April 1st 2011 the Danish Bankruptcy Act was changed and now contains part 1A regarding restructuring. The aim of the new legislation is to reduce the number of bankruptcies, by helping companies, which are temporary experiencing financial problems, to survive. This new set of rules introduces a new legal person, the restructurer, often a lawyer. This thesis analyses and defines his liability in four different scenarios, and especially in the case where he takes over the managing control of the company in reconstruction. The conclusion is that the lawyer is strictly liable when it comes to comply with the law, deadlines, obligations etc. He is also responsible for ending the restructuring, if it is hopeless. In this case the conclusion is that he would not be judged quite as strict, since it is difficult to define the exact point of no return referring to the “Business Judgment Rule”. When the court removes the management of the company, and the restructurer takes over, he also incurs the managerial liability. The thesis defines his liability and concludes, that in most cases he bears the same liability, but that the courts would not judge him as strictly, since he has a special role of rescuing and no experience in running a company. In Chapter 3 the thesis examines the economic effects of the new legislation and the overall efficiency. First we analyse the different ways, countries in Europe and in USA, has organised their restructuring legislation. The economic theories operate with the terms: a debtor or a creditor friendly system. The Danish legislation contains rules from both systems, and is very balanced in giving incentives to both companies and creditors, so that they will use the system efficient. A reconstruction involves a lot of indirect costs, especially all the time and resources that it requires from the court, the creditors and the company itself. A reconstruction also contains the possibility of huge gains. One of the most valuable in times of crisis, and especially as the situation in Denmark is right now, is the saving of jobs. The thesis compares the effects of a bankruptcy versus a reconstruction and points out the most important and often indirect effects, which the decision-maker must have in mind, when choosing between the two. Overall the new legislation is a Kaldor-Hicks improvement, and thereby efficient, but it is very important to have al the hidden costs of a restructuring in mind, when choosing between going through reorganisation or liquidate the company.
|Educations||MSc in Commercial Law, (Graduate Programme) Final Thesis|
|Number of pages||168|