Search Results (7)

This article examines the subject of SME failures due to financial distress in emerging economies by focusing on Uganda as a case study. It adopts a convergent doctrinal and empirical approach, drawing on existing black letter law and literature alongside some of the empirical data obtained from a survey of SME business owners impacted by financial distress, a survey of accredited insolvency practitioners and exchanges from a stakeholder workshop on SME insolvencies in Uganda. The article examines existing legal, regulatory and procedural frameworks on corporate rescue and the identified gaps exacerbating SME failures in unpacking why, despite the availability of these frameworks, business rescue as the policy objective of Uganda’s insolvency law has yet to be fully achieved. The article devises a recommended toolkit that if adopted, may guide the approaches needed to improve SME rescue, and meet legal and statutory objectives of Uganda’s insolvency frameworks to enhance economic stability. Full article

This paper argues that despite two decades of reform, the European Union’s (EU) insolvency framework remains structurally and behaviourally inaccessible to micro-, small-, and medium-sized enterprises (MSMEs). While policy rhetoric has embraced the idea of a “rescue culture,” practical implementation has prioritised larger, well-resourced firms. Drawing on international guidance and case studies from Ireland, France, and the United States (US), the paper shows that legal reform alone is insufficient. Structural complexity, cultural stigma, and weak institutional outreach continue to block MSMEs’ access to rescue. The paper proposes a forward-looking agenda for EU reform centred on three pillars: legal simplification tailored to MSMEs, institutional scaffolding to enhance visibility and support, and cultural reframing to normalise restructuring as a second chance. It concludes that a functioning rescue culture must treat MSMEs not as scaled-down versions of large firms but as distinct users with unique constraints and capacities. Full article

This article examines key aspects of corporate insolvency law. The main research jurisdictions are the US, England, France, and Germany. This study adopts a functional approach that compares different legal regimes of corporate insolvency law in light of the legislative changes related to the EU directive (EU) 2019/1023. This directive, to some extent, triggered a paradigm shift, leading to varying degrees of reform across all EU member states and even influencing non-EU jurisdictions. This article is structured into four parts. The introduction provides an overview of corporate insolvency laws. The second part focuses on directive (EU) 2019/1023 on preventive restructuring frameworks, which considers the requirements regarding the classes of creditors and the related procedures. The third section examines the differences and similarities in the conceptual framework of the corporate insolvency law in the selected jurisdictions, with particular emphasis on their approach—whether creditor-friendly or debtor-friendly—and their bankruptcy procedures. Finally, the last section highlights jurisdictional divergences. This article contributes to the understanding of corporate insolvency law as a complex international issue by comparing national approaches and offering legal recommendations. Full article

This study aims to investigate the effect of corporate social responsibility disclosure (CSRD) on financial distressed risk (FDR) among firms listed on the Tehran Stock Exchange (TSE). This paper also examines whether there is a negative linkage between institutional ownership as a corporate governance mechanism and corporate bankruptcy. The final research purpose is to analyze if there is a moderating effect of institutional owners on the relationship between CSRD and FDR too. The study sample consists of 200 firms listed on the TSE between 2013 and 2018, and the statistical model is logistic regression. When FDR is assessed under both Article 141 of Iran’s business law and the Altman Z-score model, our results on the main research hypotheses are quite similar. Considering the social and cultural conditions and economic situation of the Iranian market, the results show that firms with a high level of CSR disclosure are not able to make themselves more creditworthy and do not have better access to financing, resulting in more financial insolvency. Our findings confirm institutional shareholders play a vital role in facilitating a firm’s emergence from bankruptcy. The results also demonstrate financial distress risk is less seen among companies with more institutional owners that disclose more CSR information. In other words, since the goals related to CSR are long-term and Iranian institutional investors have a long-term horizon towards the company, the presence of more institutional owners within a firm push managers to provide additional voluntary CSR disclosure so firms can maintain the trust of their shareholders at the highest possible level and prevent financial distress. Our additional analysis indicates there is a positive association between financial leverage and firm failure, whereas the current ratio and ROA are negatively connected with corporate bankruptcy. Finally, when FDR is assessed on the Altman Z-score model, our evidence supports a negative relation between purchase and sale-related party transactions and bankruptcy risk, which is consistent with the efficient transaction hypothesis. Full article

Covering a central theme in corporate law development, this paper discusses the pragmatic utility of the common-law-originated duty of loyalty of company directors in the civil law context of China. The reception of legal transplantation in a host environment remains a contentious theme, and it seems to be an opportune time to study relevant cases that have been adjudicated since China’s statutory inauguration of the directors’ duty of loyalty in 2005, in the sense that more than 10 years of practice has resulted in ample evidence on the practical effects of this transplanted duty. Through an analysis of 526 cases on the basis of eight attributes, we discovered some commendable features, including increasing accessibility of the law and a differentiation of various types of directors’ duties of loyalty. Meanwhile, the selective adoption norm customary to Chinese culture has to a certain extent compromised the intended goals of greater legislative clarity, judicial consistency and in turn balanced and sustainable businesses, demonstrated in several incompatibilities between transplanted duties and domestic legal institutions. Reshaping the conventional transplantation ideal that commercial laws are easily transferable, the paper suggests the construction of a broad collateral regime for greater congruence between laws and existing institutions. Full article

The debate over corporate objectives and how companies deal with amplified existing societal inequalities and vulnerabilities has received increasing attention in recent years, especially in the wake of the COVID-19 crisis. The pandemic encouraged companies and policy makers to consider ways to develop a more enabling institutional environment, not only to tackle the ongoing crisis but also to prepare for similar future tests. Against this backdrop, the purpose of this paper is to focus on the significance and effectiveness of ex ante corporate social responsibility (CSR) law approaches in tackling the challenges brought by the pandemic. We investigate the uniqueness of the sustainable development challenges in the era of the pandemic, and introduce “corporate social competence” as a compliance principle in response to the need for forward-looking approaches to risk management and strategic planning. We use two ex ante legislative approaches in company law, namely mandatory CSR policy and legally recognised inclusive business models, as examples to illuminate the contribution of company law to navigate the pandemic beyond philanthropic CSR actions. Full article

Modern management means making managerial decisions in many situations—including the administrative ordering of matters of a bankrupt enterprise. The situation in which the court approves the opening of bankruptcy proceedings is strictly regulated by law. This does not mean, however, that such a decision is made under conditions of certainty as to its consequences. The risk of making a wrong decision has significant consequences for everyone who is interested in it (the bankrupt company, its partners, employees, banks, the tax office). The purpose of this article is to explain the importance and significance of the various types of information that are used to reliably assess the value of a failing enterprise’s assets. The information of individual types is analyzed in the decision-making process which leads to the right decision on whether to start bankruptcy proceedings. Therefore, in the theoretical part, the authors prepare a list of types of information used in the mentioned process. Then the authors present the results of a survey (103 specialists in the field of bankruptcy), which allows to assess the real meaning of information of individual types. The main contribution for which the present paper is responsible is the description of the verified tool which functioned in the form of the survey that was applied in the study and the result arising from conducting it. This survey was used to achieve the main objective that was focused on constructing the hierarchy of significance of different types of information relating to the risk of conducting bankruptcy proceedings. The main findings show that in general insolvency specialists prioritize the information (financial and also not financial) not originating from financial reporting. Full article