In 2009 the report of the bankruptcy law was finished. The report concludes that the former rules about receivership do not comply with the intentions of the law. Previously, the rules about receivership was used to give a company time to liquidate the company, however, the intention was to solve the financial difficulties in the companies and not to end up with a liquidation order. Based on the report is Consolidation act No. 217 of 15th March 2011. The topic of this thesis is reconstruction of insolvent companies and whether the changes in the bankruptcy law prevent insolvent companies to go bankrupt. The three main changes in the bankruptcy law are that: Creditors can demand the insolvent company into reconstruction, The insolvent company’s possibility of reestablishing repealed contracts Finally, creditors and the “reconstructor” are able to allocate the management of the company without stating any particular reasons. The purpose of this thesis is therefore to analyze the main changes in order to find out; Whether the changes have granted the companies better opportunities to solve their financial difficulties. For the purpose of finding out whether transaction costs have influence on the choices creditors and insolvent companies will make. This report concludes that the size of the transaction costs influences the choice of strategy regarding determination of reconstruction. If there is no transaction cost by collaborating with a third party creditor will not choose to initiate reconstruction. Furthermore this report concludes that, debtor will only reestablish the contract if the contract is unique, considering the fact that the company otherwise could attain the asset elsewhere with no transaction costs/without any transactions cost. If the contract is to be renegotiated, debtor will have to accept the fact that the terms will be less attractive. Finally, creditors chance to initiate reconstruction as well as the chance of reestablishing contracts/a contract has created an improved legal position for the insolvent company. Finally, creditors and the “reconstructor” are able to allocate the management of the company without stating any particular reasons, only have a small influence on the risk of bankruptcy.
|Educations||MSc in Commercial Law, (Graduate Programme) Final Thesis|
|Number of pages||81|