how to reduce the likelihood of loss. Information is provided on the use of collateral security or payment bonds to reduce risk.

For the past two decades Americans have debated how to prevent the Social Security System from going bankrupt by either instituting a tax increase or a benefit reduction. In this article the authors propose a bipartisan approach, presenting 1) a detailed understanding of the root causes of the system's insolvency and 2) a viable solution to insure long-term solvency without tax increases or benefit reductions. Secured Transparent Retirement Account Program (STRAP) is the long term solution for our ailing Social Security system. [ABSTRACT FROM AUTHOR]