Bankruptcy Laws Between Credit Protection And the Compass to Rescue Troubled Enterprises And Encouraging Investment: A Comparative Study
Assistant Professor FUAD SHYYAB
PRIVATE LAW DEPARTMENT - COLLEGE OF LAW - TAIBAH UNIVERSITY
Abstract
Bankruptcy laws play a driving role in development, stimulating investment and strengthening competitiveness at the national and international level, (European Parliament, 2011). So, it is not surprising that modern laws tend to support enterprises and increasing their efficiency. In general, most of the bankrupted enterprises are the new ones, and it is inconceivable to not take care to protect these productive units fighting against unemployment, especially, the legislator make strenuous efforts to induce to trade and investment by providing various forms of individual enterprises and limited liability companies. Previously, the bankrupt enterprise was considered a threat to credit (bankruptcies in cascade). Currently, we can say that the legislator plays a role like the qualified physician: prevent, diagnose and treat. In general, bankruptcy is surrounded by complicated procedures such as finding mechanisms to finance productive projects, promoting attention to all actors in investment activity, traders and others, and developing the professionalism and qualification of bankruptcy-procedures officers. Therefore, this research focuses on the most important means of stimulating investment in a comparative analytical approach (the French, the Americans, the Saudis, the Bahraini and the Kuwaiti law). Its importance does not lie in highlighting of the technical and procedural aspects, but rather in a modest attempt to make a value judgment of the bankruptcy-laws effectiveness in maintaining enterprises and encouraging investment. Chapter 1: Stimulating investment and the preventing of troubled enterprises This chapter deals with the preventive means (amicable or administrative proceeding) that prevent enterprises from faltering in French law and some Arab laws. Chapter 2: Stimulating investment and the theory of separating the fate of the enterprise from its owner This chapter deals with the theory of restructuring, which is not primarily aimed at paying off debts but rather at rescuing troubled enterprises. In this process the fate of the enterprise is not necessarily the same of its manager, so, after having analyzed the financial situation of the enterprise and the way it is managed, the company can be saved while its manager will be liable civilly and criminally. In particular, this chapter sheds light on the criminal retreat of bankruptcy laws while maintaining the necessary sanctions to maintain investment, credit and the economic institution. Chapter 3: stimulating investment and theory of fresh start in bankruptcy This chapter discusses the content of Chapter 7 of the American bankruptcy code, then the evolutions of French laws which have adopted since 2014 the rehabilitation of the debtor without liquidation (Rétablissement professionnel du débiteur), i.e. the cancellation of bankruptcy debts. This law is justified by different factors such as humanitarian considerations (preventing the social exclusion of the debtor), and limiting of economic recession, which is no longer a transitory situation. It is worth to induce the debtor to relaunch another project armed with positive income (previous experiences), but not encumbered by negative gains (previous debts). The comparison relates to certain laws, such as the Egyptian, the Saudi, the Bahraini (art. 150, bankruptcy law) and perhaps the Kuwaiti Bankruptcy Laws projects for 2019.
Keywords
Troubled enterprises, Preventive means in Bankruptcy, Fresh start in bankruptcy, Civil and criminal liability of enterprise director
